Exhibit 10.7
AMENDED AND RESTATED
DECLARATION OF TRUST
Forfeitable Exchangeable Shares
July 26th, 2007

 

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TABLE OF CONTENTS

                  ARTICLE 1 DEFINITIONS     1  
 
  1.1   Definitions     1  
 
                ARTICLE 2 PURPOSE OF TRUST DECLARATION     4  
 
  2.1   Continuance of Trust     4  
 
                ARTICLE 3 PROVISIONS APPLICABLE TO FORFEITABLE SHARES     4  
 
  3.1   Forfeitable Shares     4  
 
  3.2   Trustee Agreements Related to Forfeitable Shares     4  
 
  3.3   Voting Rights     5  
 
  3.4   Forfeiture of Shares     5  
 
  3.5   Ceasing to be Forfeitable Shares     5  
 
                ARTICLE 4 CONCERNING THE TRUSTEE     5  
 
  4.1   Powers and Duties of the Trustee     5  
 
  4.2   Income Tax Returns and Reports     6  
 
  4.3   Action of Beneficial Holders     7  
 
  4.4   Reliance Upon Declarations     7  
 
  4.5   Trustee Not Required to Give Security     7  
 
  4.6   Conflicting Claims     7  
 
  4.7   Acceptance of Trust     8  
 
                ARTICLE 5 LIMITATION OF LIABILITY     8  
 
  5.1   Limitation of Liability     8  
 
                ARTICLE 6 CHANGE OF TRUSTEE     8  
 
  6.1   Resignation     8  
 
  6.2   Successor Trustee     9  
 
  6.3   Declaration of Trustee     9  
 
  6.4   Notice of Successor Trustee     9  
 
                ARTICLE 7 AMENDMENTS AND SUPPLEMENTAL TRUST DECLARATIONS     9  
 
  7.1   Amendments, Modifications, etc.     9  
 
  7.2   Ministerial Amendments     9  
 
  7.3   Meeting to Consider Amendments     10  
 
  7.4   Execution of Supplemental Trust Declarations     10  
 
                ARTICLE 8 TERMINATION     10  
 
  8.1   Term     10  
 
  8.2   Survival of Trust Declaration     11  
 
                ARTICLE 9 GENERAL     11  
 
  9.1   Notices     11  
 
  9.2   Interpretation     11  
 
  9.3   Severability     12  
 
  9.4   Counterparts     12  

 

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  9.5   Governing Law     12  
 
  9.6   Enforcement     12  
 
  9.7   No Waiver     12  
 
  9.8   Expenses     13  
 
  9.9   Further Assurances     13   APPENDIX A FORFEITABLE SHARE PROVISIONS    
   

 

