Document:

STOCK OPTION AWARD AGREEMENT

 

Exhibit 10.2

Non-Qualified Stock Option Agreement

under the

lululemon athletica inc. 2007 Equity Incentive Plan

          THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made between lululemon
athletica inc. (the “Company”) and ROBERT MEERS (the “Optionee”).

          WHEREAS, the Company maintains the lululemon athletica inc. 2007 Equity Incentive Plan (the
“Plan”); and

          WHEREAS, the Plan permits the award of Options to purchase Shares, subject to the terms of the
Plan; and

          WHEREAS, on January 27, 2006 (the “Original Grant Date”) the Optionee was granted an
option to purchase 1,170,000 shares of common stock of the Company’s U.S. operating subsidiary,
lululemon usa inc. (f/k/a Lululemon Athletica USA Inc.), under the Lululemon Athletica USA Inc.
2005 Equity Incentive Plan (such option is hereinafter referred to as the “Original
Option”); and

          WHEREAS, on or about July 27, 2007 and in connection with the Company’s corporate
reorganization (the “Reorganization”), an option under the Plan (the “Substitute
Option”) was substituted for the Original Option to reflect the effects of the Reorganization;
and

          WHEREAS, the Company and the Optionee wish to amend and restate the Substitute Option to
reflect certain negotiated changes.

          NOW, THEREFORE, in consideration of these premises and the agreements set forth herein, the
parties intending to be legally bound hereby, agree as follows:

     1.  Award of Option. This Option constitutes an amendment and restatement of the
Substitute Option. This Option represents the right to purchase 501,802 Shares (the “Option
Shares”). In addition to the terms set forth herein, the Option is subject to the terms of the
Plan applicable to non-qualified stock options, which terms are incorporated herein by this
reference. Except as otherwise specified herein, or unless the context requires otherwise, the
terms defined in the Plan will have the same meanings herein.

     2.  Nature of the Option. This Option is intended to be a nonstatutory stock option
and is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code,
or to otherwise qualify for any special tax benefits to the Optionee.

     3.  Date of Grant; Term. The Option is restated pursuant to the authorization of the
Compensation Committee of the Company’s Board of Directors on
November 28, 2007 (the
“Effective Date”) and may not be exercised later than the tenth anniversary of the Original
Grant Date, subject to earlier termination as provided in the Plan.

     4.  Option Exercise Price. The total cost to the Optionee to purchase, pursuant to
this Agreement, one Share is $0.49. All dollar amounts reflected in this Agreement are expressed
in U.S. dollars.

 

 

     5.  Exercise of Option.

          (a)  Right to Exercise. This Option will become exercisable as follows:

               i.  Immediately Vested Portion. The Option will be vested and exercisable with respect
to 15% of the Option Shares immediately upon the Effective Date.

               ii.  Time Vested Portion. The Option will become vested and exercisable with respect
to 15% of the Option Shares on each of the following dates: January 27, 2008, January 27, 2009 and
January 27, 2010 (such 45% of the Option Shares being herein referred to as the “Time Vested
Portion”); provided, in each case, that the Optionee remains in continuous service with
the Company through the applicable date. Notwithstanding the foregoing, the Option will become
vested and exercisable with respect to the Time Vested Portion immediately prior to (and contingent
upon) the occurrence of a Sale (as defined below in Section 17(j)), provided the Optionee remains
in continuous service with the Company through the date of that Sale. Solely for purposes of this
Agreement, service with the Company will be deemed to include service with an Affiliated Company
(as defined below in Section 17(c)) for so long as such entity remains an Affiliated
Company.

               iii.  Performance Vested Portion. The Option may become vested and exercisable with
respect to 40% of the Option Shares (the “Performance Vested Portion”), based upon the
Return Multiple (as defined below in Section 17(i)) realized by the Institutional Holders
while this Option remains outstanding, as follows:

                    (1)  Immediately prior to (and contingent upon) the occurrence of an Investor Sale (as defined
below in Section 17(g)), and provided the Optionee remains in continuous service with the
Company through the date of the Investor Sale, the Performance Vested Portion will become vested
and exercisable based on the Return Multiple realized upon completion of the Investor Sale:

	 	 	 
	 	 	Percentage of Option
	Return Multiple Achieved	 	Shares Exercisable
	x < 2.00
	 	None
	2.00
≤ x < 2.25
	 	3.08%
	2.25 ≤ x < 2.50
	 	6.15%
	2.50 ≤ x < 2.75
	 	9.23%
	2.75 ≤ x < 3.00
	 	12.31%
	3.00 ≤ x < 3.25
	 	15.38%
	3.25 ≤ x < 3.50
	 	18.46%
	3.50 ≤ x < 3.75
	 	21.54%
	3.75 ≤ x < 4.00
	 	24.62%
	4.00 ≤ x < 4.25
	 	27.69%
	4.25 ≤ x < 4.50
	 	30.77%
	4.50 ≤ x < 4.75
	 	33.84%
	4.75 ≤ x < 5.00
	 	36.92%
	5.00 ≤ x
	 	40%

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                    (2)  If the Return Multiple increases following an Investor Sale due to a subsequent
Transfer and the Optionee remains in continuous service with the Company through the date of that
subsequent Transfer, the Option will then become vested and exercisable with respect to an
additional number of Option Shares determined (in accordance with the chart contained in Section
5(a)(iii)(1), above) based on the cumulative Return Multiple achieved, reduced by the number of
Option Shares with respect to which the Performance Vested Portion has previously become vested and
exercisable (taking into account any adjustments pursuant to Section 3(c) of the Plan). This
provisions of this Section 5(a)(iii)(2) will apply with respect to each subsequent Transfer until
the Performance Vested Portion terminates.

                    (3)  At such time as no further increases to the Return Multiple are possible (e.g., when the
Institutional Holders and their Permitted Transferees have Transferred their entire capital stock
holdings in the Company and its Affiliates), any portion of the Performance Vested Portion that has
not, by that time, become vested and exercisable will terminate immediately and automatically.

                    (4)  Notwithstanding anything to the contrary in this Section 5(a)(iii), the Performance Vested
Portion will become fully vested and exercisable if and when a Return Multiple of 5.00 or greater
is realized, regardless of whether such Return Multiple is realized in connection with an Investor
Sale, provided the Optionee remains in continuous service with the Company through the date that
such Return Multiple is realized.

          (b)  Method of Exercise. The Optionee may exercise the Option by providing written
notice to the Company and shall be delivered in person or by certified mail to the Secretary of the
Company (or such other person as may be designated by the Company). The written notice shall be
accompanied by payment of the purchase price and, if requested by the Company, an executed
counterpart to the Stockholders Agreement. The certificate(s) for the Shares as to which the
Option shall have been exercised will be registered in the name of the Optionee and, in addition to
any other legend that may be required pursuant to applicable law, the Plan, the Stockholders
Agreement or otherwise, will contain the following legend:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A NON-QUALIFIED STOCK OPTION AGREEMENT
ENTERED INTO BETWEEN ROBERT MEERS AND LULULEMON ATHLETICA INC. A COPY OF THAT
AGREEMENT IS ON FILE IN THE PRINCIPAL OFFICES OF LULULEMON ATHLETICA INC. AND WILL
BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUEST TO
THE SECRETARY OF LULULEMON ATHLETICA INC.

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          (c)  Partial Exercise. The Option may be exercised in whole or in part;
provided, however, that any exercise may apply only with respect to whole numbers
of Option Shares.

          (d)  Restrictions on Exercise. The Option may not be exercised if the issuance of the
Option Shares upon such exercise would constitute a violation of any applicable law or regulation
or any exchange listing requirements.

     6.  Investment Representations. Unless the Option Shares have been registered under
the Securities Act of 1933 (the “Securities Act”), in connection with the acquisition of
this Option, the Optionee represents and warrants to the Company that:

          (a)  he or she is acquiring the Option, and upon exercise of the Option, will be acquiring the
Option Shares for investment for his or her own account, not as a nominee or agent, and not with a
view to or for resale in connection with any distribution thereof; and

          (b)  he or she has a preexisting personal or business relationship with the Company or one of
its directors, officers or controlling persons and, by reason of his or her business or financial
experience, has, and can be reasonably assumed to have, the capacity to protect his or her
interests in connection with the acquisition of the Option and the Option Shares.

In addition, as a further condition to the exercise of the Option, the Company may require the
Optionee to make any representation or warranty to the Company as may be required by or advisable
under any applicable law, regulation or exchange listing requirement.

     7.  Withholding. The Company reserves the right to withhold from any consideration
payable or property transferable to the Optionee any taxes required to be withheld by law as a
result of the grant or exercise of this Option or the sale or other disposition of the Option
Shares. If the amount of any consideration payable to the Optionee is insufficient to pay such
taxes or if no consideration is then payable to the Optionee, upon the request of the Company and
as a condition to the grant or exercise of this Option or the sale or other disposition of the
Option Shares, the Optionee (or such other person entitled to exercise this Option pursuant to
Section 5 of the Plan) will pay to the Company an amount sufficient for the Company to satisfy any
such tax withholding requirements.

