exv10w1



 




Exhibit 10.1









LULULEMON ATHLETICA INC.








2007 EQUITY INCENTIVE PLAN








          SECTION 1. Purpose; Definitions. The purposes of the lululemon athletica inc. 2007 Equity
Incentive Plan (the “Plan”) are to enable Lululemon Corp. (the “Company”) and
its Affiliates (as defined herein) to recruit and retain highly qualified personnel, to provide
those personnel with an incentive for productivity and to provide those personnel with an
opportunity to share in the growth and value of the Company.







          For purposes of the Plan, the following initially capitalized words and phrases will be
defined as set forth below, unless the context clearly requires a different meaning:



          (a) “Affiliate” means any Person that is a subsidiary of the Company, or directly or
indirectly controls, or is controlled by, or is under common control with, the Company (or their
successors).



          (b) “Award” means a grant of Options, SARs, Restricted Stock, or Restricted Stock
Units pursuant to the provisions of the Plan.



          (c) “Award Agreement” means, with respect to any particular Award, the written
document that sets forth the terms of that particular Award.



          (d) “Board” means the Board of Directors of the Company, as constituted from time to
time; provided, however, that if the Board appoints a Committee to perform some or all of the
Board’s administrative functions hereunder pursuant to Section 2, references in the Plan to
the “Board” will be deemed to also refer to that Committee in connection with matters to be
performed by that Committee.



          (e) “Cause” means (i) conviction of, or the entry of a plea of guilty or no contest
to, a felony or any other crime that causes the Company or its Affiliates public disgrace or
disrepute, or adversely affects the Company’s or its Affiliates’ operations or financial
performance or the relationship the Company has with its Affiliates, (ii) gross negligence or
willful misconduct with respect to the Company or any of its Affiliates, including, without
limitation fraud, embezzlement, theft or proven dishonesty in the course of his employment; (iii)
refusal, failure or inability to perform any material obligation or fulfill any duty (other than
any duty or obligation of the type described in clause (v) below) to the Company or any of its
Affiliates (other than due to a Disability), which failure, refusal or inability is not cured
within 10 days after delivery of notice thereof; (iv) material breach of any agreement with or duty
owed to the Company or any of its Affiliates; (v) any breach of any obligation or duty to the
Company or any of its Affiliates (whether arising by statute, common law, contract or otherwise)
relating to confidentiality, noncompetition, nonsolicitation or proprietary rights; or (vi) any
other conduct that constitutes “cause” at common law. Notwithstanding the foregoing, if a
Participant and the Company (or any of its Affiliates) have entered into an employment agreement,
consulting agreement or other similar agreement that specifically defines “cause,” then with
respect to such Participant, “Cause” shall have the meaning defined in that employment agreement,
consulting agreement or other agreement.



 









 





          (f) “Change in Control” means, the occurrence of any of the following, in one
transaction or a series of related transactions: (i) any person (as such term is used in Section
13(d) and 14(d) of the Exchange Act) becoming a “beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of
the voting power of the Company’s then outstanding capital stock; (ii) a consolidation, share
exchange, reorganization or merger of the Company resulting in the stockholders of the Company
immediately prior to such event not owning at least a majority of the voting power of the resulting
entity’s securities outstanding immediately following such event; (iii) the sale or other
disposition of all or substantially all the assets of the Company (other than a transfer of
financial assets made in the ordinary course of business for the purpose of securitization); (iv) a
liquidation or dissolution of the Company; or (v) any similar event deemed by the Board to
constitute a Change in Control for purposes of the Plan.



          For the avoidance of doubt, a transaction or a series of related transactions will not constitute a
Change in Control if such transaction(s) result(s) in the Company, any successor to the Company, or
any successor to the Company’s business, being controlled, directly or indirectly, by the same
Person or Persons who controlled the Company, directly or indirectly, immediately before such
transaction(s).



          (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.



          (h) “Committee” means a committee appointed by the Board in accordance with
Section 2 of the Plan.



          (i) “Consultant” means a Person, other than an employee or Director of the Company or
an Affiliate, that (i) is engaged to provide services to the Company or an Affiliate other than
services provided in relation to a distribution of securities; (ii) provides services under a
written contract with the Company or an Affiliate; and (iii) spends or will spend a significant
amount of time and attention to the affairs and business of the Company or an Affiliate.