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AMENDED AND RESTATED DECLARATION OF TRUST
Forfeitable Exchangeable Shares
THIS DECLARATION OF TRUST is made as of the 26th day of July, 2007, by Dennis
Wilson (the “Trustee”).
WHEREAS pursuant to a stock option plan (the “Option Plan”) of LIPO Investments
(Canada) Inc.(“LIPO Canada”) dated December 1, 2005, Dennis Wilson (the
“Trustee”) was appointed as trustee of the Plan to hold legal title to the
shares of LIPO Canada issued on the exercise of options granted under the Option
Plan;
AND WHEREAS pursuant to the provisions of the Option Plan certain options
granted under the Option Plan were issued and designated as “forfeitable shares”
and held in trust by the Trustee for the benefit of the holders thereof subject
to certain repurchase and other rights;
AND WHEREAS in connection with an arrangement agreement (the “Arrangement
Agreement”) dated as of April 26, 2007 among Lululemon Corp. (“Lululemon”),
Lululemon Callco ULC (“Callco”), Lulu Canadian Holding, Inc. (“Exchangeco”),
LIPO Investments (USA), Inc. and LIPO Canada, all shares of LIPO Canada,
including the “forfeitable shares” were exchanged with Exchangeco for
exchangeable shares (“Exchangeable Shares”) of Exchangeco, and none of the
Trustee nor the former holders of the options granted under the Option Plan are
now shareholders or option holders of LIPO Canada, so that it is impractical to
continue to record the terms of the trust in the Option Plan;
AND WHEREAS pursuant to the Arrangement Agreement, the Trustee has agreed to
enter into a declaration of trust substantially in the form of this Trust
Declaration, to amend and restate the trust which was created under the Option
Plan, to record the terms pursuant to which the Trustee will hold Exchangeable
Shares issued in respect of “forfeitable shares”;
NOW THEREFORE this Declaration records the terms on which the Trustee will hold
the Trust Estate (as defined below) in trust for the benefit of the Beneficial
Holders on the terms hereof:
ARTICLE 1
DEFINITIONS
1.1 Definitions
In this Trust Declaration, the following terms shall have the following
meanings:
“Arrangement” means the arrangement under part 9, division 5 of the BCA on the
terms and subject to the conditions set out in the Plan of Arrangement, subject
to any amendments or variations thereto made in accordance with Article 6 of the
Arrangement Agreement or Article 6 of the Plan of Arrangement or made at the
direction of the Court in the Final Order.
“BCA” means the Business Corporations Act (British Columbia), as amended.
“Beneficial Holders” has the meaning assigned in Section 3.1.

 

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“Board of Directors” means the board of directors of Exchangeco.
“Business Day” means any day on which commercial banks are generally open for
business in Vancouver, British Columbia and New York, New York, other than a
Saturday, a Sunday or a day observed as a holiday in Vancouver, British Columbia
under the laws of the Province of British Columbia or the federal laws of Canada
or in New York, New York under the laws of the State of New York or the federal
laws of the United States of America.
“Court” means the Supreme Court of British Columbia.
“Declaration of Trust” means this Declaration of Trust as it may be amended or
supplemented from time to time.
“Effective Date” means the date following the grant of the Final Order on which
the parties to the Arrangement Agreement agree the Arrangement becomes
effective.
“Effective Time” means the time on the Effective Date at which the Arrangement
becomes effective.
“Eligible Person” means any individual regularly employed on a full-time or
part-time basis by Lululemon or any company in which Lululemon is a direct or
indirect shareholder or with which Lululemon does not act at arm’s length or
other persons who perform management or consulting services for Lululemon or any
company in which Lululemon is a direct or indirect shareholder or with which
Lululemon does not act at arm’s length in any such case on an ongoing basis.
“Exchange Trust Agreement” means the Agreement made between Lululemon, Callco,
the Company and a third party trustee in connection with the Plan of
Arrangement, substantially in the form and content of Exhibit C annexed to the
Reorganization Agreement with such changes thereto as the parties to the
Arrangement Agreement, acting reasonably, may agree, a copy of which is
available at the registered office of the Company.
“Exchangeable Share Provisions” means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares, which rights, privileges,
restrictions and conditions shall be substantially as set out in Appendix 1 of
the Plan of Arrangement.
“Exchangeable Shares” means the non-voting exchangeable shares in the capital of
Exchangeco, having substantially the rights, privileges, restrictions and
conditions set out in the Exchangeable Share Provisions.
“Final Order” means the order of the Court approving the Plan of Arrangement as
such order may be amended at any time prior to the Effective Date or, if
appealed, then, unless such appeal is withdrawn or denied, as affirmed.
“Forfeitable Shares” means those Exchangeable Shares issued pursuant to the Plan
of Arrangement in exchange for LIPO Canada Shares which were designated as
“forfeitable shares” pursuant to the LIPO Option Plan, until such shares cease
to be forfeitable in accordance with the conditions set out in Appendix A.