     8.  The Plan. The Optionee has received a copy of the Plan (a copy of which is
attached hereto), has read the Plan and is familiar with its terms, and hereby accepts the Option
subject to all of the terms and provisions of the Plan. Pursuant to the Plan, the Board is
authorized to interpret the Plan and to adopt rules and regulations not inconsistent with the Plan
as it deems appropriate. The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board regarding any questions arising under the Plan or this
Agreement.

     9.  Governing Law. This Option Agreement will be construed in accordance with the laws
of the State of Delaware, without regard to the application of the principles of conflicts of laws.

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     10.  Amendment. This Agreement may only be amended by a writing signed by each of the
parties hereto.

     11.  Entire Agreement. This Agreement, together with the Plan, represents the entire
agreement between the parties hereto relating to the subject matter hereof, and merges and
supersedes all prior and contemporaneous discussions, agreements and understandings of every nature
(including, without limitation, Section 2.3 of the Employment and Restrictive Covenant Agreement
dated December 5, 2005 between the Optionee and Lululemon Athletica Inc. and Exhibit A attached
thereto). For avoidance of doubt, the Optionee further acknowledges that (i) the Original Option,
and all the Optionee’s rights thereunder, were replaced by the Substitute Option, and (ii) this
Option amends and restates the Substitute Option in its entirety.

     12.  Market Stand-Off.

          (a)  The Optionee hereby agrees that, in connection with any registration under the Securities
Act of 1933, as amended, of any Option Shares, the Optionee (and the Optionee’s permitted
transferees, if any) shall not sell or otherwise transfer (including through short-sales, hedging,
or similar transactions) any Option Shares during the period that the Board specifies (a
“Holdback”); provided, however, that such period shall not exceed one hundred eighty (180)
days (or other such period that the underwriters reasonably require) following the effective date
of the applicable registration statement filed under the Securities Act (the “Market Stand-Off
Period”). Until the end of such Market Stand-Off Period, the Company may impose, with respect
to Option Shares, stop-transfer instructions that are subject to the foregoing restrictions.

          (b)  Optionee also agrees to be bound by any restriction agreed to by holders of not less than
a majority of the then outstanding Shares (giving effect to the pro forma conversion of all
outstanding preferred shares and other convertible securities and the pro forma exercise of all
stock options, warrants and other rights, to the extent then exercisable).

          (c)  In addition, if any managing underwriter or book runner of any such offering or
registration (the “Underwriter”) requests, the Optionee will execute and deliver to the
Underwriter such documents, agreements, and instruments that the Underwriter shall reasonably
require to enable the Underwriter to obtain the benefit of the Holdback during the Market Stand-Off
Period. In connection with the foregoing, the Optionee hereby appoints the Chairman of the
Company’s Board of Directors as the Optionee’s attorney-in-fact, with full power of substitution,
to execute and deliver all documents, agreements and instruments to be executed and delivered by
the Optionee, and to take all actions to be taken by the Optionee in each case in connection with
effecting any Holdback.

     13.  Restrictions on Transfer of Option and Option Shares.

          (a)  The Option may not be sold, pledged, assigned, hypothecated, gifted, transferred or
disposed of in any manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution. During the Optionee’s lifetime, the Option is
exercisable only by the Optionee. Subject to the foregoing, the terms of the Option will be
binding upon the executors, administrators and heirs of the Optionee.

          (b)  The Optionee is not prohibited from transferring Option Shares to an Affiliate, provided
the Affiliate agrees to be bound by the provisions of Sections 12, 13, 14, and 15 (with the repurchase contemplated by Section 15 being triggered by the
termination of service of the Optionee).

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          (c)  Except as permitted under this Agreement, the Optionee may not sell, pledge, assign,
encumber, hypothecate, gift, transfer, bequeath, devise, donate or otherwise dispose of, in any way
or manner whatsoever, whether voluntary or involuntary, any legal or beneficial interest in any
Option Shares. If the Optionee, without complying with this Agreement’s terms and conditions,
attempts to transfer or alienate any legal or beneficial interest in any Option Shares, then the
transfer or alienation will not take effect and the Company will not, and will not be compelled to,
recognize or record on its books any such transfer or alienation or issue to the purported
recipient of such Option Shares any stock certificate(s) representing those Option Shares. The
Optionee agrees not to deposit any Option Shares in a voting trust or subject Option Shares to any
arrangement or agreement with respect to the voting of such Shares.

     14. Right of First Refusal.

          (a)  If the Optionee desires, in any manner, to alienate or transfer, to any person, group of
people, or one or more entities (other than the Company or an Affiliate) (collectively, the
“Proposed Transferee”), any Option Shares, the Optionee first will deliver to the Company
written notice (the “Transfer Notice”) specifying: (i) the number of Option Shares that
the Optionee proposes to transfer to the Proposed Transferee (hereinafter the “Subject
Shares”), (ii) the name and address of the Proposed Transferee, (iii) the consideration, if
any, that the Proposed Transferee will pay to the Optionee in connection with the proposed transfer
of such Subject Shares, and (iv) all other material terms and conditions of the proposed transfer.
The Optionee will deliver to the Company the Transfer Notice at least forty-five (45) days prior to
the proposed transfer.

          (b)  The Company (including, for purposes of this section, an assignee of the Company) will
have the option to purchase, at the same price and under the same terms and conditions as set forth
in the Transfer Notice, any or all of the Subject Shares (the “Right of First Refusal
Option”). In order for the Company to exercise its Right of First Refusal Option set forth in
this Section 14(b), the Company must, by no later than fifteen (15) days after receipt by
the Company of a Transfer Notice, deliver to the Optionee written notice of the Company’s intent to
exercise its Right of First Refusal Option (a “Company Acceptance Notice”). If the Company
duly exercises the Right of First Refusal Option, then the closing of such purchase and sale will
take place at the Company’s offices on such date that is selected with the consent of the Company;
provided, however, that such purchase and sale date must not be more than ninety (90) days, nor
less than thirty (30) days, after the date of the Company Acceptance Notice. At such closing, the
Company will pay to the Optionee the required consideration, and the Company and the Optionee will
proceed with the purchase and sale, under the Transfer Notice’s specified terms and conditions, of
those of the Optionee’s Subject Shares to which the Company’s written option-exercise notice
refers. Notwithstanding the foregoing, to the extent that the consideration that the Proposed
Transferee offered to pay to the Optionee for the Subject Shares consists of property other than a
promissory note or cash, the consideration that the Company is required to pay to the Optionee may,
at the Company’s option, in whole or in part, consist of cash equal to the property’s value, as
mutually agreed-upon, reasonably and in good faith, by the Company and the Optionee.

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          (c)  At such closing, the Company and the Optionee each will execute and deliver to the other
all customary documentation that the Company and the Optionee reasonably require to effect, in
accordance with this Section 14 and the Transfer Notice’s specified terms and conditions,
the sale and purchase of the Optionee’s Subject Shares.

          (d)  If less than all of the Subject Shares are purchased by the Company in accordance with
this Section 14, then the Optionee will be permitted, free from the provisions of this
Section 14 and for a period of thirty (30) days from the date that the applicable Right of
First Refusal Option exercise period expired, to offer and sell to the Proposed Transferee the
Optionee’s remaining Subject Shares; provided, however, that any such transfer or sale must take
place at the same price and under terms and conditions no more favorable to the Proposed Transferee
than the Transfer Notice’s specified terms and conditions; and provided, further, that as a
condition of any such transfer or sale, the Proposed Transferee must execute and deliver an
agreement in form and substance requested by the Company pursuant to which Proposed Transferee will
agree to be bound by the provisions of Sections 12, 13, 14, and 15 (with the repurchase
contemplated by Section 15 being triggered by the termination of service of the Optionee),
and any stock certificate representing any transferred Option Shares will bear any restrictive
legends deemed appropriate by the Company.

          (e)  The Company’s release or failure to exercise its rights under this Section 14 will
not adversely affect the Company’s right to participate, as this Section 14 provides, in
the Optionee’s subsequent proposed transfers.

          (f)  The rights and obligations under this Section 14 shall terminate immediately upon
(and shall not apply in connection with any sale by Optionee of Option Shares as a part of) a
Qualified Public Offering. For purposes of this Agreement, “Qualified Public Offering”
means the initial sale of shares of common stock of the Company (or a successor to the Company) in
an underwritten public offering registered under the Securities Act (“IPO”) in which the
gross proceeds to the Company from the IPO are not less than $75,000,000.

     15.  Call Upon Cessation of Service.

          (a)  If the Optionee’s service with the Company ceases for any reason, the Company or its
assignee may repurchase up to all the Option Shares. The price payable by the Company or its
assignee to repurchase Option Shares pursuant to this Section 15(a) will be the Fair
Market Value (as defined in the Plan) of those shares at the time the right described in this
Section 15 is exercised. Such price may be paid (i) in cash; (ii) by offset of any
obligation of the Optionee to the Company or its Affiliates; or (iii) a promissory note of the
Company payable in four (4) equal annual installments of principal and interest, commencing one
year from the date of the repurchase of the Option Shares and bearing simple interest at the prime
rate as reported in the Wall Street Journal on the date of the repurchase of the Option Shares.
Any promissory note issued under this Section 15 will be subject to prepayment in part or
in full at any time at the Company’s option and without penalty. Payments under any promissory
note issued under this Section 15 may be deferred to the extent necessary in order to avoid
a violation by the Company of the terms of any credit, loan or other debt financing agreement or
any of the other loan documents related thereto.