          (j) “Designated Participant” means a Participant not subject to Canadian federal
personal income tax.



          (k) “Director” means a member of the Board or of the board of directors of an
Affiliate.



          (l) “Disability” means a condition rendering a Participant Disabled.



          (m) “Disabled” means a total and permanent disability, as defined in Section 22(e)(3)
of the Code.



          (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          (o) “Fair Market Value” means, as of any date: (i) if the Shares are not then publicly
traded, the value of such Shares on that date, as determined by the Board in its sole and absolute
discretion; or (ii) if the Shares are publicly traded, the volume weighted average trading price of
the Shares for the five trading days immediately preceding such date on the TSX or the



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principal national securities exchange on which the majority of the trading in the Shares
occurs or, if the Shares are not listed or admitted to trading on the TSX or any national
securities exchange, but are traded in the over-the-counter market, the closing sale price of a
Share on that date or, if no sale is publicly reported, the average of the closing bid and asked
prices on that date, as furnished by two members of the National Association of Securities Dealers,
Inc. who make a market in the common stock selected from time to time by the Company for that
purpose.



          (p) “Incentive Stock Option” means any Option intended to be and designated as an
“Incentive Stock Option” within the meaning of Section 422 of the Code.



          (q) “Insider” means an insider as defined in the Securities Act (British Columbia),
other than a Person who would be deemed an “insider” only virtue of being a director or senior
officer of a Subsidiary.



          (r) “Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor
definition adopted by the Securities and Exchange Commission; provided, however, that the Board or
the Committee may, to the extent that it deems necessary to comply with Section 162(m) of the Code
or regulations thereunder, require that each “Non-Employee Director” also be an “outside director”
as that term is defined in regulations under 

Section 162(m).



          (s) “Non-Qualified Stock Option” means any Option that is not an Incentive Stock
Option.



          (t) “Option” means any option to purchase Shares (including Restricted Stock, if the
Board so specifies in the applicable Award Agreement) granted pursuant to Section 5 hereof.



          (u) “Parent” means, in respect of the Company, a “parent corporation” as defined in
Section 424(e) of the Code.



          (v) “Participant” means an employee, Director or Consultant of the Company or any of
its Affiliates to whom an Award is granted.



          (w) “Person” means an individual, partnership, corporation, limited liability company,
trust, joint venture, unincorporated association, or other entity or association.



          (x) “Restricted Stock” means Shares that are subject to restrictions pursuant to
Section 8 hereof.



          (y) “Restricted Stock Unit” means a right granted under and subject to restrictions
pursuant to Section 8 hereof.



          (z) “SAR” means a stock appreciation right granted under the Plan and described in
Section 6 hereof.



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          (aa) “Shares” means shares of the Company’s common stock, par value $0.001, subject to
substitution or adjustment as provided in Section 3 hereof



          (bb) “Subsidiary” means, in respect of the Company, a subsidiary company, whether now
or hereafter existing, as defined in Sections 424(f) and (g) of the Code.



          (cc) “Tax Act” means the Income Tax Act (Canada), as amended from time to time, and
any successor thereto.



          (dd) “TSX” means the Toronto Stock Exchange.



          SECTION 2. Administration. The Plan will be administered by the Board; provided,
however, that the Board may at any time appoint a Committee to perform some or all of the Board’s
administrative functions hereunder; and provided further, that the authority of any Committee
appointed pursuant to this Section 2 will be subject to such terms and conditions as the
Board may prescribe and will be coextensive with, and not in lieu of, the authority of the Board
hereunder.



          Subject to the requirements of the Company’s by-laws, certificate of incorporation, and any
other agreement that governs the appointment of Board committees, any Committee established under
this Section 2 will be composed of not fewer than two members, each of whom will serve for
such period of time as the Board determines; provided, however, that if the Company has a class of
securities required to be registered under Section 12 of the Exchange Act, all members of any
Committee established pursuant to this Section 2 will be Non-Employee Directors. From time
to time the Board may increase the size of the Committee and appoint additional members thereto,
remove members (with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter directly administer
the Plan.



          Directors who are eligible for Awards or have received Awards may vote on any matters
affecting the administration of the Plan or the grant of Awards, except that no such member will
act upon the grant of an Award to himself or herself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which action is taken with
respect to the grant of Awards to himself or herself.



