Document:

EX-10.4

 Exhibit 10.4 

NEW BUFFALO SAVINGS BANK 

SALARY CONTINUATION AGREEMENT 

FOR 
 RICHARD C. SAUERMAN

 THIS SALARY CONTINUATION PLAN FOR RICHARD C. SAUERMAN (the “Plan”) is effective as of May 28, 2015, and is
entered into by New Buffalo Savings Bank (the “Bank”) and Richard C. Sauerman (“Executive”).  
 WHEREAS,
the purpose of the Plan is to provide additional retirement benefits to Executive, who, as a member of senior management, has contributed significantly to the success of the Bank, and whose continued services are vital to the Bank’s continued
growth and success; and 
 WHEREAS, this Plan is intended to be an unfunded, non-qualified deferred compensation plan that
complies with Sections 451 and 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder and is also intended to be a “top hat” pension plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). 
 ARTICLE I 

DEFINITIONS 
 When used
herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise: 
  

	1.1	“Accrued Benefit” means, as of any date, the liability that should be accrued by the Bank under generally accepted accounting principles (“GAAP”) to reflect the Bank’s obligation to Executive
under the Plan. 

  

	1.2	“Administrator” means the Bank and/or its Board of Directors, provided, however, the Board of Directors can designate a committee of the Board of Directors (“Committee”) as the Administrator.

  

	1.3	“Bank” means New Buffalo Savings Bank and any successor to its business and/or assets which assumes and agrees to perform the duties and obligations under this Plan by operation of law or otherwise.

  

	1.4	 “Beneficiary” means the person or persons (and, if applicable, their heirs) designated by Executive as the beneficiary to whom the deceased
Executive’s benefits are payable. The beneficiary designation shall be made on the form attached hereto as Exhibit A and filed with the Administrator. If no Beneficiary is so designated, then Executive’s Spouse, if living, will be deemed
the Beneficiary. If Executive’s Spouse is not living at the time of Executive’s death or dies prior to payment to her of the Survivor’s Benefit, then the Children of Executive will be deemed the Beneficiaries and will take on a per
stirpes basis. If there are no living Children, then Executive’s estate will be deemed the Beneficiary. For this purpose, the term “Children” means Executive’s children, or the

	 	
issue of any deceased Children, then living at the time payments are due the Children under this Plan. The term “Children” shall include both natural and adopted children, as well as
stepchildren. Also, for this purpose, the term “Spouse” means the individual to whom Executive is legally married at the time of Executive’s death, provided, however, that the term “Spouse” shall not refer to an individual
to whom Executive is legally married at the time of death if Executive and the individual have entered into a formal separation agreement (provided that the separation agreement does not provide otherwise or state that the individual is entitled to
a portion of the benefits hereunder) or initiated divorce proceedings. 

  

	1.5	“Benefit Eligibility Date” shall be the date on which Executive is entitled to commencement of benefits under the Plan. 

  

	 	(a)	In the event benefits become payable on account of Executive’s Separation from Service on or after Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following
Executive’s Separation from Service, subject to Section 1.5(g) below. 

  

	 	(b)	In the event the benefits become payable to Executive in the event of Executive’s Separation from Service on or after his Early Retirement Age but before his Normal Retirement Age, the Benefit Eligibility Date
shall be the first day of the second month following the Separation from Service, subject to Section 1.5(g) below. 

  

	 	(c)	In the event the Accrued Benefit becomes payable to Executive in the event of Executive’s Involuntary Separation from Service prior to his Early Retirement Age, the Benefit Eligibility Date shall be the first day
of the second month following the Separation from Service, subject to Section 1.5(g) below. 

  

	 	(d)	In the event the Survivor’s Benefit becomes payable on account of Executive’s death, the Benefit Eligibility Date shall be the first day of the second month following Executive’s death. 

 

	 	(e)	In the event Executive suffers a Disability while employed by the Bank, the Benefit Eligibility Date shall be the first day of the second month following the date Executive is determined to be Disabled.

  

	 	(f)	In the event the Accrued Benefit becomes payable pursuant to Section 2.7 of this Plan on account of Executive’s voluntary or Involuntary Separation from Service (other than for Cause) or resignation for Good
Reason coincident with or within two (2) years following a Change in Control and prior to his Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following Separation from Service, subject to
Section 1.5(g) below. 

  

	 	(g)	 Notwithstanding anything in this Section 1.5 to the contrary, if Executive is a Specified Employee of a publicly-traded company and the
payment(s) are due to 

  
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Executive’s Separation from Service (other than due to death), then the Benefit Eligibility Date shall be the first day of the seventh month following Executive’s Separation from
Service (if later than the date otherwise specified as the Benefit Eligibility Date). The payments that otherwise would have been received from the date of Separation from Service to the Specified Employee’s Benefit Eligibility Date shall be
aggregated and shall be paid on the same date as the initial payment (e.g., on the first day of the seventh month) and all remaining payments shall be made as otherwise scheduled. For purposes of Code Section 409A, the payments due hereunder
shall be deemed a single payment. 

  

	1.6	“Board of Directors” shall mean the Board of Directors of the Bank. 