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          (b)  With respect to each Option Share subject to repurchase pursuant to this Section
15, the Company (or its assignee) may exercise its repurchase right by delivery of written
notice to the holder of such share at any time during the 90-day period beginning on the later of
(i) the date the Optionee’s service to the Company ceases, or (ii) six months following the date
the Optionee acquires that Option Share. All the rights of the holder of any such shares, other
than the right to receive payment in the manner described in Section 15(a), will terminate
as of the date of delivery by the Company of the written notice described in this paragraph. The
only representation, warranty or covenant which the holder of such shares will be required to make
in connection with a sale pursuant to Section 15(a) is a representation and warranty with
respect to his or her ownership of the shares and his or her ability to convey title thereto free
and clear of liens, claims or encumbrances.

          (c)  If a holder of Option Shares becomes obligated to transfer shares to the Company or its
assignee pursuant to this Agreement, that holder will endorse in blank the certificates evidencing
the shares to be sold and deliver those certificates to the Company or its assignee within 15 days
of receipt of the notice described above in Section 15(b). If a holder of Option Shares
fails to deliver those shares in accordance with the terms of this Agreement, the Company or its
assignee may, at its option, in addition to all other remedies it may have, either (i) send to that
holder the purchase price for such shares, as herein specified, or (ii) deposit such amount with a
trustee or escrow agent for the benefit of that holder for release upon delivery of shares in
accordance with the terms of this Agreement. Thereupon, the Company or its assignee, upon written
notice to the holder, will (x) cancel on its books the certificate or certificates representing the
Option Shares required to be transferred, and (y) issue, in lieu thereof, in the name of the
Company (or its assignee) a new certificate or certificates representing such shares.

          (d)  The rights and obligations under this Section 15 shall terminate immediately upon
the consummation of a Qualified Public Offering.

     16.  [Reserved]

     17.  Definitions

          (a)  “Advent Funds” means (i) Advent International GPE V Limited Partnership, Advent
International GPE V-B Limited Partnership and Advent International GPE V-I Limited Partnership,
each a limited partnership formed under the laws of the Cayman Islands, and (ii) Advent
International GPE V-A Limited Partnership, Advent International GPE V-G Limited Partnership, Advent
Partners III Limited Partnership, Advent Partners GPE V Limited Partnership, Advent Partners GPE
V-A Limited Partnership and Advent Partners GPE V-B Limited Partnership, each a Delaware limited
partnership.

          (b)  “Affiliate” means, as to any specified person or entity, (i) any other person or
entity controlling, controlled by or under common control with such specified person or entity or
(ii) any member of the Family Group of such specified person or of any individual who is an
Affiliate of such specified person by reason of clause (i) of this definition; provided, however,
that no person shall be deemed an Affiliate of any other person or entity solely by reason of any
investment in the Company. The term “control,” with respect to any person or entity, means
possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting securities or a

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partnership interest, by contract or otherwise. With respect to each of the Institutional
Holders, the term “Affiliate” shall also include (1) any entity in which such Institutional Holder
(or one of its Affiliates) is a general partner or member and (2) each investor in such
Institutional Holder, but only in connection with the liquidation, winding up or dissolution of the
Institutional Holder, and only to the extent of such investor’s pro rata share in the Institutional
Holder. With respect to each Advent Fund, the term “Affiliate” shall also include any investment
fund managed by Advent International Corporation, a Delaware corporation. For purposes of this
Agreement, “Family Group” means, as to any holder of capital stock who is a natural person,
such holder’s spouse, ancestors, the lineal descendants of such individual’s grandparents, and
trusts for the benefit of any of the foregoing, provided that all the income beneficiaries and
remainderman of any such trust are such individual’s spouse, ancestors or lineal descendants.

          (c)  “Affiliated Company” means (i) lululemon usa inc., a Nevada corporation, (ii)
lululemon athletica canada inc., a company formed under the laws of British Columbia, (iii)
Lululemon FC USA Inc., a Nevada corporation, (iv) Lulu Canadian Holding, Inc., a company formed
under the laws of British Columbia, (v) Lululemon Athletica International SRL, a company formed
under the laws of Barbados and (vi) any Affiliate of any of the foregoing.

          (d)  “Brooke Funds” means Brooke Private Equity Advisors Fund I-A, L.P. and Brooke
Private Equity Advisors Fund I (D), L.P., each a Delaware limited partnership.

          (e)  “Highland Funds” means Highland Capital Partners VI Limited Partnership, Highland
Capital Partners VI-B Limited Partnership, and Highland Entrepreneurs’ Fund VI Limited Partnership,
each a Delaware limited partnership.

          (f)  “Institutional Holder” means, individually, each of the Advent Funds, Brooke Funds
and Highland Funds, and collectively, the “Institutional Holders.”

          (g)  “Investor Sale” means (i) a Transfer that, when added to all prior Transfers,
results in the Institutional Holders and their Permitted Transferees ceasing to hold or control at
least 20% of the voting power represented by all the capital stock of the Company held by them
collectively as of the Original Grant Date, or (ii) the sale of substantially all the assets of the
Company (other than (a) a transfer of financial assets made in the ordinary course of business for
the purpose of securitization or (b) pursuant to any recapitalization, reorganization or any
similar transaction pursuant to which control of the Company is substantially unaffected).

          (h)  “Permitted Transferee” means, with respect to a holder of shares of capital stock
of the Company (a “Holder” and collectively, the “Holders”):

               i.  an Affiliate of the Holder;

               ii.  any Person to whom the Holder may transfer its shares of capital stock to hold such shares
of capital stock as such Holder’s nominee;

               iii.  in the case of an Institutional Holder, any Person who receives securities in a
liquidating distribution by such fund or holder to its members, partners or shareholders;

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               iv.  in the case of an Institutional Holder, one or more funds which invest in equity
securities and are “qualified institutional buyers” or “accredited investors” (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) in connection with the sale by such holder of
any material part of its portfolio investments;

               v.  in the case of an Institutional Holder, any other Institutional Holder; and

               vi.  in the event of the death or incompetence of the Holder, a legal representative of the
Holder.

          (i)  “Return Multiple” means as of any given date, the multiple achieved by dividing
(i) the aggregate gross proceeds realized by the Institutional Holders and their Permitted
Transferees in respect of their investment in capital stock of the Company and its Affiliates made
on the Original Grant Date (including, without limitation, gross proceeds from any Transfer(s) to a
third party in registered or private offerings or sales under Rule 144 of the Securities Act, but
excluding gross proceeds received in connection with any Transfer to a Permitted Transferee), over
(ii) $92,783,505.15 (i.e., the aggregate cash amount invested by the Institutional Holders to
acquire shares of capital stock of the Company and its Affiliates as of the Original Grant Date),
all as determined by the Board in good faith immediately prior to (but as of) the relevant date and
subject to the following principles:

               i.  the Board will determine the value of any illiquid consideration received in connection
with any Transfer(s) by taking into account (among other things) any restrictions on the transfer
of that property and other impairments on its value;

               ii.  the Board will determine the value of any contingent consideration potentially payable in
connection with any Transfer(s) based on its best estimate of the likelihood that such contingent
consideration will actually be received;

               iii.  dividends or other non-stock distributions paid prior to the date as of which the Return
Multiple is being determined will be included in the calculation;

               iv.  securities of the Company and its Affiliates will not be counted as gross proceeds;

               v.  if the relevant transaction giving rise to a calculation of the Return Multiple is a sale
of substantially all the assets of the Company, a liquidation of the Company will be deemed to
occur immediately following that asset sale; and

               vi.  the Return Multiple will be calculated net of any commissions, discounts, underwriters’
compensation, attorneys’, accountants’ and bankers’ fees and any similar expenses or transaction
costs that are incurred (A) by or on behalf of the Institutional Holders in connection with the
acquisition of capital stock of the Company or its Affiliates through the Original Grant Date, or
(B) by or on behalf of the Institutional Holders or any Permitted Transferees in connection with
any Transfer(s) of any such capital stock (other than a Transfer between an Institutional Holder
and a Permitted Transferee).

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          (j)  “Sale” means (i) the sale, transfer, assignment or other disposition (including by
merger, consolidation, recapitalization, reorganization or any similar transaction) by stockholders
of the Company, in one transaction or a series of related transactions, of greater than 66 2/3% of
the voting power represented by the then outstanding shares of capital stock (unless (a) such sale,
transfer, assignment or other disposition by such Holder or Holders is made to a Permitted
Transferee, (b) immediately after the completion of such transaction(s), control of the Company is
substantially unaffected or (c) such merger, consolidation, recapitalization, reorganization or any
similar transaction of the Company is with, into or among any Affiliated Company) or (ii) the sale
of substantially all the assets of the Company (other than (a) a transfer of financial assets made
in the ordinary course of business for the purpose of securitization or (b) pursuant to any
recapitalization, reorganization or any similar transaction pursuant to which control of the
Company is substantially unaffected).