          The Board will have full authority to grant Awards under this Plan. In particular, subject to
the terms of the Plan, the Board will have the authority:



          (a) to select the persons to whom Awards may from time to time be granted hereunder
(consistent with the eligibility conditions set forth in Section 4);



          (b) to determine the type of Award to be granted to any person hereunder;



          (c) to determine the number of Shares, if any, to be covered by each Award; and



          (d) to establish the terms and conditions of each Award Agreement.



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          The Board will have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it, from time to time, deems advisable; to establish
the terms of each Award Agreement; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any Award Agreement); and to otherwise supervise the administration of
the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent
of the Plan.



          All decisions made by the Board pursuant to the provisions of the Plan will be final and
binding on all persons, including the Company and Participants. No Director will be liable for any
good faith determination, act or omission in connection with the Plan or any Award.



          SECTION 3. Shares Subject to the Plan.







          (a) Shares Subject to the Plan. The Shares to be subject to or related to Awards
under the Plan will be authorized and unissued Shares of the Company. The maximum number of Shares
that may be subject to Options, SARs, Restricted Stock or Restricted
Stock Units under the Plan is 10,000,000. The Company will reserve for the purposes of the Plan, out of its authorized and
unissued Shares, such number of Shares. Notwithstanding the foregoing, no Participant may be
granted Options or SARs with respect to more than 400,000 Shares in any calendar year or 5% of the
Shares outstanding at the time such Shares are reserved for issuance.


In addition, (i) the maximum number of shares that may be issued to Insiders pursuant to awards
under the Plan and any other stock-based compensation arrangement adopted by the Company is 10% of
the Shares outstanding; (ii) the maximum number of Shares that may be issued to Insiders under the
Plan and any other stock-based compensation arrangement adopted by the Company within a one-year
period is 10% of the Shares outstanding; and (iii) the maximum number of shares that may be issued
to any one Insider (and such Insider’s associates and Affiliates) under the Plan and any other
stock-based compensation arrangement adopted by the Company within a one-year period is 5% of the
number of Shares outstanding.








For purposes of clauses (i), (ii) and (iii) above, any entitlement to acquire Shares granted
pursuant to this Plan or any other stock-based compensation arrangement adopted by the Company
prior to the Participant becoming an Insider is to be excluded, and the number of Shares
outstanding is to be determined at the time of the Share issuance in question.




          (b) Effect of the Expiration or Termination of Awards. If and to the extent that an
Option or SAR expires, terminates or is canceled or forfeited for any reason without having been
exercised in full, the Shares associated with that Option or SAR will again become available for
grant under the Plan. Similarly, if and to the extent an Award of Restricted Stock or Restricted
Stock Units is canceled or forfeited for any reason, the Shares subject to that Award will again
become available for grant under the Plan. In addition, if and to the extent an Award is settled
for cash, the Shares subject thereto will again become available for grant under the Plan.



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          (c) Other Adjustment. In the event of any recapitalization, reorganization, merger,
stock split or combination, stock dividend or other similar event or transaction (including,
without limitation, any “corporate transaction,” within the meaning of Treasury Regulation §
1.424-1(a)(3)), substitutions or adjustments will be made by the Board: (i) to the aggregate
number, class and/or issuer of the securities reserved for issuance under the Plan; (ii) to the
number, class and/or issuer of securities subject to outstanding Awards; and (iii) to the exercise
price of outstanding Options or SARs, in each case in a manner that reflects equitably the effects
of such event or transaction. For avoidance of doubt, a substitution or adjustment that reflects
equitably the effects of a given event or transaction will include (but will not be limited to) any
substitution or adjustment consistent with the requirements of Treasury Regulation § 1.424-1(a) or
any successor provision.