  

	1.7	“Cause” shall mean Executive’s (i) personal dishonesty; (ii) willful misconduct; (iii) incompetence; (iv) breach of fiduciary duty involving personal profit; (v) intentional
failure to perform his stated duties; or (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order. 

 

	    	For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief
that Executive’s action or omission was in the best interest of the Bank. 

  

	1.8	“Change in Control” shall mean any of the following events: (i) a change in the ownership of New Bancorp, Inc. (the “Company”) or Bank; (ii) a change in the effective control of the Company
or Bank; or (iii) a change in the ownership of a substantial portion of the assets of the Company or Bank, as described below: 

  

	 	(a)	A change in ownership occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or the
Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Bank or the Company. 

 

	 	(b)	A change in the effective control of the Company or Bank occurs on the date that either (A) any one person, or more than one person acting as a group (as defined in Treasury Regulations section
1.409A-3(i)(5)(vi)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or Bank possessing 30% or more of the total voting power of
the stock of the Company or Bank, or (B) a majority of the members of the Bank’s or the Company’s Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of
the members of the Bank’s or the Company’s Board of Directors prior to the date of the appointment or election, provided that this subsection is inapplicable where a majority shareholder of the corporation is another corporation.

  
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	 	(c)	A change in the ownership of a substantial portion of the Bank’s or the Company’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulations
section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or Bank that have a total gross fair market value equal to or
more than 40% of the total gross fair market value of all of the assets of the Company. For purposes of this Agreement, “gross fair market value” means the value of the assets of the Company or Bank, or the value of the assets being
disposed of, without regard to any liabilities associated with such assets. 

  

	 	(d)	For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulations section 1.409A-3(i)(5), except to the extent that such regulations are
superseded by subsequent guidance. 

  

	1.9	“Disability” means, with respect to Executive, that, in the good faith determination of the Board of Directors, Executive is (i) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Bank, or (iii) determined to be totally disabled by the Social Security Administration. 

  

	1.10	“Early Retirement Age” means age 56. 

  

	1.11	“Effective Date” of this Plan shall be May 28, 2015. 

  

	1.12	“Executive” means Richard C. Sauerman, who has been selected and approved by the Board of Directors to participate in the Plan. 

 

	1.13	“Good Reason” shall mean: (i) a material diminution in Executive’s base salary; (ii) a material diminution in Executive’s authority, duties, or responsibilities; or (iii) a material
change in the geographic location at which Executive must perform his duties to the Bank; provided, however, that any such occurrence shall not be deemed a “Good Reason” if Executive consents thereto. A termination by Executive shall not
constitute Good Reason unless Executive shall first have delivered to the Bank written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days
after the initial occurrence of such event), and the Bank has failed within 60 days of such notice to correct the circumstance that would otherwise constitute Good Reason. 

 

	1.14	“Involuntary Separation from Service” is a Separation from Service that is not voluntary, other than a Separation from Service for Cause or due to death or Disability, provided, however, that an Involuntary
Separation from Service includes a resignation for Good Reason. 

  
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	1.15	“Normal Retirement Age” means age 61. 

  

	1.16	“Payout Period” means the time frame during which benefits payable under the Plan shall be distributed. The Payout Period shall be fifteen (15) years, commencing on Executive’s Benefit Eligibility
Date specified in Section 1.5 of the Plan. 

  

	1.17	“Separation from Service” (or “Separated from Service”) means Executive’s death, retirement or other termination of employment with the Bank within the meaning of Code Section 409A. No
Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of the leave does not exceed six months or, if longer, so long as Executive’s right to reemployment is provided
by law or contract. If the leave exceeds six months and Executive’s right to reemployment is not provided by law or by contract, then Executive shall have a Separation from Service on the first date immediately following such six-month period.

  

	    	Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a
certain date or that the level of bona fide services Executive would perform after that date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of bona fide
services performed over the immediately preceding 36 months (or the lesser period of time in which Executive performed services for the Bank). The determination of whether Executive has had a Separation from Service shall be made by applying the
presumptions set forth in the Treasury Regulations under Code Section 409A. 

  

	1.18	“Specified Employee” means an individual who also satisfies the definition of “key employee” as that term is defined in Code Section 416(i) (without regard to paragraph (5) thereof). In the
event Executive is a Specified Employee, no distribution shall be made to such Executive upon Separation from Service (other than due to death or Disability) prior to the date which is six (6) months following Separation from Service.

  

	1.19	“Survivor’s Benefit” means the benefit payable to Executive’s Beneficiary following his death in accordance with Section 2.4 of the Plan. 

ARTICLE II 
 BENEFITS

  

	2.1	Benefit on Separation from Service on or after Normal Retirement Age. 

  

	    	If Executive has a Separation from Service after reaching his Normal Retirement Age, Executive shall be entitled to an annual benefit equal to $10,000. The Benefit under this Section 2.1 shall commence on
Executive’s Benefit Eligibility Date specified in Section 1.5(a) of the Plan and shall be payable in installments over the Payout Period specified in Section 1.16 of the Plan. 

  
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	2.2	Benefit on Separation from Service on or after Early Retirement Age and Before Normal Retirement Age. 