          (k)  “Transfer” means a sale, transfer, assignment or other disposition of shares of
capital stock of the Company or its Affiliates by one or more of the Institutional Holders or their
Permitted Transferees.

[Signature Page Follows]

-11-

 

     IN WITNESS WHEREOF, this Agreement has been executed by each of the parties on the date
indicated below, respectively.

	 	 	 	 	 
	 	lululemon athletica inc.

 	 
	 	By:  	/s/
John E. Currie
 	 
	 	 	Name:  	John E. Currie 	 
	 	 	Title:  	Chief Financial Officer 	 
	 	 	Date:	November 28, 2007 	 
	 
	 
	 	ROBERT MEERS

 	 
	 	By:  	/s/
Robert Meers
 	 
	 	 	Name:  	Robert Meers 	 
	 	 	Date:	November 28, 2007 	 
	 

-12-EMPLOYEE SHARE PURCHASE PLAN

 

Exhibit 10.3

lululemon athletica inc.

EMPLOYEE SHARE PURCHASE PLAN

 

 

lululemon athletica inc.

EMPLOYEE SHARE PURCHASE PLAN

Article 1 — Definitions

1.1 Definitions

In this Plan, unless the context otherwise requires:

Administration Agreement

means the administration, trust, administrative services, plan services or other agreement entered
into by lululemon with the Administrator pursuant to section 9.1 or 9.2 then in effect, as the same
may be amended pursuant to section 9.3.

Administrator

means the party appointed as Administrator and service provider in connection with the
administration of this Plan pursuant to section 9.1 or 9.2 then acting as such.

Applicable Tax Legislation

means the Income Tax Act (Canada) and the regulations made thereunder and applicable provincial
income tax legislation and regulations made thereunder or, as applicable, the Internal Revenue Code
of 1986, as amended.

Board of Directors

means the board of directors of lululemon.

Canadian Employee

means an Employee who is resident in Canada within the meaning of that expression as used in the
Income Tax Act (Canada) and is employed by a Canadian Employer.

Canadian Employer

means an Employer that is organized under the laws of Canada or a province thereof which carries on
business in Canada and deals at non-arm’s length with lululemon.

Committee

means the Compensation Committee of the Board of Directors and shall include (i) any successor to
such committee, and (ii) any committee of the Board of Directors which may, subsequent to the
implementation of this Plan, be established by the Board of Directors and to which the Board of
Directors has delegated responsibility for administration of this Plan (any successor or other
committee being herein referred to as a “Successor Committee”), provided
that if the Compensation Committee of the Board of Directors shall cease to exist without any
Successor Committee coming into existence “Committee” shall mean the Board of Directors.

Common Shares

means common shares, par value U.S. $0.01 per share, in the capital of lululemon.

 

 

Declaration of Trust

in respect of any Member, means the separate application and declaration of trust (including any
addenda in respect of “locked-in funds”) entered into by the Trustee and such Member pursuant to
the Sponsor Agreement in the form approved by the Trustee, as amended by the Trustee from time to
time, which creates, governs and sets out the terms of the registered retirement savings plan under
the Applicable Tax Legislation under which such Member is the annuitant within the meaning of
Applicable Tax Legislation.

Earnings

means, with respect to any Member, the total base earnings of such Member from such Member’s
Employer, but excluding overtime pay, commissions, bonus payments, on-call pay, gratuities and
other special compensation.

Employee

means a person who is an employee of an Employer.

Employer

means:

     (a) lululemon; or

     (b) a Participating Subsidiary.

Full-Time Employee

means:

	 	(a)	 	an Employee who:

	 	(i)	 	is in a full-time year round position and works 24 or more
hours per week;
	 
	 	(ii)	 	is in a position of store manager or assistant store manager
and works year round with no break in service and works 24 or more hours per
week; or
	 
	 	(iii)	 	is in a position of “Educator” and works year round with no
break in service and works 24 or more hours per week; or

	 	(b)	 	an Employee or class of Employees whose participation in the Plan is approved
in writing by the Chief Executive Officer of lululemon.

lululemon

means lululemon athletica inc., a Delaware corporation.

Market Value

on any date, means the average of the closing prices per share of at least a board lot of Common
Shares on The Toronto Stock Exchange for the five trading days immediately preceding such date on
which at least a board lot of Common Shares traded.

 

 

Member

means a Full-Time Employee who is enrolled in this Plan pursuant to the provisions hereof.

Non-Registered ESPP

means a Non-Registered ESPP Account established and maintained by the Administrator with respect to
a Member under this Plan that is not a Registered ESPP.

Non-Registered ESPP Account

means, with respect to any Member, an account of such Member established and maintained by the
Administrator pursuant to section 10.1.

Participating Subsidiary

means any Subsidiary of lululemon that has been designated by the Board of Directors, the Committee
or the Chief Executive Officer of lululemon as participating in this Plan unless such designation
has been revoked by the Board of Directors, the Committee or the Chief Executive Officer as the
case may be.

Plan

means this Employee Share Purchase Plan (“ESPP”) which will consist of the Non-Registered ESPPs and
the Registered ESPPs.

Registered ESPP

means a Registered ESPP Account established and maintained by the Trustee with respect to a Member
under this Plan pursuant to a Declaration of Trust that is a “registered retirement savings plan”
under the Applicable Tax Legislation.

Registered ESPP Account

means with respect to any Member, an account of such Member established and maintained by the
Trustee pursuant to section 10.2.

Sponsor Agreement

means the RSP Sponsor Agreement entered into by lululemon with the Trustee pursuant to section 9.4
or 9.5 then in effect, as the same may be amended pursuant to section 9.6.

Subsidiary

means a “subsidiary” as that term is defined in the Securities Act (British Columbia).

Trustee

means (i) in respect of Non-Registered ESPPs, the Administrator, and (ii) in respect of Registered
ESPPs, the party appointed as Trustee under this Plan pursuant to section 9.4 or 9.5 then acting as
such.

Year

means a year ending December 31.

 

 

Article 2 — Eligibility

2.1 Eligibility

Except to the extent that an Employee’s ability to re-enrol in this Plan is restricted as provided
in section 7.5, all Full-Time Employees are eligible to enrol and participate in this Plan and may
enrol and participate in this Plan at any time after:

	 	(a)	 	in the case of a Full-Time Employee who is part of the “Senior Management
Team”, as designated by the Chief Executive Officer of lululemon, commencing employment
with such Full-Time Employee’s Employer;
	 
	 	(b)	 	in the case of all other Full-Time Employees, the commencement of the first
calendar month following the end of the Employee’s three-month initial probation
period.

2.2 Re-enrolment

If the employment of a Member is terminated as described in section 7.9 and the Employee thereafter
becomes a Full-Time Employee, for the purposes of this Plan, except to the extent that an
Employee’s ability to re-enrol or recommence participation in this Plan is restricted as provided
in section 7.5, the Employee will be considered to be a new Employee.

2.3 No Right to Employment

Participation in this Plan is entirely voluntary and any decision by a Full-Time Employee not to
participate will not affect such Employee’s employment with such Employee’s Employer. Nothing
contained in this Plan gives any Full-Time Employee who participates in this Plan the right to be
employed or to continue to be employed by an Employer.

Article 3 — Enrolment

3.1 Enrolment by Canadian Employees

A Full-Time Employee who is a Canadian Employee who wishes to participate in a Non-Registered ESPP
or a Registered ESPP must:

	 	(a)	 	submit to lululemon or the Administrator an enrolment form authorizing the
Employee’s Employer to deduct from the Earnings of such Employee such contributions to
this Plan as such Employee may designate in such enrolment form (subject to changes
which the Employee may thereafter make pursuant to section 4.1);
	 
	 	(b)	 	open an account with the Administrator;
	 
	 	(c)	 	if the Employee wishes to enrol and participate in a Registered ESPP, complete
and submit to the Administrator a group application form;

 

 

	 	(d)	 	if the Employee wishes to enrol and participate in both a Non-Registered ESPP
and a Registered ESPP, designate a percentage of the Member’s contributions to this
Plan that the Employee wishes to contribute to (i) the Non-Registered ESPP and (ii) the
Registered ESPP;
	 
	 	(e)	 	submit to the Administrator or lululemon a beneficiary designation form; and
	 
	 	(f)	 	express the agreement of such Employee to be bound by the terms and conditions
of this Plan;

in each case in the form and manner from time to time required by lululemon, the Administrator or
the Trustee.

3.2 Employee Solely Responsible re Contribution Limits to Registered ESPP

For greater certainty, the Employers and Administrator and Trustee assume no responsibility in
relation to whether any Employee is or continues to be eligible under applicable laws to
participate in a Registered ESPP or contribution limits applicable to any Employee to any
Registered ESPP, which matters shall be the sole responsibility of the Employee.