          (d) Change in Control. Notwithstanding anything to the contrary set forth in the
Plan, upon or in anticipation of any Change in Control of the Company or any of its Affiliates, the
Board may, in its sole and absolute discretion and without the need for the consent of any
Participant, take one or more of the following actions contingent upon the occurrence of that
Change in Control:




          (i) cause any or all outstanding Options or SARs to become vested and immediately
exercisable, in whole or in part;




          (ii) cause any or all outstanding Restricted Stock or Restricted Stock Units to become
non-forfeitable, in whole or in part;




          (iii) cause any outstanding Option to become fully vested and immediately exercisable
for a reasonable period in advance of the Change in Control and, to the extent not exercised
prior to that Change in Control, cancel that Option upon closing of the Change in Control;




          (iv) cancel any Option or SAR in exchange for a substitute award in a manner consistent
with the principles of Treas. Reg. §1.424-1(a) or any successor rule or regulation
(notwithstanding the fact that the original Award may never have been intended to satisfy
the requirements for treatment as an Incentive Stock Option);




          (v) cancel any Restricted Stock or Restricted Stock Units in exchange for restricted
stock or restricted stock units with respect to the capital stock of any successor
corporation or its parent;




          (vi) redeem any Restricted Stock or Restricted Stock Unit for cash and/or other
substitute consideration with a value equal to the Fair Market Value of an unrestricted
Share on the date of the Change in Control;




          (vii) cancel any SAR in exchange for cash and/or other substitute consideration with a
value equal to: (A) the number of Shares subject to that SAR, multiplied by (B) the
difference, if any, between the Fair Market Value per Share on the date of the Change in
Control and the exercise price of that SAR; provided, that if the Fair Market Value per
Share on the date of the Change in Control does not exceed the



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exercise price of any such SAR, the Board may cancel that SAR without any payment of
consideration therefore; and/or




          (viii) with respect to any Option held by a Designated Participant, cancel that Option
in exchange for cash and/or other substitute consideration with a value equal to: (A) the
number of Shares subject to that Option, multiplied by (B) the difference, if any, between
the Fair Market Value per Share on the date of the Change in Control and the exercise price
of that Option; provided, that if the Fair Market Value per Share on the date of the Change
in Control does not exceed the exercise price of any such Option, the Board may cancel that
Option without any payment of consideration therefor.


In the discretion of the Board, any cash or substitute consideration payable upon cancellation of
an Award may be subjected to (i) vesting terms substantially identical to those that applied to the
cancelled Award immediately prior to the Change in Control, or (ii) earn-out, escrow, holdback or
similar arrangements, to the extent such arrangements are applicable to any consideration paid to
stockholders in connection with the Change in Control.




          SECTION 4. Eligibility. Employees, Directors and Consultants are eligible to be
granted Awards under the Plan; provided, however, that only employees of the Company, its Parent or
a Subsidiary are eligible to be granted Incentive Stock Options.



          SECTION 5. Options. Options granted under the Plan may be Incentive Stock Options or
Non-Qualified Stock Options. Any Option granted under the Plan will be in such form as the Board
may at the time of such grant approve. Without limiting the generality of Section 3(a),
any or all of the Shares reserved for issuance under Section 3(a) may be issued in respect
of Incentive Stock Options.



          The Award Agreement evidencing any Option will incorporate the following terms and conditions
and will contain such additional terms and conditions, not inconsistent with the terms of the Plan,
as the Board deems appropriate in its sole and absolute discretion:



          (a) Option Price. Except for the exchange of Options contemplated under Section 5(h),
the exercise price per Share purchasable under an Option will be determined by the Board and will
not be less than 100% of the Fair Market Value of a Share on the date of the grant. However, any
Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns more
than 10% of the voting power of all classes of shares of the Company, its Parent or of a Subsidiary
will have an exercise price per Share of not less than 110% of Fair Market Value per Share on the
date of the grant.



          (b) Option Term. The term of each Option will be fixed by the Board, provided,
however, that no Option will be exercisable more than 10 years after the date the Option is
granted. However, any Incentive Stock Option granted to any Participant who, at the time such
Option is granted, owns more than 10% of the voting power of all classes of shares of the Company,
its Parent or of a Subsidiary may not have a term of more than five years. No Option may be
exercised by any person after expiration of the term of the Option.



          (c) Exercisability. Options will vest and be exercisable at such time or times and
subject to such terms and conditions as determined by the Board.