  

	    	If Executive has a Separation from Service after reaching his Early Retirement Age and before reaching his Normal Retirement Age, Executive shall be entitled to an annual benefit equal to the following:

  

	 	(i)	if Executive has attained age 56, but not age 57, 20% of the monthly benefit payable at Normal Retirement Age under Section 2.1 of the Plan; 

	 	(ii)	if Executive has attained age 57, but not age 58, 40% of the monthly benefit payable at Normal Retirement Age under Section 2.1 of the Plan; and 

	 	(iii)	if Executive has attained age 58, but not age 59, 60% of the monthly benefit payable at Normal Retirement Age under Section 2.1 of the Plan. 

	 	(iv)	if Executive has attained age 59, but not age 61, 80% of the monthly benefit payable at Normal Retirement Age under Section 2.1 of the Plan 

 

	    	The benefit shall be payable commencing on the Benefit Eligibility Date specified in Section 1.5(b) of the Plan and payable in monthly installments over the Payout Period specified in Section 1.16 of the Plan.

  

	2.3	Involuntary Separation from Service Before Early Retirement Age. 

  

	    	If Executive has an Involuntary Separation from Service (including a resignation for Good Reason) prior to the attainment of his Early Retirement Age (other than due to Cause, death or Disability), Executive shall be
entitled to the Accrued Benefit (annuitized for a period of fifteen (15) years using the discount rate utilized for accounting purposes as of the date of the Separation from Service) payable commencing on the Benefit Eligibility Date specified
in Section 1.5(c) of the Plan and payable in annual installments over the Payout Period specified in Section 1.16 of the Plan. 

  

	2.4	Survivor’s Benefit. 

  

	 	(a)	If the Participant dies while in the active service of the Bank and prior to attaining his Normal Retirement Age, Executive’s Beneficiary shall be entitled to the Accrued Benefit (payable in equal annual
installments by dividing the Accrued Benefit at the date of death by 15). The Bank shall pay Executive’s Beneficiary the Accrued Benefit on the Benefit Eligibility Date specified in Section 1.5(d) of the Plan in monthly installments for a
period of fifteen (15) years. 

  

	 	(b)	 If Executive dies following a Separation from Service after reaching his Normal Retirement Age but prior to the commencement of benefit payments to
Executive, Executive’s Beneficiary shall be entitled to the benefit payments that would have been made to Executive at the same time and in the same amounts they would 

  
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have been paid to Executive had Executive survived for a period of fifteen (15) years (15 annual installments). If Executive dies following a Separation of Service or suffering a Disability
and after the commencement of benefit payments, Executive’s Beneficiary shall be entitled to the remaining benefit payments at the same time and in the same amounts they would have been paid to Executive had Executive survived for fifteen
(15) years following his Separation from Service and received 15 annual installments. For the avoidance of doubt, if Executive had received 15 annual installments at the time of his death, his Beneficiary will not be entitled to any benefit
payments following the death of Executive. If Executive had received 7 annual installments at the time of his death, his Beneficiary would be entitled to 3 annual installments following the death of Executive. 

 

	2.5	Benefit on Disability. If Executive suffers a Disability prior to his Normal Retirement Age, Executive shall be entitled to receive the Accrued Benefit (annuitized for a period of fifteen (15) years using
the discount rate utilized for accounting purposes as of the date of Disability), commencing on the Benefit Eligibility Date set forth in Section 1.5(e) of the Plan. Executive’s Benefit shall be paid in annual installments over the Payout
Period specified in Section 1.16 of the Plan. 

  

	2.6	Termination for Cause and Voluntary Termination. Notwithstanding any other provision of this Plan to the contrary, if Executive is terminated for Cause or voluntarily Separates from Service prior to the
attainment of his Early Retirement Age, other than for Good Reason, all benefits under this Plan shall be forfeited by Executive and Executive’s participation in this Plan shall become null and void. 

 

	2.7	Benefit Payable on Separation from Service within Two Years Following a Change in Control. In the event a Change in Control occurs followed by Executive’s Involuntary Separation from Service or resignation
for Good Reason within two (2) years and prior to his separation from service, Executive shall be entitled to his present value of the benefit that would otherwise be due under Section 2.1 or Section 2.2 of the Plan payable commencing
on the Benefit Eligibility Date specified in Section 1.5(f), in a lump sum. 

 ARTICLE III 

BENEFICIARY DESIGNATION 

Executive shall make an initial designation of primary and secondary Beneficiaries upon initial participation in the Plan by completion of a
Beneficiary form substantially in the form attached as Exhibit A, and shall have the right to change the designation, at any subsequent time. Any Beneficiary designation shall become effective only when receipt thereof is acknowledged in writing by
the Administrator. 