3.3 Enrolment by Non-Canadian Employees

A Full-Time Employee who is not a Canadian Employee who wishes to participate in the Plan may
participate through a Non-Registered ESPP and such Employee must:

	 	(a)	 	submit to lululemon or the Administrator an enrolment form authorizing the
Employee’s Employer to deduct from the Earnings of such Employee such contributions to
this Plan as such Employee may designate in such enrolment form (subject to changes
which the Employee may thereafter make pursuant to section 4.1);
	 
	 	(b)	 	open an account with the Administrator (and, in connection therewith, if
required by the Administrator or lululemon, submit to the Administrator or lululemon a
Substitute Form W-9 or other form that the Administrator or lululemon may require); and
	 
	 	(c)	 	express the agreement of such Employee to be bound by the terms and conditions
of this Plan;

in each case in the form and manner from time to time required by lululemon and the Administrator.

Article 4 — Contributions

4.1 Member Contributions and Allocation

A Member may, no less frequently than monthly, contribute an amount to this Plan equal to what ever
portion of his or her Earnings equates, after deduction of applicable taxes, to either 3%, 6%

 

 

or 9%
of such Member’s Earnings for such period, as designated by such Member from time to time in the
form and manner contemplated pursuant to sections 3.1 or 3.3 or in a written notice given pursuant
to this section. The contributions to this Plan made by a Member who is a Canadian Employee who is
participating in both a Non-Registered ESPP and a Registered ESPP shall be allocated between a
Non-Registered ESPP and a Registered ESPP as designated by such Member from time to time in the
form and manner contemplated pursuant to sections 3.1(d) or 4.2(b) or in a written notice given
pursuant to this section. A Member may change any designation or allocation referred to in this
section to be applicable to future regularly scheduled payroll payments by giving notice of such
change to the Administrator and the Trustee (and, if the Administrator or lululemon so advises the
Member, to lululemon and the Member’s Employer), in the form and manner and subject to such
restrictions or conditions (which may include conditions regarding when changes will become
effective subsequent to notice being given or limitations on the number of times a Member may make
changes in a specified time period) from time to time required by lululemon and the Administrator.
Subject to the mandatory change of allocation contemplated pursuant to section 4.2, any such
designation will remain in effect until changed by the Member.

4.2 Change of Status of Canadian Employee

If a Member participating in a Registered ESPP ceases to be a Canadian Employee:

	 	(a)	 	the Member must, not less than 10 days prior to the date on which the status of
the Member changes, give notice of such change to the Administrator and the Member’s
Employer specifying the date on which the Member will cease to be a Canadian Employee,
in the form and manner required by lululemon and the Administrator or Trustee; and
	 
	 	(b)	 	effective upon the date that the Member so ceases to be a Canadian Employee,
all contributions made after such time to this Plan by the Member shall be allocated to
the Member’s Non-Registered ESPP unless and until the Member again becomes a Canadian
Employee, in which event the Member may give a notice
pursuant to this section designating an allocation of such Member’s contributions
between such Member’s Non-Registered ESPP and Registered ESPP in the form and manner
required by lululemon and the Administrator or Trustee.

4.3 Deduction of Contributions – Registered ESPP

Contributions to this Plan made by a Member who is a Canadian Employee participating in a
Registered ESPP which are, pursuant to section 4.1, allocated to the Member’s Registered ESPP will
be deducted and withheld by the Member’s Employer by payroll deductions from such Member’s Earnings
which will be made no more frequently than the regularly scheduled payroll payments as may be
designated by the Member’s Employer from time to time and all such amounts so deducted or withheld
will promptly (and, in any event, within ten days after the deduction or withholding thereof) be
deposited by the Employer with the Trustee (or with the Administrator, as agent for the Trustee).

 

 

4.4 Deduction of Contributions – Non-Registered ESPP

Contributions made by a Member to this Plan which are not, pursuant to section 4.1, allocated to a
Member’s Registered ESPP will be deducted and withheld by the Member’s Employer by payroll
deductions from such Member’s Earnings which will be made no more frequently than the regularly
scheduled payroll payments as may be designated by the Member’s Employer from time to time and will
be allocated to the Member’s Non-Registered ESPP and all such amounts so deducted or withheld will
promptly (and in any event, within ten days after the deduction or withholding thereof) be
deposited by the Employer with the Administrator.

4.5 Employer Contributions – Registered ESPP

Subject to section 4.9, the Employer, on behalf of each Member who is a Canadian Employee who is
participating in a Registered ESPP, will make a contribution to the Member’s Registered ESPP on
behalf of the Member equal to one-third of the amount contributed by such Member to the Member’s
Registered ESPP. The contribution of lululemon will be deposited by lululemon with the Trustee (or
with the Administrator, as agent for the Trustee) at the time of or promptly (and in any event,
within ten days) after the end of each month in which contributions to this Plan made by such
Member are deducted and withheld by the Member’s Employer.

4.6 Employer Contributions – Non-Registered ESPP

Subject to section 4.9, the Employer, on behalf of each Member who is participating in a
Non-Registered ESPP, will make a contribution to the Member’s Non-Registered ESPP on behalf of the
Member equal to one-third of the amount contributed by such Member to the Member’s Non-Registered
ESPP. The contribution by lululemon will be deposited by lululemon with the Administrator at the
time of or promptly (and in any event, within ten days) after the end of each month in which
contributions to this Plan made by such Member are deducted and withheld by the Member’s Employer.
The Employer’s contributions will be additional compensation to the Member and the Employer will be
entitled to make such withholdings as may be required by Applicable Tax Legislation from cash
remuneration payable to the Member.

4.7 Contributions Credited to Accounts

The Trustee (or the Administrator as agent for the Trustee) will, on receipt of any contribution to
a Registered ESPP by or on behalf of a Member, credit such contribution to such Member’s Registered
ESPP Account. The Administrator will, on receipt of any contribution to a Non-Registered ESPP by
or on behalf of a Member, credit such contribution to such Member’s Non-Registered ESPP Account.
All contributions by lululemon on behalf of a Member will vest irrevocably in such Member as and
when they are received by the Trustee or Administrator.

4.8 Holding of Amounts Pending Investment

The Trustee will hold all cash amounts credited to each Member’s Registered ESPP Account from time
to time, pending the application thereof to the purchase of Common Shares pursuant to section 5.1,
in a non-interest bearing account of the Trustee or the Administrator or of any Canadian chartered
bank, including, without limitation, any bank expressly permitted in the Sponsor Agreement, or any
trust corporation existing under the laws of Canada or any province

 

 

thereof, and will credit all
cash dividends or other earnings arising therefrom to such Member’s Registered ESPP Account. The
Administrator will hold all cash amounts credited to each Member’s Non-Registered ESPP Account from
time to time, pending the application thereof to the purchase of Common Shares pursuant to
section 5.4, in a non interest bearing account of the Administrator or of any Canadian chartered
bank, including, without limitation, any bank expressly permitted in the Administration Agreement,
or any trust corporation existing under the laws of Canada or any province thereof, and will credit
all cash dividends or other earnings arising therefrom to such Member’s Non-Registered ESPP
Account.

4.9 Insolvency

Notwithstanding anything to the contrary herein, the Employer will not make any contribution to
this Plan pursuant to section 4.5 or 4.6 in circumstances where the Employer is insolvent or such
contribution would render the Employer insolvent.

Article 5 — Purchase of Common Shares

5.1 Purchase by Trustee of Common Shares – Registered ESPPs

The contributions by or on behalf of each Member to a Member’s Registered ESPP, together with all
cash dividends, interest and other earnings credited to such Member’s Registered ESPP Account, will
be applied by the Trustee (or the Administrator as agent for the Trustee) to the purchase of Common
Shares to be held in trust for the benefit of such Member. Such purchases will be made by the
Trustee (or the Administrator as agent for the Trustee) on or before the 15th day of the month
following the month in which contributions by or on behalf of a Member are made, through the
facilities of the Toronto Stock Exchange (or such other stock exchange as lululemon may designate
from time to time) and at the prevailing market price of our Common Stock on the Toronto Stock
Exchange (or such other stock exchange as lululemon may designate from time to time) on the date of
purchase.

5.2 Holding of Common Shares – Registered ESPPs

All Common Shares purchased by the Trustee (or the Administrator as agent for the Trustee) pursuant
to section 5.1 on behalf of a Member will be held by the Trustee in trust for the benefit of such
Member, and the Trustee (or the Administrator as agent for the Trustee) will record in such
Member’s Registered ESPP Account the number of Common Shares (including any fraction thereof) so
held by the Trustee for the benefit of such Member. The certificates representing such Common
Shares will, prior to the withdrawal of such Common Shares from the Member’s Registered ESPP, be
registered in the name of the Trustee or its nominee.

5.3 Dividends in Registered ESPPs

The Trustee will, on receipt of any dividends paid on any Common Shares held by the Trustee in
trust for the benefit of a Member pursuant to section 5.2, credit such dividends to such Member’s
Registered ESPP Account.