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          (d) Method of Exercise. Subject to the exercisability and termination provisions set
forth herein and in the applicable Award Agreement, Options may be exercised in whole or in part at
any time and from time to time during the term of the Option, by the delivery of written notice of
exercise by the Participant to the Company specifying the number of Shares to be purchased. Such
notice will be accompanied by payment in full of the purchase price, either by (i) cash or
certified or bank check, (ii) unless otherwise determined by the Committee, through means of a “net
settlement,” whereby no exercise price will be due and where the number of Shares issued upon such
exercise will be equal to: (A) the product of (1) the number of Shares as to which the Option is
then being exercised, and (2) the difference between (x) the then current Fair Market Value per
Share and (y) the exercise price per share, divided by (B) the then current Fair Market Value per
Share. A number of Shares equal to the difference between the number of Shares as to which the
Option is then being exercised and the number of Shares actually issued to the Grantee upon such
net settlement will be deemed to have been received by the Company in satisfaction of the exercise
price, or (iii) by such other method as the Committee may approve or accept.



          No Shares will be issued upon exercise of an Option until full payment therefor has been made.
A Participant will not have the right to distributions or dividends or any other rights of a
stockholder with respect to Shares subject to the Option until the Participant has given written
notice of exercise, has paid in full for such Shares, if requested, has given the representation
described in Section 11 hereof and fulfills such other conditions as may be set forth in
the applicable Award Agreement.



          (e) Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by the Participant during any
calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary
will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock
Options will be taken into account in the order granted. To the extent any Option does not meet
such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.



          (f) Termination of Service. Unless otherwise specified in the Award Agreement,
Options will be subject to the terms of Section 7 with respect to exercise upon or
following termination of employment or other service.



          (g) Transferability of Options. Except as may otherwise be specifically determined by
the Board with respect to a particular Option, no Option will be transferable by the Participant
other than by will or by the laws of descent and distribution, and all Options will be exercisable,
during the Participant’s lifetime, only by the Participant or, in the event of his Disability, by
his personal representative.







          (h) Exchange of Options. In respect of Options issued pursuant to this Plan (a
“Replacement Option”) in exchange (an “Exchange”) for an option (the “Exchanged
Option”) previously issued by an Affiliate of the Company in an exchange contemplated under
section 1.4 of the Reorganization Agreement dated April 26, 2007 made among the Company,
Lululemon Athletica USA, Inc., Lululemon Athletica Inc., LIPO Investments (USA) Inc., LIPO







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Investments
(Canada) Inc., and  Lulu Canadian Holdings Inc., and which is
described in paragraphs 7(1.4)(a) and (b) of the Tax Act, the following provisions shall ensure
compliance with paragraph 7(1.4)(c) thereof, as follows:




          (i) subject to (ii), the exercise price per Share of a Replacement Option shall be
fixed at the exercise price of the Exchanged Option, adjusted for the exchange ratio
applicable to such Exchange; and




          (ii) if




               (A) the Board determines in good faith and after receiving an opinion from a qualified
valuator that with respect to the Exchanges pursuant to the Reorganization Agreement (1) the
excess of the aggregate fair market value of the Shares subject to the Replacement Option
immediately after the issuance of the Replacement Option less the aggregate option exercise
price for such Shares pursuant to the Replacement Option (such excess, referred to as the
“Post-Exchange Option Value”) would otherwise exceed (2) the excess of the aggregate
Fair Market Value of the securities subject to the Exchanged Option immediately before the
issuance of the Replacement Option less the aggregate option exercise price for such
securities pursuant to the Exchanged Option (such excess, referred to as the
“Pre-Exchange Option Value”), and




               (B) the Board determines in good faith after receiving an opinion from legal counsel
that an adjustment to the option exercise price is necessary to ensure compliance with the
requirements under section 7(1.4) of the Tax Act,




          then the option exercise price of the Shares subject to the Replacement Option as
determined by the Board under this Section 5 shall be modified nunc pro tunc, but only to
the extent necessary, so that the Post-Exchange Option Value does not exceed the
Pre-Exchange Option Value. The terms of the Replacement Option will otherwise continue
unamended.


The term, conditions to and manner of exercising, vesting conditions and all other terms and
conditions of each Replacement Option will otherwise be the same as the terms and conditions of the
corresponding Exchanged Option.




          SECTION 6. Stock Appreciation Rights.