  
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 ARTICLE IV 

EXECUTIVE’S RIGHT TO ASSETS, 

ALIENABILITY AND ASSIGNMENT PROHIBITION 

At no time shall Executive be deemed to have any lien, right, title or interest in or to any specific investment or asset of the Bank. The
rights of Executive, any Beneficiary, or any other person claiming through Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. Executive, the Beneficiary, or any other person claiming through Executive,
shall only have the right to receive from the Bank those payments so specified under this Plan. Neither Executive nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by Executive or his Beneficiary, nor be
transferable by operation of law in the event of bankruptcy, insolvency or otherwise. 
 ARTICLE V 

ERISA PROVISIONS 
  

	5.1	Named Fiduciary and Administrator. The Bank shall be the Named Fiduciary and Administrator of this Plan. As Administrator, the Bank shall be responsible for the management, control and administration of the Plan
as established herein. The Administrator may delegate to others certain aspects of the management and operational responsibilities of the Plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

  

	5.2	Claims Procedure and Arbitration. In the event that benefits under this Plan is not paid to Executive (or to his Beneficiary in the case of Executive’s death) and the claimant(s) feel he or they are entitled
to receive the benefits, then a written claim must be made to the Administrator within sixty (60) days from the date payments are refused. The Administrator shall review the written claim and, if the claim is denied, in whole or in part, it
shall provide in writing, within thirty (30) days of receipt of such claim, its specific reasons for such denial, reference to the provisions of this Plan upon which the denial is based, and any additional material or information necessary for
such claimants to perfect the claim. The written notice by the Administrator shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial is desired. 

 

	    	If claimants desire a second review, they shall notify the Administrator in writing within thirty (30) days of the first claim denial. Claimants may review this Plan or any documents relating thereto and submit any
issues and comments, in writing, they may feel appropriate. In its sole discretion, the Administrator shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state
the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based. 

  
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	    	No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan until the claimant has
first exhausted the provisions set forth in this Section 5.2. 

 ARTICLE VI 

MISCELLANEOUS 
  

	6.1	No Effect on Employment Rights. Nothing contained herein will confer upon Executive the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with
Executive without regard to the existence of the Plan. 

  

	6.2	State Law. The Plan is established under, and will be construed according to, the laws of the State of Michigan, to the extent such laws are not preempted by ERISA and valid regulations published thereunder or
any other federal law. 

  

	6.3	Severability and Interpretation of Provisions. The Bank shall have full power and authority to interpret, construe and administer this Plan and the Bank’s interpretation and construction thereof and actions
thereunder shall be binding and conclusive on all persons for all purposes. No employee or representative of the Bank shall be liable to any person for any actions taken or omitted in connection with the interpretation and administration of this
Plan unless attributable to his own willful misconduct or lack of good faith. In the event that any of the provisions of this Plan or portion hereof are held to be inoperative or invalid by any court of competent jurisdiction, or in the event that
any provision is found to violate Code Section 409A and would subject Executive to additional taxes and interest on the amounts deferred hereunder, or in the event that any legislation adopted by any governmental body having jurisdiction over
the Bank would be retroactively applied to invalidate this Plan or any provision hereof or cause the benefits under this Plan to be taxable, then: (1) insofar as is reasonable, effect will be given to the intent manifested in the provisions
held invalid or inoperative, and (2) the validity and enforceability of the remaining provisions will not be affected thereby. In the event that the intent of any provision shall need to be construed in a manner to avoid taxability, this
construction shall be made by the Administrator in a manner that would manifest to the maximum extent possible the original meaning of such provisions. 

  

	6.4	Incapacity of Recipient. If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his property, the Bank may pay such benefit to the guardian,
legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Bank may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit.
The distribution shall completely discharge the Bank for all liability with respect to the benefit. 

  

	6.5	 Unclaimed Benefit. Executive shall keep the Bank informed of his or her current address and the current address of his Beneficiaries. If the
location of Executive is not made known to the Bank, the Bank shall delay payment of Executive’s benefit payment(s) until the location of Executive is made known to the Bank; however, the Bank shall only be

  
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obligated to hold the benefit payment(s) for Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the Bank may discharge its obligation by
payment to Executive’s Beneficiary. If the location of Executive’s Beneficiary is not known to the Bank, Executive and his Beneficiary(ies) shall thereupon forfeit any rights to the balance, if any, of any benefits provided for such
Executive and/or Beneficiary under this Plan. 

  

	6.6	Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, no individual acting as an employee or agent of the Bank, or as a member of the Board of Directors shall be personally liable
to Executive or any other person for any claim, loss, liability or expense incurred in connection with the Plan. 

  

	6.7	Gender. Whenever in this Plan words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter gender, whenever they should so apply. 

 

	6.8	Effect on Other Corporate Benefit Plans. Nothing contained in this Plan shall affect the right of Executive to participate in or be covered by any qualified or nonqualified pension, profit sharing, group, bonus
or other supplemental compensation or fringe benefit agreement constituting a part of the Bank’s existing or future compensation structure. 

  

	6.9	Inurement. This Plan shall be binding upon and shall inure to the benefit of the Bank, its successors and assigns, and Executive, his successors, heirs, executors, administrators, and Beneficiaries.

  

	6.10	Acceleration of Payments. Except as specifically permitted under this Section 6.10 or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made under this Plan.
Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department.
Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in
compliance with ethics agreements with the Federal Government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in
the case of certain distributions to avoid a non-allocation year under Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of Executive to the Bank; (vii) in satisfaction of certain bona fide disputes
between Executive and the Bank; or (viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance. 

  

	6.11	Headings. Headings and sub-headings in this Plan are inserted for reference and convenience only and shall not be deemed a part of this Plan. 

  
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	6.12	12 U.S.C. §1828(k). Any payments made to Executive pursuant to this Plan or otherwise are subject to and conditioned upon compliance with 12 U.S.C. § 1828(k) or any regulations promulgated thereunder.