 

 

5.4 Purchase by Administrator of Common Shares – Non-Registered ESPPs

The contributions by or on behalf of each Member to a Member’s Non-Registered ESPP, together with
all cash dividends, interest and other earnings credited to such Member’s Non-Registered ESPP
Account, will be applied by the Administrator to the purchase of Common Shares on behalf of such
Member. Such purchases will be made by the Administrator on or before the 15th day of
the month following the month in which contributions by or on behalf of a Member are made, through
the facilities of the Toronto Stock Exchange (or such other stock exchange as lululemon may
designate from time to time) and at the prevailing market price of our Common Stock on the Toronto
Stock Exchange (or such other stock exchange as lululemon may designate from time to time) on the
date of purchase.

5.5 Holding of Common Shares – Non-Registered ESPPs

All Common Shares purchased by the Administrator pursuant to section 5.4 on behalf of a Member will
be held by the Administrator for the benefit of such Member, and the Administrator will record in
such Member’s Non-Registered ESPP the number of Common Shares (including any fraction thereof) so
held by the Administrator for the benefit of such Member. The certificates representing such
Common Shares will, prior to the withdrawal of such Common Shares from this Plan, be registered in
the name of the Administrator or its nominee.

5.6 Dividends in Non-Registered ESPPs

The Administrator will, on receipt of any dividends paid on any Common Shares held by the
Administrator for the benefit of a Member pursuant to this Plan, credit such dividends to such
Member’s Non-Registered ESPP Account.

Article 6 — Transfers to Registered ESPP

6.1 Transfer to Registered ESPP

A Member who is a Canadian Employee participating in a Registered ESPP may transfer all or some of
the Common Shares, money or other property held in such Member’s Non-Registered ESPP Account to
such Member’s Registered ESPP Account, subject to such restrictions and limitations and conditions
as may be imposed from time to time by lululemon or the Trustee or Administrator. If the Canadian
Employee Member is not already participating in a Registered ESPP the Member will be required to
first enrol in a Registered ESPP pursuant to section 3.1(c) prior to effecting any transfer
referred to in this section. A Member wishing to effect such a transfer must execute and submit to
the Administrator an ESPP Transfer form in the form and manner required by lululemon and the
Administrator. Such a transfer will not constitute a withdrawal from the Member’s Non-Registered
ESPP for the purpose of Article 7.

6.2 Transfer Process

In the event of a transfer pursuant to section 6.1, the Administrator will transfer the Common
Shares, money or other property held for the benefit of the Member in the transferring Member’s
Non-Registered Account to the Trustee, on behalf of the Member, as directed by the Member, to be
held by the Trustee in trust for the benefit of the Member. The Trustee (or the Administrator

 

 

as
agent for the Trustee) will record in such Member’s Registered ESPP Account the number of Common
Shares (including any fraction thereof) so held by the Trustee for the benefit of such Member. The
certificate representing any Common Shares so transferred will, prior to the withdrawal of such
Common Shares from the Member’s Registered ESPP Account, be registered in the name of the Trustee
or its nominee. The Member will provide the Administrator or Trustee with such information, and
comply with such requirements as the Administrator or Trustee may require in relation to any
capital gains which may be realized by the Member as a result of any such transfer. The Member
effecting such transfer will have sole liability for determining and discharging any tax liability
of the Member in respect of or arising as a result of such transfer.

Article 7 — Withdrawals

7.1 Annual Withdrawals Permitted

No more than twice in each Year a Member may withdraw all or some of the Common Shares, money or
other property held in such Member’s Non-Registered ESPP Account or Registered ESPP Account, or, if
the Member has both a Non-Registered ESPP Account and Registered ESPP Account, may separately
withdraw all or some of the Common Shares, money or other property held in both such Non-Registered
ESPP Account and Registered ESPP Account, without in any way affecting the right of such Member to
continue to participate in this Plan. If a Member wishes to withdraw some or all of the Common
Shares, money or other property held in such Member’s Non-Registered ESPP Account or Registered
ESPP Account, the Member must complete and submit to the Administrator a withdrawal form in the
form and manner from time to time required by lululemon and the Administrator.

7.2 Suspension of Contributions Following Third Withdrawal

If a Member withdraws all or some of the Common Shares, money or other property held in such
Member’s Non-Registered ESPP Account or Registered ESPP Account more than twice in any Year, the
right of the Member to make contributions under this Plan will be suspended for a period of 12
months following the date of the third withdrawal. During this period of suspension any Common
Shares, money and other property held in such Member’s Non-Registered ESPP Account or Registered
ESPP Account following such third withdrawal will continue to be held in such Member’s
Non-Registered ESPP Account and Registered ESPP Account pursuant to the terms of this Plan, and
dividends, if any, paid on any Common Shares held by the Trustee for the benefit of such Member in
such Member’s Registered ESPP Account will be applied by the Trustee (or the Administrator as agent
for the Trustee) to the purchase of Common Shares on behalf of such Member pursuant to section 5.1
and dividends, if any, paid on any Common Shares held by the Trustee for the benefit of such Member
in such Member’s Non-Registered ESPP Account will be applied by the Administrator to the purchase
of Common Shares on behalf of such Member pursuant to section 5.4, but no contributions will be
made by or on behalf of the Member under this Plan (either in the form of contributions deducted
and withheld from payroll deductions or contributions by an Employer pursuant to section 4.5 or
4.6) during such period of suspension.

 

 

7.3 No Further Withdrawals

If a Member’s right to make contributions under this Plan is suspended pursuant to section 7.2, the
Member will not have the right to make further withdrawals of any of the Common Shares, money or
other property held in such Member’s Non-Registered ESPP Account or Registered ESPP Account during
the period of suspension unless the Member terminates such Member’s participation in this Plan.

7.4 Termination of Participation

If a Member’s right to make contributions under this Plan is suspended pursuant to section 7.2 and
the Member makes a withdrawal of any of the Common Shares, money or other property held in such
Member’s Non-Registered ESPP Account or Registered ESPP Account during the period of suspension,
the Member will cease to be entitled to participate in this Plan, or make contributions to this
Plan from and after the date of such withdrawal unless such Employee, if the Employee continues to
be a Full-Time Employee eligible to do so, thereafter, subject to section 7.5, again enrols in this
Plan pursuant to section 3.1 or section 3.3.

7.5 Withdrawal Following Termination

In the event:

	 	(a)	 	any Member ceases to be entitled to participate in this Plan as provided in
section 7.4; and
	 
	 	(b)	 	upon the conclusion of the 12-month suspension period contemplated in section
7.2, such Member continues to be a Full-Time Employee eligible to participate in
the Plan but does not again enrol in this Plan pursuant to section 3.1 or section
3.3,

all of the Common Shares, money and other property held in such Member’s Non-Registered ESPP
Account and, if applicable, Registered ESPP Account will be deemed to have been withdrawn by the
Member within 60 days of the conclusion of the 12-month suspension period contemplated in section
7.2. In addition, in such event the Employee will not be entitled to re-enrol or recommence
participation in this Plan prior to the first anniversary of the first day of the month following
the month in which such Member’s Common Shares, money and other property were deemed to have been
withdrawn.

7.6 Transfers to Registered ESPP During Suspension Period

Notwithstanding that a Member’s right to make contributions under this Plan is suspended pursuant
to section 7.2, a Member who is a Canadian Employee participating in a Registered ESPP will have
the right to transfer all or some of the Common Shares, money or property held in such Member’s
Non-Registered ESPP Account pursuant to Article 6 during the period of such suspension.

 

 

7.7 Authorization by Chief Financial Officer or the Vice President People Resources – No Suspension

Either the Chief Financial Officer or the Vice President People Resources of lululemon may, in his
or her discretion, authorize a Member, on such terms and conditions, if any, as such authorization
may specify, to withdraw Common Shares, money or other property held in such Member’s
Non-Registered ESPP Account or, if applicable, Registered ESPP Account more than twice in a Year
without such Member’s right to make contributions being suspended pursuant to section 7.2 where, in
the opinion of either the Chief Financial Officer or the Vice President People Resources, such
action is necessary or desirable as a result of financial hardship being suffered by such Member.
If either the Chief Financial Officer or the Vice President People Resources makes an authorization
pursuant to this section 7.7, section 7.2 will not apply to any withdrawal made in accordance with
such authorization.

7.8 Authorization by Chief Financial Officer or the Vice President People Resources During Suspension Period

Either the Chief Financial Officer or the Vice President People Resources of lululemon, in his or
her discretion, may authorize a Member, on such terms and conditions, if any, as such authorization
may specify, to withdraw Common Shares, money or other property held in such Member’s
Non-Registered ESPP Account or, if applicable, Registered ESPP Account during any period of
suspension referred to in section 7.2 without such Member ceasing to be entitled to participate in
this Plan or to make contributions to this Plan where, in the opinion of either the Chief Financial
Officer or the Vice President People Resources, such action is necessary or desirable as a result
of financial hardship being suffered by such Member. If either the Chief Financial Officer or the
Vice President People Resources makes an authorization pursuant to this section 7.8, sections 7.3
and 7.4 will not apply to any withdrawal made in accordance with such authorization.

7.9 Withdrawal Following Termination of Employment

In the event of the termination of the employment of a Member with an Employer for any reason
whatsoever (including death or disability), the Member will cease to be entitled to participate in
this Plan as of the last day of active employment for the Member and all of the Common Shares,
money and other property held in such Member’s Non-Registered ESPP Account and Registered ESPP
Account, as applicable, will be deemed to have been withdrawn by the Member within 60 days after
the date on which such Member’s employment is so terminated.