 

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“Government Entity” means any federal, provincial, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
“Insolvency Event” means the institution by Exchangeco of any proceeding to be
adjudicated a bankrupt or insolvent or to be wound up, or the consent of
Exchangeco to the institution of bankruptcy, insolvency or winding-up
proceedings against it, or the filing of a petition, answer or consent seeking
dissolution or winding-up under any bankruptcy, insolvency or analogous laws,
including without limitation the Companies Creditors’ Arrangement Act (Canada)
and the Bankruptcy and Insolvency Act (Canada), and the failure by Exchangeco to
contest in good faith any such proceedings commenced in respect of Exchangeco
within 30 days of becoming aware thereof, or the consent by Exchangeco to the
filing of any such petition or to the appointment of a receiver, or the making
by Exchangeco of a general assignment for the benefit of creditors, or the
admission in writing by Exchangeco of its inability to pay its debts generally
as they become due, or Exchangeco not being permitted, pursuant to solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
Section 6.6 of the Exchangeable Share Provisions.
“Lock-Up Agreement” means the lock-up agreement entered into by each of the
Beneficial Holders pursuant to the terms of the Reorganization Agreement.
“Lululemon Common Stock” means the common stock of Lululemon, par value US$0.01
per share and any other securities into which such shares may be changed.
“person” means any individual, a general or limited partnership, a corporation,
a trust, a joint venture, an unincorporated organization, a limited liability
entity, any other entity and any Government Entity.
“Plan of Arrangement” means the plan of arrangement substantially in the form
and content of Exhibit B to the Arrangement Agreement and any amendments or
variations thereto made in accordance with Article 6 of the Arrangement
Agreement or Article 6 of the Plan of Arrangement or made at the direction of
the Court.
“Reorganization Agreement” means the Agreement and Plan of Reorganization dated
April 26, 2007 by and among Lululemon, Exchangeco, LIPO Canada, LIPO USA and
certain other parties;
“Subsidiary” of any person means any corporation or other organization whether
incorporated or unincorporated of which at least a majority of the securities or
interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled (i) by such person, (ii) by any one or more of its
subsidiaries, or (iii) by such person and one or more of its subsidiaries;
provided, however, that no person that is not directly or indirectly
wholly-owned by any other person shall be a subsidiary of such other person
unless such other person controls, or has the right, power or ability to
control, that person.
“Trust” means the trust created by this Trust Declaration.
“Trust Estate” means the Forfeitable Shares, any other securities and any money
or other property which may be held by the Trustee from time to time pursuant to
this Trust Declaration.

 

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“Trustee” means Dennis Wilson and, subject to the provisions of Article 6,
includes any successor trustee.
ARTICLE 2
PURPOSE OF TRUST DECLARATION
2.1 Continuance of Trust
Effective as at the time of the amendment of the Option Plan pursuant to the
Plan of Arrangement, the trust established by the Option Plan is hereby
continued for the benefit of the Beneficial Holders from time to time, and the
Trustee agrees to hold the Forfeitable Shares and the Trust Estate as trustee
for the Beneficial Holders on the terms set out in this Trust Declaration.
ARTICLE 3
PROVISIONS APPLICABLE TO FORFEITABLE SHARES
3.1 Forfeitable Shares
Upon completion of the Plan of Arrangement, the Forfeitable Shares shall be
issued to and registered in the name of the Trustee, to be held in trust for the
respective beneficial holders (the “Beneficial Holders”) thereof pursuant to the
terms of this Article 3. Shares which are designated as Forfeitable Shares will
be entitled to become non-forfeitable in accordance with the conditions set out
in Appendix A.
3.2 Trustee Agreements Related to Forfeitable Shares
The Trustee acknowledges and agrees that, other than as set forth in this Trust
Declaration:

  (a)   the Trustee will hold legal title to the Forfeitable Shares as nominee,
agent and trustee for the benefit and account of the respective Beneficial
Holders thereof as principal and beneficial owner subject to and in accordance
with this Article 3 and subject to the terms and conditions of any transfer,
deed, shareholder agreement or other instrument, document or encumbrance
pertaining to the Forfeitable Shares;     (b)   subject to forfeiture pursuant
to Section 3.4, any benefit, interest, profit or advantage arising out of or
accruing from such Forfeitable Shares is and will continue to be a benefit,
interest, profit or advantage of the Beneficial Holder and if received by the
Trustee will be received and held by the Trustee for the use, benefit and
advantage of the Beneficial Holder and the Trustee will account to the
Beneficial Holder for any money or other consideration paid to or to the order
of the Trustee in connection with the Trust Estate;     (c)   the Trustee may at
his discretion, whether on his own initiative or upon the direction of such
Beneficial Holder, act as the agent of the Beneficial Holder, as principal, in
respect of any matter relating to such Forfeitable Shares or the performance or
observance of any contract or Agreement relating to the Forfeitable Shares; and

 

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  (d)   the Trustee will have the full right and power to execute and deliver,
under seal and otherwise, any shareholder agreement or other instrument or
document pertaining to the Forfeitable Shares without delivering proof to any
person (including, without limitation, any other party to any such instrument or
document) of its authority to do so and any person may act in reliance on any
such instrument or document and for all purposes any such instrument or document
will be binding on the Beneficial Holder.

3.3 Voting Rights
Notwithstanding anything to the contrary contained herein, the Trustee shall
have sole power in his absolute discretion to exercise the voting rights with
respect to all Forfeitable Shares outstanding, from time to time, for his own
benefit, until such shares cease to be Forfeitable Shares.
3.4 Forfeiture of Shares

  (a)   Upon the date on which a holder of Forfeitable Shares ceases to be an
Eligible Person then the Trustee shall repurchase all Forfeitable Shares which
it holds on behalf of such holder including any benefit, interest, profit or
advantage which may have arisen or may in the future arise out of or accrue from
such Forfeitable Shares, for cash in an amount equal to the price paid for the
shares of LIPO Canada upon issuance thereof which were exchanged for such
Forfeitable Shares pursuant to the Plan of Arrangement.     (b)   Immediately
following the payment of the purchase price referred to in Section 3.4(a) the
Trustee shall distribute such funds to the Beneficial Holder and the Trustee
shall be the sole registered and beneficial owner of such Forfeitable Shares and
all such benefits, interest, profit or advantage.

3.5 Ceasing to be Forfeitable Shares
Upon the later of (a) an Exchangeable Share ceasing to be a Forfeitable Share
and (b) the expiry of the Lock-Up Agreement to which the Beneficial Holder is a
party, the provisions of this Article 3 shall cease to apply to such Share and
legal title will pass to the Beneficial Holder thereof who shall thenceforth be
the sole legal and beneficial owner thereof. Promptly thereafter the Trustee
shall direct Exchangeco’s transfer agent to reregister such share in the name of
such Beneficial Holder, direct Exchangeco to deliver or cause to be delivered
such re-registered share certificate to the Beneficial Holder promptly after
receipt thereof from the transfer agent and pay over to the Beneficial Holder
all benefits, interest, profit or advantage which have been received by the
Trustee in respect of such Forfeitable Shares.
ARTICLE 4
CONCERNING THE TRUSTEE
4.1 Powers and Duties of the Trustee
In addition to the rights set out in Article 3, but subject to his duties and
obligations hereunder, the Trustee will have in his capacity as Trustee of the
Trust, the unfettered discretion at any time and from time to time to administer
the Trust Estate in whatever manner the Trustee may determine, as if

 

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he were the sole owner of the Trust Estate, including, without limitation, the
power, duty and authority to:

  (a)   hold title to the Trust Estate;     (b)   invest any moneys forming,
from time to time, a part of the Trust Estate as provided in this Trust
Declaration;     (c)   accelerate the vesting provisions attached to some or all
of the Forfeitable Shares;     (d)   consent to the transfer of a beneficial
interest in the Forfeitable Shares to an Eligible Person;     (e)   exchange the
Forfeitable Shares or any part of the Trust Estate for other property; and    
(f)   take such other actions and doing such other things as are specifically
provided in this Trust Declaration.