  

	6.13	Payment of Employment and Code Section 409A Taxes. Any distribution under this Plan shall be reduced by the amount of any taxes required to be withheld from the distribution. This Plan shall permit the
acceleration of the time or schedule of a payment to pay employment-related taxes as permitted under Treasury Regulation Section 1.409A-3(j) or to pay any taxes that may become due at any time that the arrangement fails to meet the requirements
of Code Section 409A and the regulations and other guidance promulgated thereunder. In the latter case, such payments shall not exceed the amount required to be included in income as the result of the failure to comply with the requirements of
Code Section 409A. 

  

	6.14	Successors to the Bank. The Bank, as applicable, will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets
of the Bank to assume expressly and agree to perform the duties and obligations under this Plan in the same manner and to the same extent as the Bank would be required to perform it if no such succession had taken place. 

 

	6.15	Legal Fees. In the event Executive retains legal counsel to enforce any of the terms of the Plan, the Bank will pay his legal fees and related expenses reasonably incurred by him, but only if Executive prevails
in an action seeking legal and/or equitable relief against the Bank. 

 ARTICLE VII 

AMENDMENT/TERMINATION 
  

	7.1	This Plan may be amended or modified at any time, in whole or part, with the mutual written consent of Executive and the Bank. Notwithstanding anything to the contrary herein, the Plan may be amended without
Executive’s consent to the extent necessary to comply with existing tax laws or changes to existing tax laws or to amend or terminate the Plan in accordance with Section 7.2 below. 

 

	7.2	Termination of Plan. 

  

	 	(a)	Partial Termination. The Board of Directors, at its discretion, may partially terminate the Plan by freezing future accruals if, in its sole judgment, the tax, accounting, or other effects of the continuance of
the Plan, or potential payments thereunder, would not be in the best interests of the Bank. 

  

	 	(b)	Complete Termination. Subject to the requirements of Code Section 409A, in the event of complete termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to Executive his benefits
as if Executive had terminated employment as of the effective date of the complete termination. A complete termination of the Plan shall occur only under the following circumstances and conditions: 

  
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	 	(i)	The Board of Directors may terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that
the benefit is included in Executive’s (or his Beneficiary’s) gross income (and paid to Executive or his Beneficiary) in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount
is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable. 

  

	 	(ii)	The Board of Directors may terminate the Plan by Board of Directors action taken within the 30 days preceding or 12 months following a Change in Control, provided that the Plan shall only be treated as terminated if all
substantially similar arrangements sponsored by the Bank are terminated so that Executive and all participants under substantially similar arrangements are required to receive all amounts payable under the terminated arrangements within 12 months of
the date of the termination of the arrangements. 

  

	 	(iii)	The Board of Directors may terminate the Plan at any time provided that (i) the termination does not occur proximate to a downturn in the financial health of the Bank, (ii) all arrangements sponsored by the
Bank that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if Executive was also covered by any of those other arrangements are also terminated; (iii) no payments other than payments that would be payable
under the terms of the arrangements if the termination had not occurred are made within 12 months of the termination of the arrangement (e.g., Executive’s benefit); (iv) all payments are made within 24 months of the termination of the
arrangements; and (v) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if Executive participated in both arrangements, at any time within
three years following the date of termination of the arrangement. 

 ARTICLE VIII 

EXECUTION 
  

	8.1	This Plan sets forth the entire understanding of the Bank and Executive with respect to the transactions contemplated hereby, and any previous agreements or understandings between them regarding the subject matter
hereof are merged into and superseded by this Plan. 

  
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	8.2	This Plan shall be executed in duplicate, each copy of which, when so executed and delivered, shall be an original, but both copies shall together constitute one and the same instrument. 

[signature page follows] 

  
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 IN WITNESS WHEREOF, the Bank has caused this Plan to be executed, effective as of the day and
date first above written. 
  

									
	ATTEST:				NEW BUFFALO SAVINGS BANK
				
	/s/ Richard C. Sauerman				By:		/s/ David Blum
	RICHARD C. SAUERMAN						
					
							Title:		Secretary
				
	5/28/15						
	Date				Date:		5/28/15
				
							

  
 14lulu-2015.05.03-EX 10.1

Exhibit 10.1
LULULEMON ATHLETICA INC.
NOTICE OF GRANT OF PERFORMANCE SHARES

The Participant has been granted an award of Performance Shares (the “Award”) pursuant to the lululemon athletica inc. 2014 Equity Incentive Plan (the “Plan”) and the Performance Share Agreement attached hereto (the “Agreement”), as follows:
	
					
	Participant:
	______________________________
	Employee ID:
	________________________

	Grant Date:
	______________________________
	Grant No.:
	________________________

	Target Number of Performance Shares:
	________________, subject to adjustment as provided by the Agreement.

	Maximum Number of Performance Shares:
	________________ multiplied by 200%, subject to adjustment as provided by the Agreement.

	Performance Period:
	Company fiscal years ____, ____ and ____ (beginning ________________ and ending ________________).

	Performance Share Vesting Date:
	________________, except as provided by the Agreement or a separate written employment or other service agreement between a Participating Company and the Participant. In addition, and not withstanding anything in the Agreement to the contrary, if the Committee has not certified the level of attainment of Performance Measures (as defined in the Agreement) during the Performance Period prior to the date set forth in the preceding sentence, then the “Performance Share Vesting Date” shall be the date on which such certification occurs.