7.10 Withdrawal Following Change of Employment

In the event any Member participating in this Plan ceases to be a Full-Time Employee for any reason
whatsoever (including disability), the Member will cease to be entitled to participate in this Plan
and all of the Common Shares, money and other property held in such Member’s Non-Registered ESPP
Account and Registered ESPP Account, as applicable, will be deemed to have been withdrawn by the
Member within 60 days after the date on which such Member ceases to be a Full-Time Employee.

 

 

7.11 Withdrawal Following Termination of Plan

In the event of the termination of this Plan, all of the Common Shares, money and other property
held in each Member’s Non-Registered ESPP Account and Registered ESPP Account, as applicable, will
be deemed to have been withdrawn by the Member within 60 days after the date on which this Plan is
terminated.

7.12 Fractional Share Interest on Withdrawal

All rights of a Member to a fraction of a Common Share upon any withdrawal of Common Shares from a
Member’s Registered ESPP will be satisfied by a cash payment in an amount equal to the value
thereof as determined by the Trustee on the basis of the Market Value on the day on which such
withdrawal is made. All rights of a Member to a fraction of a Common Share upon any withdrawal of
Common Shares from a Member’s Non-Registered ESPP will be satisfied by a cash payment in an amount
equal to the value thereof as determined by the Administrator on the basis of the Market Value on
the day on which such withdrawal is made.

7.13 Distribution Following Withdrawal – Non-Registered ESPP

Upon any withdrawal of Common Shares, money and other property by any Member from such Member’s
Non-Registered ESPP, the Member (or the Member’s legal representatives) will be entitled to
instruct the Administrator, in the manner required by the Administrator, to (i) sell any Common
Shares so withdrawn in the open market, through the facilities of the Toronto Stock Exchange (or
such other stock exchange as lululemon may designate from time to time) and remit the proceeds from
such sale, net of related transaction expenses, to such Member; (ii) transfer any Common Shares so
withdrawn to a self-directed investment account of the Member designated by the Member; or
(iii) cause a share certificate registered in the name of such Member (or the Member’s legal
representatives) representing any such Common Shares so withdrawn to be sent to the Member. If the
Member (or the Member’s legal representatives) does not provide instructions to the Administrator
within 60 days after the withdrawal, the
Administrator will sell all Common Shares so withdrawn and remit the proceeds from such sale, net
of related transaction expenses, together with all money and other property so withdrawn from such
Member’s Non-Registered ESPP, (i) by first class registered mail to such Member to the address
specified by such Member by written notice delivered to the Administrator (or, failing such written
notice, to the address of such Member as it appears on such Member’s Non-Registered ESPP Account)
or (ii) by direct deposit with such bank or financial institution, or utilizing such other
alternate payment mechanism, as may have been authorized by the Member. In the event the
Administrator receives evidence satisfactory to the Administrator of the appointment of one or more
legal representatives of such Member or of the estate of such Member, the share certificate (if
applicable), money and other property will be forwarded to the address specified by such personal
representatives by written notice delivered to the Administrator (or, failing such written notice,
to the address of such Member as it appears on such Member’s Non-Registered ESPP Account).

 

 

7.14 Distribution Following Withdrawal – Registered ESPP

Upon any withdrawal of Common Shares, money and other property by any Member from such Member’s
Registered ESPP, the Member (or the Member’s legal representatives) will be entitled to instruct
the Trustee (or the Administrator, as agent for the Trustee), in the manner required by the Trustee
or the Administrator, to (i) sell any Common Shares so withdrawn in the open market, through the
facilities of the Toronto Stock Exchange (or such other stock exchange as lululemon may designate
from time to time) and remit the proceeds from such sale, net of related transaction expenses, to
such Member, or (ii) transfer any Common Shares so withdrawn to a self-directed investment account
or registered retirement savings plan of the Member designated by the Member. If the Member (or
the Member’s legal representatives) does not provide instructions to the Trustee (or the
Administrator as agent for the Trustee) within 60 days after the withdrawal, the Trustee will sell
all Common Shares so withdrawn and remit the proceeds from such sale, net of related transaction
expenses, to the Member, together with all money and other property withdrawn from such Member’s
Registered ESPP, (i) by first class registered mail to such Member to the address specified by such
Member by written notice delivered to the Trustee (or, failing such written notice, to the address
of such Member as it appears on such Member’s Registered ESPP Account), or (ii) by direct deposit
with such bank or financial institution, or utilizing such other alternate payment mechanism, as
may have been authorized by the Member, all subject to the right of the Trustee to withhold and
deduct taxes or other amounts, or sell Common Shares held on behalf of a Member, pursuant to
section 7.16 and in accordance with the terms, conditions, rules and restrictions of the
Declaration of Trust applicable in respect of such Member’s Registered ESPP.

7.15 Compliance with Laws

lululemon may from time to time take such steps and require such documentation from Members that in
its opinion are necessary or desirable to ensure compliance with all applicable laws, including
(i) the applicable securities laws and regulations of Canada (including the provinces and
territories thereof) and of the United States, and any political subdivision of either, and the
bylaws, rules and regulations of any stock exchange or other organized market on which the Common
Shares may from time to time be listed or traded and (ii) the withholding provisions of Applicable
Tax Legislation. lululemon may also from time to time take such steps that in its
opinion are necessary or desirable to restrict the transferability of any Common Shares withdrawn
from this Plan in order to ensure such compliance.

7.16 Tax Withholding

The Trustee shall have the right to:

	 	(a)	 	withhold and deduct from any payment to be made by the Trustee under this Plan
any federal, provincial, local or other taxes and other amounts required by law to be
withheld in respect of such payments; and
	 
	 	(b)	 	sell any Common Shares held on behalf of any Member and use the proceeds from
such sale to pay any federal, provincial, local or other taxes and other amounts
required by law to be withheld in respect of any distribution to such Member under this
Plan.

 

 

Article 8 — Temporary Suspension and Termination

8.1 Temporary Suspension

A Member may elect to suspend making contributions to this Plan effective as of the commencement of
any month and for a period of not less than 3 months and not more than 12 months by giving written
notice of such election to the Member’s Employer not less than 10 days prior to the commencement of
such month in the manner from time to time required by lululemon.

8.2 Restriction

No Member may elect to suspend making contributions to this Plan pursuant to section 8.1 more than
once in any Year.

8.3 Short Term Leaves

A Member who ceases to perform the duties of the Member’s position by virtue of being absent
pursuant to a medical disability (short term disability, long term disability or Worker’s
Compensation leave), maternity or parental leave or pursuant to such other leave of absence as may
be approved by the Member’s Employer or required by law, may elect to suspend making contributions
to this Plan effective as of the commencement of any month during such absence by giving written
notice of such election to the Member’s Employer not less than 10 days prior to the commencement of
such month in the manner required by lululemon. In such case the Member must begin contributing to
this Plan as soon as the Member returns to active employment.

8.4 Termination of Participation

A Member may elect to terminate the Member’s participation in this Plan effective as of the
commencement of any month by giving written notice of such election to the Member’s Employer not
less than 10 days prior to the commencement of such month in the manner from
time to time required by lululemon. If a Member makes such election, the Member will cease to be
entitled to participate in this Plan, or make contributions to this Plan, effective from and after
the commencement of the month indicated in the notice, unless such Employee, if the Employee
continues to be a Full-Time Employee eligible to do so, thereafter, subject to section 8.5, again
enrols in this Plan pursuant to section 3.1 or section 3.3.

8.5 Effect of Termination of Participation

In the event any Member ceases to participate in this Plan as provided in section 8.4, all of the
Common Shares, money and other property held in such Member’s Non-Registered ESPP Account and, if
applicable, Registered ESPP Account, will be deemed to have been withdrawn by the Member within 60
days after the date such Member ceases to participate. In addition, in such event, the Employee
will not be entitled to re-enrol or recommence participating in this Plan

 

 

prior to the first
anniversary of the first day of the month following the month in which such Member ceased to be
entitled to participate in this Plan.

8.6 Required Form

If a Member wishes to temporarily suspend making contributions to this Plan as contemplated in
section 8.1 or to terminate the Member’s participation in this Plan as contemplated by section 8.4,
the Member must complete and submit to lululemon a suspension/termination form in the form and
manner from time to time required by lululemon.

8.7 No Contributions

For greater certainty,

	 	(a)	 	so long as a Member’s contributions to this Plan are suspended, or
	 
	 	(b)	 	from and after the time a Member ceases to participate in this Plan,

contributions on behalf of such Member pursuant to sections 4.5 and 4.6 will also be suspended.

Article 9 — Administrator and Trustee

9.1 Administrator

Each of the Chief Financial Officer and the Vice President People Resources of lululemon shall have
the authority to appoint an Administrator and service provider in connection with the
administration of this Plan pursuant to the terms of an administration, trust, administrative
services, plan services or other agreement in form and on terms and conditions approved by either
the Chief Financial Officer or the Vice President People Resources.