In the exercise of such rights, powers, duties and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers, duties and
authority not in conflict with any of the provisions of this Trust Declaration
as the Trustee, acting in good faith and in the reasonable exercise of its
discretion, may deem necessary, appropriate or desirable to effect the purpose
of the Trust. Any exercise of such discretionary rights, powers, duties and
authorities by the Trustee shall be final, conclusive and binding upon all
persons.
The Trustee in exercising its rights, powers, duties and authorities hereunder
shall act honestly and in good faith and with a view to the best interests of
the Beneficial Holders and shall exercise the care, diligence and skill that a
reasonable person would exercise in comparable circumstances.
The Trustee shall not be bound to give notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and until he
shall be specifically required to do so under the terms hereof; nor shall the
Trustee be required to take any notice of, or to do, or to take any act, action
or proceeding as a result of any default or breach of any provision hereunder,
unless and until notified in writing of such default or breach, which notices
shall distinctly specify the default or breach desired to be brought to the
attention of the Trustee, and in the absence of such notice the Trustee may for
all purposes of this Trust Declaration conclusively assume that no default or
breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained
herein.
4.2 Income Tax Returns and Reports
The Trustee shall, to the extent necessary, prepare and file on behalf of the
Trust appropriate United States and Canadian income tax returns and any other
returns or reports as may be required by applicable law or pursuant to the rules
and regulations of any securities exchange or other trading system through which
the Exchangeable Shares are traded. In connection therewith, the Trustee may
obtain the advice and assistance of such experts or advisors as the Trustee
considers necessary or advisable (who may be experts or advisors to Lululemon or
Exchangeco).

 

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4.3 Action of Beneficial Holders
No Beneficial Holder shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this Trust Declaration
for the purpose of enforcing any of its rights or for the execution of any trust
or power hereunder unless the Beneficial Holder has requested the Trustee to
take or institute such action, suit or proceeding and the Trustee shall have
failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Beneficial Holder shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken; it being
understood and intended that no one or more Beneficial Holders shall have any
right in any manner whatsoever to affect, disturb or prejudice the rights hereby
created by any such action, or to enforce any right hereunder, except subject to
the conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Beneficial Holders.
4.4 Reliance Upon Declarations
The Trustee shall not be considered to be in contravention of any of his rights,
powers, duties and authorities hereunder if, when required, it acts and relies
in good faith upon statutory declarations, certificates, opinions or reports
furnished pursuant to the provisions hereof or required by the Trustee to be
furnished to it in the exercise of its rights, powers, duties and authorities
hereunder if such statutory declarations, certificates, opinions or reports
comply with the provisions of this Trust Declaration.
4.5 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in respect of the
execution of the trusts, rights, duties, powers and authorities of this Trust
Declaration.
4.6 Conflicting Claims
If conflicting claims or demands are made or asserted with respect to any
interest of any Beneficial Holder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficial Holder in any
Exchangeable Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claims or demands.
In so refusing, the Trustee may elect not to exercise any rights hereunder
subject to such conflicting claims or demands and, in so doing, the Trustee
shall not be or become liable to any person on account of such election or its
failure or refusal to comply with any such conflicting claims or demands. The
Trustee shall be entitled to continue to refrain from acting and to refuse to
act until:

  (a)   the rights of all adverse claimants with respect to the rights subject
to such conflicting claims or demands have been adjudicated by a final judgment
of a court of competent jurisdiction; or     (b)   all differences with respect
to the other rights subject to such conflicting claims or demands have been
conclusively settled by a valid written agreement binding on all

 

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      such adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement certified to be in full force and effect.