	Vested Performance Shares:
	Provided that the Participant’s Service has not terminated prior to the Performance Share Vesting Date, except as provided by the Agreement or a separate written employment or other service agreement between a Participating Company and the Participant, on the Performance Share Vesting Date the number of Vested Performance Shares (not to exceed the Maximum Number of Performance Shares) shall be determined by multiplying the Target Number of Performance Shares by the sum of (a) the Pre-Tax Operating Income Multiplier; and (b) the Net Revenue Multiplier (each as defined in the Agreement).  Notwithstanding the foregoing, if the number of Vested Performance Shares determined based on the above is zero because both the Pre-Tax Operating Income and the Net Revenue Multipliers are below the minimum necessary for the Performance Shares to become Vested Performance Shares, then up to 50% of the Target Number of Performance Shares may become Vested Performance Shares based on the Fiscal Year _____ Operating Income Multiplier (as defined in the Agreement).

	Settlement Date:
	Except as otherwise provided in the Agreement or a separate written employment or other service agreement between a Participating Company and the Participant, as soon as practicable on or after the Performance Share Vesting Date (or such other date on which the Award vests pursuant to Sections 5.4 or 8 of the Agreement), but in any event no later than seventy four (74) days following such date.

	Recoupment Policy:
	The Award is subject to the terms and conditions of the Company’s Policy for Recoupment of Incentive 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, the Agreement, and the Clawback Policy, all of which are made a part of this document.  The Participant acknowledges receipt of a copy of the Plan, the Agreement, the prospectus for the Plan, and the Clawback Policy 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.

	
		
	LULULEMON ATHLETICA INC.

	 
	 

	By:
	__________________

	 
	__________________

	 
	 

	Address:
	1818 Cornwall Avenue

	 
	Vancouver, British Columbia

	 
	Canada, V6J 1C7

	 
	 

	Attachments:
	Performance Share Agreement

	 
	Policy for Recoupment of Incentive Compensation

LULULEMON ATHLETICA INC.
PERFORMANCE SHARE AGREEMENT

lululemon athletica inc. has granted to the Participant named in the Notice of Grant of Performance Shares (the “Grant Notice”) to which this Performance Share Agreement (the “Agreement”) is attached an Award consisting of Performance Shares subject to the terms and conditions set forth in the Grant Notice and this Agreement.  The Award has been granted pursuant to Section 10 of 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 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.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)“Confidential Information” means, for purposes of this Agreement, all information included in the Grant Notice or this Agreement which is not generally or publicly known (other than as a result of unauthorized disclosure by the Participant), including but not limited to the Performance Measures.  
(b)“Fiscal Year _____ Operating Income Multiplier” means a number determined as follows:
	
		
	Fiscal Year _____ Operating Income Level
	Fiscal Year _____ Operating Income Multiplier

	Less than $_____________
	0.00%

	$_____________
	25.00%

	Equal to or greater than $_____________
	50.00%

The Fiscal Year _____ Operating Income Multiplier for Fiscal Year _____ Operating Income achieved falling between the amounts set forth above shall be linear interpolation.
(c)“Fiscal Year _____ Operating Income” means the earnings before other income and taxes as reported in the Consolidated Statements of Operations of the Company for its _____ Fiscal Year.
(d)“Net Revenue” means the revenue as reported in the Consolidated Statements of Operations of the Company for the fiscal years of the Company coinciding with the Performance period.
(e)“Net Revenue Multiplier” means a number determined as follows:
	
		
	Net Revenue Achieved
	Net Revenue Multiplier

	Less than $_____________
	0.00%

	$_____________
	15.00%

	$_____________
	30.00%

	Equal to or greater than $_____________
	60.00%

The Net Revenue Multiplier for Net Revenue achieved falling between the amounts set forth in the table above shall be determined by linear interpolation.

(f)“Performance Measures” means the Company’s Pre-Tax Operating Income, Net Revenue, and Fiscal Year _____ Operating Income, as defined in this Agreement.
(g)“Pre-Tax Operating Income” means the earnings before other income and taxes as reported in the Consolidated Statements of Operations of the Company for the fiscal years of the Company coinciding with the Performance Period.
(h)“Pre-Tax Operating Income Multiplier” means a number determined as follows:
	
		
	Percentage of Pre-Tax Operating Income Achieved
	Pre-Tax Operating Income Multiplier

	Less than $_____________
	0.00%

	$_____________
	35.00%

	$_____________
	70.00%

	Equal to or greater than $_____________
	140.00%

The Pre-Tax Operating Income Multiplier for Pre-Tax Operating Income achieved falling between the amounts set forth in the table above shall be determined by linear interpolation. 
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 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 Performance Shares.  On the Grant Date, the Participant shall acquire, subject to the provisions of this Agreement, a right to receive a number of Performance Shares which shall not exceed the Maximum Number of Performance Shares set forth in the Grant Notice, subject to adjustment as provided in Section 9.  The number of Performance Shares, if any, ultimately earned by the Participant, shall be that number of Performance Shares which become Vested Performance Shares.  Except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, this Award is subject to the terms set forth herein, and in all respects is subject to the terms and provisions of the Plan applicable to Performance Share Awards, which terms and provisions are incorporated herein by this reference.
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 Performance Shares or the Stock issued upon settlement of the Performance Shares, 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 rendered having a value not less than the par value of the Stock issued upon settlement of the Performance Shares. 