          (a) Nature of Award. Upon the exercise of a SAR, its holder will be entitled to
receive an amount equal to the excess (if any) of: (i) the Fair Market Value of the Shares as to
which the SAR is then being exercised, over (ii) the Fair Market Value of those Shares as of the
date the SAR was granted (subject to adjustment in accordance with Section 3(c)). Such amount may
be paid in either cash and/or Shares, as determined by the Board in its discretion.



          (b) Terms and Conditions. The Award Agreement evidencing any SAR will incorporate the
following terms and conditions and will contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute
discretion:



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          (i) Term of SAR. Unless otherwise specified in the Award Agreement, the term
of a SAR will be ten years.




          (ii) Exercisability. SARs will vest and become exercisable at such time or
times and subject to such terms and conditions as will be determined by the Board.




          (iii) Method of Exercise. Subject to the exercisability and termination
provisions set forth herein and in the applicable Award Agreement, SARs may be exercised in
whole or in part from time to time during their term by delivery of written notice to the
Company specifying the portion of the SAR to be exercised.




          (iv) Termination of Service. Unless otherwise specified in the Award
Agreement, SARs will be subject to the terms of Section 7 with respect to exercise upon
termination of employment or other service.




          (v) Non-Transferability. Except as may otherwise be specifically determined by
the Board with respect to a particular SAR: (A) SARs may not be sold, pledged, assigned,
hypothecated, gifted, transferred or disposed of in any manner either voluntarily or
involuntarily by operation of law, other than by will or by the laws of descent or
distribution, and (B) during the Participant’s lifetime, SARs will be exercisable only by
the Participant (or, in the event of the Participant’s Disability, by his or her personal
representative).



          SECTION 7. Termination of Service. Unless otherwise specified by the Board with
respect to a particular Option or SAR, any portion of an Option or SAR that is not exercisable upon
termination of service will expire immediately and automatically upon such termination and any
portion of an Option or SAR that is exercisable upon termination of service will expire on the date
it ceases to be exercisable in accordance with this Section 7.



          (a) Termination by Reason of Death. If a Participant’s service with the Company or
any Affiliate terminates by reason of death, any Option or SAR held by such Participant may
thereafter be exercised, to the extent it was exercisable at the time of his or her death, by the
legal representative of the estate or by the legatee of the Participant under the will of the
Participant, for a period ending 12 months following the date of death (or, if sooner, on the last
day of the stated term of such Option or SAR).



          (b) Termination by Reason of Disability. If a Participant’s service with the Company
or any Affiliate terminates by reason of Disability, any Option or SAR held by such Participant may
thereafter be exercised by the Participant or his personal representative, to the extent it was
exercisable at the time of termination, for a period ending 12 months following the date of
termination (or, if sooner, on the last day of the stated term of such Option or SAR).



          (c) Cause. If a Participant’s service with the Company or any Affiliate is terminated
for Cause: (i) any Option or SAR held by the Participant will immediately and automatically expire
as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered
share certificates will be immediately and automatically forfeited



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and the Company will refund to the Participant the Option exercise price paid for such Shares,
if any.



          (d) Other Termination. If a Participant’s service with the Company or any Affiliate
terminates for any reason other than death, Disability or Cause, any Option or SAR held by such
Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the
time of such termination, for a period ending 90 days following the date of such termination (or,
if sooner, on the last day of the stated term of such Option or SAR).



          SECTION 8. Restricted Stock.



          (a) Issuance. Restricted Stock may be issued either alone or in conjunction with
other Awards. The Board will determine the time or times within which Restricted Stock may be
subject to forfeiture, and all other conditions of such Awards.



          (b) Certificates. Any share certificate issued in connection with an Award of
Restricted Stock will bear the following legend and/or any other legend required by this Plan, the
applicable Award Agreement or applicable law:




THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE LULULEMON
CORP. 2007 EQUITY INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO
BETWEEN THE PARTICIPANT AND LULULEMON CORP. (WHICH TERMS AND
CONDITIONS MAY INCLUDE, WITHOUT LIMITATION, CERTAIN TRANSFER
RESTRICTIONS AND FORFEITURE CONDITIONS). COPIES OF THAT PLAN AND
AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF LULULEMON CORP.
AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY.



          Any Share certificates evidencing Restricted Stock will be held in custody by the Company or
in escrow by an escrow agent until the restrictions thereon have lapsed. As a condition to any
Restricted Stock award, the Participant may be required to deliver to the Company a share power,
endorsed in blank, relating to the Shares covered by such Award.