If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate to fully indemnify it as between all conflicting claims
or demands.
4.7 Acceptance of Trust
The Trustee hereby accepts the Trust created and provided for by and in this
Trust Declaration and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Beneficial Holders, subject to all the terms and conditions herein set forth.
ARTICLE 5
LIMITATION OF LIABILITY
5.1 Limitation of Liability
The Trustee shall not be held liable for any loss or damage relating to any
matter regarding the Trust or the performance of its duties and obligations
hereunder, including, without limitation, any loss which may occur by reason of
depreciation of the value of any part of the Trust Estate or any loss incurred
on any investment of funds pursuant to this Trust Declaration, except to the
extent that such loss is attributable to the fraud, gross negligence,
recklessness, wilful misconduct or bad faith on the part of the Trustee.
The Trustee will not be liable to the Trust or to any Beneficial Holder for the
acts, omissions, receipts, neglects or defaults of any person, firm or
corporation employed or engaged by it as permitted hereunder, or for joining in
any receipt or act of conformity, or for any loss, damage or expense caused to
the Trust through the insufficiency or deficiency of any security in or upon
which any of the monies of or belonging to the Trust shall be laid out or
invested, or for any loss or damage arising from the bankruptcy, insolvency or
tortious act of any person, firm or corporation with whom or which the Trust
Estate or any part of it shall be lodged or deposited, or for any loss
occasioned by error in judgment or oversight on the part of the Trustee, or for
any other loss, damage or misfortune which may happen in the execution by the
Trustee of his duties hereunder, except to the extent that the Trustee does not
meet the standard of care set out in Section 4.1 and except as set out in this
Article 5.
ARTICLE 6
CHANGE OF TRUSTEE
6.1 Resignation
The Trustee, or any Trustee hereafter appointed, may at any time resign by
appointing a successor trustee provided that such resignation shall not take
effect until the date of the appointment of a successor trustee and the
acceptance of such appointment by the successor trustee.

 

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6.2 Successor Trustee
Any successor trustee appointed as provided under this Trust Declaration shall
execute an instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor under this
Trust Declaration, with the like effect as if originally named as trustee in
this Trust Declaration.
6.3 Declaration of Trustee
If the Trustee dies during the term of this Trust before he has resigned and
appointed a successor trustee, the persons who are the executors and trustees of
the last will and testament of the Trustee will have the right to appoint a
successor trustee of the Trust.
6.4 Notice of Successor Trustee
Upon acceptance of appointment by a successor trustee as provided herein, the
successor trustee shall cause to be mailed notice of the succession of such
trustee hereunder to each Beneficial Holder.
ARTICLE 7
AMENDMENTS AND SUPPLEMENTAL TRUST DECLARATIONS
7.1 Amendments, Modifications, etc.
This Trust Declaration may not be amended or modified except by an Agreement in
writing executed by the Trustee and approved by the Beneficial Holders in
accordance with Section 10.2 of the Exchangeable Share Provisions.
7.2 Ministerial Amendments
Notwithstanding the provisions of Section 7.1, the Trustee may in writing, at
any time and from time to time, without the approval of the Beneficial Holders,
amend or modify this Trust Declaration for the purposes of:

  (a)   adding to the covenants of any or all parties hereto for the protection
of the Beneficial Holders hereunder if the Trustee is of the good faith opinion
that such additions will not be prejudicial to the rights or interests of the
Beneficial Holders;     (b)   making such amendments or modifications not
inconsistent with this Trust Declaration as may be necessary or desirable with
respect to matters or questions which, in the good faith opinion of the Trustee,
having in mind the best interests of the Beneficial Holders it may be expedient
to make, provided that the Trustee, acting on the advice of counsel, is of the
opinion that such amendments and modifications will not be prejudicial to the
interests of the Beneficial Holders; or     (c)   making such changes or
corrections which, on the advice of counsel to the Trustee, are required for the
purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided that

 

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      the Trustee, acting on the advice of counsel is of the opinion that such
changes or corrections will not be prejudicial to the rights and interests of
the Beneficial Holders.