4.CERTIFICATION OF THE COMMITTEE.
4.1    Level of Attainment of Performance Measures.  As soon as practicable following completion of the Performance Period, the Committee shall certify in writing the level of attainment of the Performance Measures during the Performance Period and the resulting number of Performance Shares which shall become Vested Performance Shares on the Performance Share Vesting Date, subject to the Participant’s continued Service until the Performance Share Vesting Date, except as otherwise provided by Section 5.  The Company shall promptly notify the Participant of the determination by the Committee.
4.2    Adjustment to Performance Measures for Extraordinary Items.  The Committee shall adjust the Performance Measures  as it deems appropriate, to exclude the effect (whether positive or negative) of any of the following occurring after the grant of the Award: (a) a change in accounting standards required by generally accepted accounting principles or (b) any extraordinary, unusual or nonrecurring item.  Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of the Performance Measures in order to prevent the dilution or enlargement of the Participant’s rights with respect to the Award.
5.VESTING OF PERFORMANCE SHARES.
5.1    In General.  Except as provided by this Section 5 and Section 8, the Performance Shares shall vest and become Vested Performance Shares as provided in the Grant Notice and certified by the Committee.
5.2    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.  
5.3    Termination for Cause or Voluntary Termination.  In the event of the termination of the Participant’s Service for Cause or for any other reason other than death, Disability, Retirement, or termination by the Company without Cause prior to the Performance Share Vesting Date, the Participant shall forfeit and the Company shall automatically reacquire all of the Performance Shares subject to the Award.  The Participant shall not be entitled to any payment for such forfeited Performance Shares. Termination of Service shall be deemed to be the date on which any notice of termination of employment provided to such Participant is stated to be effective, 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.
5.4    Termination by Reason of Death.  In the event of the death prior to the Performance Share Vesting Date, then on the date of such death a number of Performance Shares shall become Vested Performance Shares equal to 100% of the Target Number of Performance Shares.
5.5    Termination by Reason of Disability.  In the event of the termination of the Participant’s Service by reason of Disability prior to the Performance Share Vesting Date, then on the Performance Share Vesting Date a number of Performance Shares shall become Vested Performance Shares equal to that number of Performance Shares that would have become Vested Performance Shares had no such termination of Service occurred. 
5.6    Termination Without Cause. 
(a)In the event of the termination of the Participant’s Service without Cause more than twelve (12) months before the end of the Performance Period, the Participant shall forfeit and the Company shall automatically reacquire all of the Performance Shares subject to the Award.  The Participant shall not be entitled to any payment for such forfeited Performance Shares.

(b)In the event of the termination by the Company of the Participant’s Service without Cause less than or equal to twelve months before the end of the Performance Period, then on the Performance Share Vesting Date the number of Performance Shares that shall become Vested Performance Shares shall be determined by multiplying (i) that number of Performance Shares that would have become Vested Performance Shares had no such termination occurred by (ii) a percentage equal to the ratio of the number of full months of the Participant’s Service during the Performance Period to the number of full months contained in the Performance Period.  
(c)Termination of the Participant’s Service without Cause shall be considered to have occurred on the date on which any notice of termination given by the applicable Participating Company, is stated to be effective (notwithstanding any statutory, contractual or common law period of notice of termination or compensation in lieu of such notice, to which the Participant may be entitled).  For greater certainty, the Participant’s Service shall not include any period following termination of Service 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.   
5.7    Termination by Reason of Retirement.  In the event of the termination of the Participant’s Service by reason of Retirement prior to the Performance Share Vesting Date, then on the Performance Share Vesting Date the number of Performance Shares that shall become Vested Performance Shares shall be determined by multiplying (a) that number of Performance Shares that would have become Vested Performance Shares had no such termination occurred by (b) a percentage equal to the ratio of the number of full months of the Participant’s Service during the Performance Period to the number of full months contained in the Performance Period.  
5.8    Forfeiture For Violations of Non-Compete and/or Non-Solicitation Agreements.  Notwithstanding anything in Sections 5.5, 5.6(b), or 5.7 to the contrary, if, 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 the Performance Share Vesting Date, then all of the Performance Shares 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 Performance Shares which have become Vested Performance Shares following the Participant’s termination of Service shall be forfeited by the Participant and any 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.  
5.9    Forfeiture of Unvested Performance Shares.  Except as otherwise provided by this Section 5 or Section 8, on the Performance Share Vesting Date, the Participant shall forfeit and the Company shall automatically reacquire all Performance Shares subject to the Award which have not become Vested Performance Shares.  The Participant shall not be entitled to any payment for such forfeited Performance Shares.
6.SETTLEMENT OF THE AWARD.
6.1    Issuance of Stock.  Subject to the provisions of Section 6.3 below, the Company shall issue to the Participant on the Settlement Date with respect to each Vested Performance Share one (1) share of Stock.  Shares issued in settlement of Performance Shares shall be subject to any restrictions as may be required pursuant to Section 6.3, Section 7, or the Trading Compliance Policy.
6.2    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 6.2, 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.