          (c) Restrictions and Conditions. The Restricted Stock awarded pursuant to this
Section 8 will be subject to the following restrictions and conditions, and any other
restrictions and conditions set forth in the applicable Award Agreement.



               (i) During a period commencing with the date of an Award of Restricted Stock and ending at
such time or times as specified by the Board (the “Restriction Period”), the Participant
will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Stock
awarded under the Plan. The Board may condition the lapse of restrictions on Restricted Stock upon
the continued employment or service of the recipient, the



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attainment of specified individual or corporate performance goals, or such other factors as
the Board may determine, in its sole and absolute discretion.



               (ii) Except as otherwise provided herein or in the applicable Award Agreement, once Restricted
Stock has been awarded to a Participant, that Participant will have, with respect to the Restricted
Stock, all of the rights of a stockholder of the Company, including the right to vote the Shares,
and the right to receive any cash distributions or dividends. The Board, in its sole discretion,
may require cash distributions or dividends to be subjected to the same Restriction Period as is
applicable to the Restricted Stock with respect to which such amounts are paid, or if the Board so
determines, reinvested in additional Restricted Stock to the extent Shares are available under
Section 3(a). Any distributions or dividends paid in the form of securities with respect to
Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with
respect to which they were paid, including, without limitation, the same Restriction Period.



               (iii) Subject to the applicable provisions of the Award Agreement, if a Participant’s service
with the Company and its Affiliates terminates prior to the expiration of the Restriction Period,
all of that Participant’s Restricted Stock which then remain subject to forfeiture will then be
forfeited automatically.



               (iv) If and when the Restriction Period applicable to certain Restricted Stock expires without
a forfeiture of those Shares (or if and when the restrictions applicable to Restricted Stock are
removed pursuant to Section 3(d) or otherwise), any certificates evidencing that Restricted Stock
will be replaced with new certificates, without the restrictive legends described in Section 8(b)
applicable to such lapsed restrictions, and such new certificates will be promptly delivered to the
Participant, the Participant’s representative (if the Participant has suffered a Disability), or
the Participant’s estate or heir (if the Participant has died).



          SECTION 9. Restricted Stock Units. Restricted Stock Units may be granted hereunder,
subject to such terms and conditions as the Board may impose. Each Restricted Stock Unit will
represent the right to receive from the Company, after fulfillment of any applicable conditions, a
distribution from the Company in an amount equal to the Fair Market Value (at the time of the
distribution) of one Share. Distributions may be made in cash and/or Shares. Unless otherwise
determined by the Board, Restricted Stock Units may not be sold, pledged, assigned, hypothecated,
gifted, transferred or disposed of in any manner, either voluntarily or involuntarily by operation
of law, other than by will or by the laws of descent or distribution. All other terms governing
Restricted Stock Units, such as vesting, dividend equivalent rights, time and form of payment and
termination of units shall be set forth in the applicable Award Agreement.



          SECTION 10. Amendment and Termination. The Board may amend, alter or discontinue the
Plan at any time, provided that no amendment, alteration or discontinuation will be made, without
the approval of such amendment by the Company’s stockholders and/or any applicable regulatory
agency in a manner consistent with the requirements of Treas. Reg. § 1.422-3 (or any successor
provision), that would: (i) increase the total number of Shares reserved for issuance hereunder
(except as otherwise provided in Section 3), or (ii) change the classes of persons eligible to
receive Awards.



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For the avoidance of doubt, no stockholder approval shall be required for (i) amendments of a
“housekeeping nature,” (ii) changes to the vesting provisions of any Award or this Plan, (iii)
changes to the provisions of this Plan relating to the expiration of Awards prior to their
respective expiration dates upon the occurrence of certain specified events, (iv) a change in the
exercise price of an Option granted to a Participant who is not an Insider, (v) the cancellation of
an Award, or (vi) any other amendment to an Award or this Plan which is approved by the TSX on a
basis which does not require stockholder approval to be obtained.




          SECTION 11. General Provisions.



          (a) The Board may require each Participant to represent to and agree with the Company in
writing that the Participant is acquiring securities of the Company for investment purposes and
without a view to distribution thereof and as to such other matters as the Board believes are
appropriate.