7.3 Meeting to Consider Amendments
The Trustee will request Exchangeco to call a meeting or meetings of the
Beneficial Holders for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the articles of Exchangeco, the
Exchangeable Share Provisions and all applicable laws.
7.4 Execution of Supplemental Trust Declarations
No amendment to or modification or waiver of any of the provisions of this Trust
Declaration otherwise permitted hereunder shall be effective unless made in
writing and signed by the Trustee. From time to time, the Trustee may, subject
to the provisions of this Trust Declaration, execute and deliver, trust
agreements or other instruments supplemental hereto, which thereafter shall form
part hereof, for any one or more of the following purposes:

  (a)   making any additions to, deletions from or alterations of the provisions
of this Trust Declaration, which, in the opinion of the Trustee, will not be
prejudicial to the interests of the Beneficial Holders or are, in the opinion of
counsel to the Trustee, necessary or advisable in order to incorporate, reflect
or comply with any legislation the provisions of which apply to Lululemon,
Exchangeco, the Trustee or this Trust Declaration; and     (b)   for any other
purposes not inconsistent with the provisions of this Trust Declaration,
including without limitation, to make or evidence any amendment or modification
to this Trust Declaration as contemplated hereby, provided that, in the opinion
of the Trustee, the rights of the Trustee and Beneficial Holders will not be
prejudiced thereby.

ARTICLE 8
TERMINATION
8.1 Term
The Trust created by this Trust Declaration shall continue until the earliest to
occur of the following events:

  (a)   no outstanding Forfeitable Shares are held by the Trustee;     (b)   the
Trustee elects in writing to terminate the Trust and such termination is
approved by the Beneficial Holders in accordance with section 10.2 of the
Exchangeable Share Provisions; and

 

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  (c)   21 years after the death of the last survivor of the descendants of His
Majesty King George VI of Canada and the United Kingdom of Great Britain and
Northern Ireland living on the date of the creation of the Trust.

8.2 Survival of Trust Declaration
This Trust Declaration shall survive any termination of the Trust and shall
continue until there are no Forfeitable Shares outstanding held by the Trustee;
provided, however, that the provisions of Article 5 shall survive any such
termination of this Trust Declaration.
ARTICLE 9
GENERAL
9.1 Notices
All notices, requests, claims, demands, waivers and other communications under
this Trust Declaration shall be in writing and shall be deemed given (a) five
Business Days following sending by registered or certified mail, postage
prepaid, (b) when sent, if sent by facsimile, provided that the facsimile
transmission is promptly confirmed by telephone, (c) when delivered, if
delivered personally to the intended recipient and (d) one Business Day
following sending by overnight delivery via a courier service that is nationally
recognized in the U.S. and Canada and, in each case, addressed to a party at the
following address for such party.
If to the Trustee, to:

    Dennis Wilson
#2 2108 West 4th Avenue
Vancouver, BC V6K 1N6

If to the Beneficial Holders to the last address in the central securities
register for Exchangeco. or to such other address(es) as shall be furnished in
writing by any such party to the other party hereto in accordance with the
provisions of this Section 9.1.
9.2 Interpretation
When a reference is made in this Trust Declaration to an Article or a section,
such reference shall be to an Article or a section of this Trust Declaration
unless otherwise indicated. The table of contents and headings contained in this
Trust Declaration are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Trust Declaration. Whenever the words
‘include’, ‘includes’ or ‘including’ are used in this Trust Declaration, they
shall be deemed to be followed by the words ‘without limitation’. The terms
‘this Trust Declaration’, ‘hereof’, ‘herein’ and ‘hereunder’ and similar
expressions refer to this Trust Declaration and not to any particular Article,
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto. Words importing the singular number only
shall include the plural and vice versa. Words importing any gender shall
include all genders. If any date on which any action is required to be taken
under this Trust Declaration is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.