6.3    Restrictions on Grant of the Award and Issuance of Stock.  The grant of the Award and issuance 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 shares 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 or 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.
6.4    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 Performance Shares shall be rounded up to the nearest whole number.
7.TAX MATTERS.
7.1    In General.  At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the Canadian federal, United States federal, provincial, state, local and foreign tax (including any social insurance or social security contributions including Canada Pension Plan) withholding obligations of the Participating Company Group, if any, which arise in connection with the Award or the issuance of shares of Stock in settlement thereof (the aggregate of all such sums, as determined by the Company, referred to herein as the “Withholding Amount”).  The Company shall have no obligation to process the settlement of the Award or to deliver shares of Stock until the tax withholding obligations as described in this Section have been satisfied by the Participant.  Notwithstanding anything in this Agreement to the contrary, the Participant may satisfy such tax withholding obligations by paying to the Company, in cash, by check or in cash equivalent, an amount equal to the Withholding Amount, in which case the Participant shall be entitled to receive the number of shares of Stock issuable pursuant to Section 6.1.
7.2    Withholding in Shares.  Subject to applicable law in the event the Participant has not satisfied the tax withholding obligations described in Section 7.1 in accordance with Section 7.1, the tax withholding obligations shall be satisfied in the following manner:
(a)the Participant shall dispose of such portion of the Vested Performance Shares that represents rights to receive shares of Stock having a Fair Market Value equal to the minimum statutory Withholding Amount to the Company on the Settlement Date in consideration for cash in an amount equal to the minimum statutory 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 minimum statutory tax withholding obligations; and
(b)the portion of the Vested Performance Shares not disposed of in accordance with Section 7.2(a) shall be settled in accordance with Section 6.1.
8.CHANGE IN CONTROL.
8.1    Acceleration of Vesting Upon a Change in Control.  In the event of the consummation of a Change in Control prior to the Performance Share 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 8.1, an Award shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, for each Performance Share 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 Performance Share 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 Target Number of Performance Shares shall be accelerated in full and such Performance Shares shall be deemed Vested Performance Shares 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 Performance Share determined in accordance with this Section 8.1.  The vesting of Performance Shares and settlement of the Award that was permissible solely by reason of this Section 8.1 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 Target Number of Performance Shares subject to such Award 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 Performance Share (subject to any required tax withholding).  Such payment shall be made as soon as practicable following the Change in Control.
8.2    Termination After Change in Control.  Notwithstanding anything in this Agreement to the contrary, if the Participant’s Service ceases as a result of a Termination After Change in Control (as defined below), the Target Number of Performance Shares shall become Vested Performance Shares 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 with the Participating Company Group (or its successor) which (A) is for Cause; (B) is a result of the Participant’s death or disability; (C) is a result of the Participant’s voluntary termination of such relationship other than for Good Reason; or (D) 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 (or its successor) 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 bonus compensation, 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).
8.3    Federal Excise Tax Under Section 4999 of the Code.
(a)Excess Parachute Payment.  In the event that any acceleration of vesting the Performance Shares and any other payment or benefit received or to be received by the Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, the Participant may elect, in his or her sole discretion, to reduce the amount of any acceleration of vesting called for by this Agreement in order to avoid such characterization.
(b)Determination by Independent Accountants.  To aid the Participant in making any election called for under Section 8.2(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 8.2(a) (an “Event”), the Company shall request a determination in writing by independent public accountants selected by the Company (the “Accountants”).  Unless the Company and the Participant otherwise agree in writing, the Accountants shall determine and report to the Company and the Participant within twenty (20) days of the date of the Event the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the Accountants may reasonably charge in connection with their services contemplated by this Section 8.2(b).
9.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 Performance Shares 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 Performance Shares acquired pursuant to this Award will be immediately subject to the provisions of this Award on the same basis as all Performance Shares originally acquired hereunder.  Any fractional Performance Share or share of Stock 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.
10.RIGHTS AS A STOCKHOLDER OR EMPLOYEE.
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 9.  If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, or as otherwise provided by applicable law, the Participant’s employment is “at will” and is for no specified 

term.  Nothing in this Agreement shall confer upon the Participant any right to continue in Service or interfere in any way with any right of any Participating Company terminate the Participant’s Service at any time.
11.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.  
12.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:
12.1    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.
12.2    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.
12.3 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.
12.4    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.

13.MISCELLANEOUS PROVISIONS.
13.1    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.
13.2    Nontransferability of the Award.  Prior to the issuance of shares of Stock on the applicable Settlement Date, neither this Award nor any Performance Shares 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.
13.3    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.
13.4    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.
13.5    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 13.5(a) of this Agreement and consents to the electronic delivery of the Plan documents and Grant Notice, as described in Section 13.5(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 13.5(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 13.5(a).

13.6    Confidentiality.  The Participant shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information.  Any Confidential Information now or hereafter acquired by the Participant shall be deemed a valuable, special and unique asset of the Company that is received by the Participant in confidence and as a fiduciary, and the Participant shall remain a fiduciary to the Company with respect to all of such information.
13.7    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.
13.8    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.
13.9    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.

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.

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