          (b) Shares shall not be issued hereunder unless, in the judgment of counsel for the Company,
the issuance complies with the requirements of any stock exchange or quotation system on which the
Shares are then listed or quoted, the Securities Act of 1933, the Exchange Act, all rules and
regulations promulgated thereunder and all other applicable laws.



          (c) All certificates for Shares or other securities delivered under the Plan will be subject
to such share-transfer orders and other restrictions as the Board may deem advisable under the
rules, regulations, and other requirements of any stock exchange upon which the Shares are then
listed and any applicable laws, and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.



          (d) Neither the adoption of the Plan nor the execution of any document in connection with the
Plan will: (i) confer upon any employee of the Company or an Affiliate any right to continued
employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the
right of the Company or such Affiliate to terminate the employment of any of its employees at any
time.



          (e) With respect to any Award, the Participant will
pay to the Company, or make arrangements satisfactory to the Board regarding the payment of, taxes
of any kind required by law to be withheld with respect to any amount
includable in the gross income of the Participant as required by
applicable law. The obligations of the
Company under the Plan will be conditioned on such payment or arrangements and the Company will
have the right to deduct any such taxes from any payment of any kind otherwise due to the
Participant. Unless otherwise determined by the Board (but solely with respect to Designated
Participants), the minimum required withholding obligation with respect to an Award may be settled
in Shares, including the Shares that are subject to that Award.



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deduct or withhold from payments of any kind due to the Participant under the Plan any taxes
of any kind required by law to be deducted or withheld.



          SECTION
12. Effective Date of Plan. Subject to the approval of the Plan by the
Company’s stockholders within 12 months of the Plan’s adoption by the Board, the Plan will become
effective on the date that it is approved by the Board (or such later date as is then specified by
the Board), provided, however, that all Options intended to be Incentive Stock Options will
automatically be converted into Non-Qualified Stock Options if the Plan is not approved by the
Company’s stockholders within one year (365 days) of its adoption by the Board in a manner
consistent with Treas. Reg. § 1.422-5.



          SECTION
13. Term of Plan. The Plan will continue in effect until terminated in
accordance with Section 10; provided, however, that no Incentive Stock Option will be
granted hereunder on or after the 10th anniversary of the effective date of the Plan (or, if the
stockholders approve an amendment that increases the number of shares subject to the Plan, the
10th anniversary of the date of such approval); but provided further, that Incentive
Stock Options granted prior to such 10th anniversary may extend beyond that date.



          SECTION
14. Invalid Provisions. In the event that any provision of this Plan is found
to be invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability will not be construed as rendering any other provisions contained herein as
invalid or unenforceable, and all such other provisions will be given full force and effect to the
same extent as though the invalid or unenforceable provision was not contained herein.



          SECTION
15. Governing Law. The Plan and all Awards granted hereunder will be governed
by and construed in accordance with the laws of the State of Delaware, without regard to the
application of the principles of conflicts of laws.



          SECTION
16. Board Action. Notwithstanding anything to the contrary set forth in the
Plan, any and all actions of the Board or Committee, as the case may be, taken under or in
connection with the Plan and any agreements, instruments, documents, certificates or other writings
entered into, executed, granted, issued and/or delivered pursuant to the terms hereof, will be
subject to and limited by any and all votes, consents, approvals, waivers or other actions of all
or certain stockholders of the Company or other persons required by:



          (a) the Company’s Certificate of Incorporation (as the same may be amended and/or restated
from time to time);



          (b) the Company’s Bylaws (as the same may be amended and/or restated from time to time); and



          (c) any other agreement, instrument, document or writing now or hereafter existing, between or
among the Company and its stockholders or other persons (as the same may be amended from time to
time).



          SECTION
17. Notices. Any notice to be given to the Company pursuant to the provisions
of the Plan shall be given by registered or certified mail, postage prepaid, and, addressed, if to
the Company to its principal executive office to the attention of its Chief



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Financial Officer (or such other person as the Company may designate in writing from time to
time), and, if to a Participant, to his or her address contained in the Company’s personnel
records, or at such other address as such Participant may from time to time designate in writing to
the Company. Any such notice shall be deemed given or delivered three days after the date of
mailing.




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