9.2 Successor Administrator

lululemon will have the right at any time and from time to time to appoint any trust company or
life insurance company authorized to carry on trust or deposit business or insurance business
within British Columbia as a replacement Administrator and service provider in connection with
the administration of this Plan pursuant to the terms of an administration, trust, administrative
services, plan services or other agreement between lululemon and such trust company or insurance
company in form and on terms and conditions approved by either the Chief Financial Officer or the
Vice President People Resources of lululemon.

9.3 Amendment of Administration Agreement

lululemon will have the right at any time and from time to time to agree to any modification or
amendment to the administration, trust, administrative services, plan services or other agreement
referred to in sections 9.1 or 9.2 which is approved by either the Chief Financial Officer or the
Vice President People Resources of lululemon.

 

 

9.4 Trustee

Each of the Chief Financial Officer and the Vice President People Resources of lululemon shall have
the authority to appoint a Trustee, pursuant to the terms of a Sponsor Agreement between lululemon
and the Trustee, in form and on terms and conditions approved by either the Chief Financial Officer
or the Vice President People Resources.

9.5 Successor Trustee

lululemon will have the right at any time and from time to time to appoint any trust company
authorized to carry on a trust business within the Province of British Columbia as a replacement
Trustee to serve as trustee under this Plan in respect of the Registered ESPPs pursuant to the
terms of an agreement between lululemon and such trust company in form and on terms and conditions
approved by either the Chief Financial Officer or the Vice President People Resources of lululemon.

9.6 Amendment of Sponsor Agreement

lululemon will have the right at any time and from time to time to agree to any modification or
amendment to the Sponsor Agreement or a trust agreement referred to in section 9.5 which is
approved by either the Chief Financial Officer or the Vice President People Resources of lululemon.

Article 10 — Accounts and Records

10.1 Non-Registered ESPP Accounts

The Administrator will establish and maintain a separate account for each Member who is
participating in a Non-Registered ESPP in which the Administrator will record:

	 	(a)	 	contributions made by such Member pursuant to section 4.1 allocated to the
Member’s Non-Registered ESPP;
	 
	 	(b)	 	contributions to such Member’s Non-Registered ESPP made on behalf of such
Member pursuant to section 4.6;
	 
	 	(c)	 	interest or other earnings credited to such account;
	 
	 	(d)	 	Common Shares purchased by the Administrator on behalf of such Member pursuant
to section 5.4;
	 
	 	(e)	 	dividends paid on any Common Shares held by the Administrator for the benefit
of such Member;
	 
	 	(f)	 	Common Shares, money or other property transferred from such account pursuant
to Article 6; and

 

 

	 	(g)	 	Common Shares, money and other property withdrawn from such account pursuant to
Article 7.

10.2 Registered ESPP Accounts

The Trustee will establish and maintain a separate account for each Member who is a Canadian
Employee who is participating in a Registered ESPP in which the Trustee will record:

	 	(a)	 	contributions made by such Member pursuant to section 4.1 which are allocated
to the Member’s Registered ESPP;
	 
	 	(b)	 	contributions to such Member’s Registered ESPP made on behalf of such Member
pursuant to section 4.5;
	 
	 	(c)	 	interest or other earnings credited to such account;
	 
	 	(d)	 	Common Shares purchased by the Trustee in trust for the benefit of such Member
pursuant to section 5.1;
	 
	 	(e)	 	dividends paid on any Common Shares held by the Trustee in trust for the
benefit of such Member;
	 
	 	(f)	 	Common Shares, money and other property transferred to such account pursuant to
Article 6; and
	 
	 	(g)	 	Common Shares, money and other property withdrawn from such account pursuant to
Article 7.

10.3 Reporting – Non-Registered ESPP Accounts

Promptly after December 31 in each Year the Administrator will deliver to each Member who is
participating in a Non-Registered ESPP a statement of the Common Shares, money and other property
recorded in such Member’s Non-Registered ESPP Account as of the last day of the immediately
preceding month and such information concerning dividends, interest or other earnings credited to
such Member’s Non-Registered ESPP Account, Common Shares purchased by the Administrator on behalf
of such Member pursuant to section 5.4, Common Shares transferred from such account pursuant to
Article 6 and Common Shares withdrawn from such
account pursuant to Article 7 (including proceeds from the sale of any Common Shares pursuant to
section 7.13 and cash payments made in lieu of a fraction of a Common Share pursuant to
section 7.12) and other matters as may be necessary to enable such Member to file returns in
respect of such Year under Applicable Tax Legislation. The Administrator will complete any
information slips or similar reporting as may be required under Applicable Tax Legislation.

10.4 Reporting – Registered ESPP Accounts

Promptly after December 31 in each Year the Trustee (or the Administrator as agent for the Trustee)
will deliver to each Member who is a Canadian Employee who is participating in a Registered ESPP a
statement of the Common Shares, money and other property recorded in such

 

 

Member’s Registered ESPP
Account as of the last day of the immediately preceding month and such information concerning
dividends, interest or other earnings credited to such Member’s Registered ESPP Account, Common
Shares purchased by the Trustee in trust for the benefit of such Member pursuant to section 5.1,
Common Shares transferred to such account pursuant to Article 6 and Common Shares withdrawn
pursuant to Article 7 (including proceeds from the sale of any Common Shares pursuant to
section 7.14 and cash payments made in lieu of a fraction of a Common Share pursuant to
section 7.12) and other matters as may be necessary to enable such Member to file returns in
respect of such Year under Applicable Tax Legislation.

Article 11 — Common Shares Subject to the Plan

11.1 Authorized Shares

The aggregate number of Common Shares available for purchase under the Plan will be 3,000,000,
subject to adjustment pursuant to this Article 11.

11.2 Adjustments

The number of Common Shares available for purchase under the Plan will be automatically and
proportionately adjusted for share dividends, share splits, share combinations, reorganizations and
other similar events or transactions in a manner that reflects equitably the effects of such events
or transactions.

Article 12 — Shareholder Materials

12.1 Shareholder Meeting Materials and Voting

So long as the Administrator or Trustee is holding Common Shares on behalf of a Member, the
Administrator and Trustee (or the Administrator as agent for the Trustee) will cause the Member to
be provided with a copy of the notice, information circular and proxy for each meeting of the
shareholders of lululemon received by the Administrator and Trustee (or their nominees) as the
registered holder of Common Shares together with an appropriate form on which the Member may
indicate voting instructions to the Administrator or Trustee. Provided that the Member provides
clear and timely instructions to the Administrator, or Trustee, as applicable, the Common Shares
held by the Administrator and Trustee on behalf of a Member pursuant to this Plan will be voted by
the Administrator and Trustee at each meeting of the shareholders of lululemon in accordance with
such instructions of such Member.

12.2 Take-Over Bids, etc.

The Administrator and Trustee (or the Administrator as agent for the Trustee) will promptly advise
all Members of take-over bids, issuer bids, rights offerings and other events notice of which is
delivered to the Administrator and Trustee or their nominee as the registered holder of Common
Shares and cause all Members to be provided with copies of all materials delivered by the offeror
or lululemon to the Administrator or Trustee or their nominee in connection therewith.

 

 

Article 13 — Amendments and Termination

13.1 Amendments, Suspensions and Terminations of Plan

lululemon may at any time and from time to time amend, suspend or terminate this Plan in whole or
in part as approved by resolution of the Board of Directors, provided that no such amendment,
suspension or termination shall deprive any Member of any benefits that have accrued on or prior to
the date thereof without the consent of the affected Member.

Article 14 — General

14.1 Agents

lululemon may from time to time appoint or engage accountants, lawyers and such other personnel as
it deems necessary or advisable for the proper administration of this Plan.

14.2 Administrative Rules

lululemon may make administrative rules for the proper functioning of this Plan.

14.3 Interpretation

Save as expressly provided herein, the rights and obligations of a Member with respect to Common
Shares, money and other property held by the Trustee pursuant to such Member’s Registered ESPP will
be as provided in the Declaration of Trust in respect of such Member. All questions arising as to
the interpretation of this Plan (including any disputes or disagreements which may arise under, as
a result of or in any way related to the application of this Plan) will be determined by the Chief
Executive Officer, Chief Financial Officer or the Vice President People Resources of lululemon or
such other officer of lululemon as the Chief Executive Officer may designate in writing to the
Administrator and Trustee from time to time, and any such determination will be final, binding and
conclusive for all purposes.

14.4 Governing Law

This Plan and the rights of the parties hereto will be construed and governed according to the laws
of British Columbia.

14.5 Expenses

Except as otherwise provided herein, lululemon will pay all administrative expenses of this Plan,
including fees of the Administrator and the Trustee and brokerage fees and commissions in respect
of the purchase of Common Shares purchased by the Trustee or Administrator under this Plan.
Members will be responsible for (i) brokerage fees and commissions and other transaction fees and
expenses payable upon a sale by the Administrator or Trustee of Common Shares held under this Plan;
(ii) transaction fees (including fees charged by the Administrator) payable upon a transfer of
Common Shares held under this Plan to a self-directed investment account of a Member; and
(iii) share certificate fees (including fees charged by the Administrator) payable in respect of
share certificates delivered to a Member.

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