 

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9.3 Severability
If any term or other provision of this Trust Declaration is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Trust Declaration shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Trust Declaration so as to effect the
original intent of the parties as closely as possible to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
9.4 Counterparts
This Trust Declaration may be executed in one or more counterparts, all of which
shall be considered one and the same Trust Declaration and shall become
effective when one or more counterparts have been signed by each of the parties
hereto and delivered to the other parties.
9.5 Governing Law
This Trust Declaration shall be governed by, and construed in accordance with,
the laws of the Province of British Columbia and the laws of Canada applicable
therein, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
9.6 Enforcement
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Trust Declaration were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of any provision of this Trust Declaration and to enforce
specifically the terms and provisions of this Trust Declaration in any court of
competent jurisdiction in the Province of British Columbia, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of competent jurisdiction in the Province of
British Columbia, in the event any dispute arises out of this Trust Declaration,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, (c) agrees that it
will not bring any action relating to this Trust Declaration in any court other
than any court of competent jurisdiction in the Province of British Columbia,
and (d) waives any right to trial by jury with respect to any action related to
or arising out of this Trust Declaration.
9.7 No Waiver
No provisions of this Trust Declaration shall be deemed waived by any party,
unless such waiver is in writing and signed by the authorized representatives of
the person against whom it is sought to enforce such waiver.

 

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9.8 Expenses
Except as expressly set forth in this Trust Declaration, all costs and expenses
and third party fees, paid or incurred in connection with this Trust Declaration
shall be paid in accordance with section 7.6 of the Arrangement Agreement.
9.9 Further Assurances
From time to time, as and when requested by any party, each party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Trust Declaration.
IN WITNESS WHEREOF the Trustee has caused this Trust Declaration to be duly
executed under seal as of the date first above written.

         
By :
  /s/ Dennis Wilson
 
DENNIS WILSON, in his capacity as trustee    

 

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APPENDIX A
RELEASE CONDITIONS ATTACHED TO FORFEITABLE SHARES
The number of Exchangeable Shares which cease to be forfeitable on the dates set
out below shall be determined by multiplying the appropriate number in the chart
below by the Exchange Ratio (as defined in the Plan of Arrangement).

                                  Beneficial Holder   December 5, 2007  
December 5, 2008   December 5, 2009   Total
Darrell Kopke
    238,312       111,122       27,662       377,096  
Deanne Schweitzer
    158,875       74,082       18,439       251,396  
Christopher Ng
    48,525       48,525       27,661       124,711  
Shannon Wilson
    105,917       49,388       12,292       167,597  
Delaney Schweitzer
    59,702       43,214       10,756       113,672  
Julianne Lee
    52,084       52,084       13,829       117,997  
Bree Stanlake
    45,128       45,128       13,832       104,088  
Karen Wyder
    73,513       61,735       15,364       150,612  
Brian Bacon
    76,346       76,346       27,661       180,353  
Chloe Gow-Jarret
    50,147       33,954       8,452       92,553  
Cassandra Sze
    30,695       27,781       6,916       65,392  
Erin Westelman
    22,546       22,546       9,989       55,081  
David Andru
    10,372       10,372       10,373       31,117  
Jenna Hills
    35,730       27,781       6,914       70,425  
Laura Rowse
    20,219       20,219       11,525       51,963  
Lisa Fuhrman
    27,578       27,578       8,453       63,609  
Kerry Brown
    17,692       17,692       14,137       49,521  
Jeremy Wong
    27,049       24,694       6,147       57,890  
Bonnie Fung
    7,171       7,171       7,172       21,514  
Erica Larsen
    935       935       935       2,805  
Andrea Murray
    51,458       43,214       10,757       105,429  
Jeramiah Morris
    24,303       24,303       6,915       55,521  
Diana Mulvey
    11,525       11,525       11,525       34,575  
TOTAL
    1,195,822       861,389       287,706       2,344,917