Document:

exv10w2

 

Exhibit 10.2

NON-QUALIFIED STOCK OPTION AGREEMENT

UNDER THE

LULULEMON ATHLETICA INC.
2007 EQUITY INCENTIVE PLAN

     THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made between Lululemon Athletica Inc. (the “Company”) and [___] (the “Optionee”).

     WHEREAS,
the Company maintains the lululemon athletica inc. 2007 Equity Incentive Plan (the
“Plan”) for the benefit of the key employees, directors and advisors of the Company and its
Affiliates; and

     WHEREAS, the Plan permits the award of Non-Qualified Stock Options to purchase Shares, subject
to the terms of the Plan; and

     WHEREAS, the Company desires to grant the Optionee Non-Qualified Stock Options under the Plan
to further align the Optionee’s personal financial interests with those of the Company’s
stockholders.

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

     1.   Award of Option.   This Agreement evidences the grant to the Optionee of an option (the
“Option”) to purchase [___] ([___]) Shares (the “Option Shares”). The Option
is subject to the terms set forth herein, and in all respects is subject to the terms and
provisions of the Plan applicable to Non-Qualified Stock Options, which terms and provisions are
incorporated herein by this reference. Except as otherwise specified herein or unless the context
herein requires otherwise, the terms defined in the Plan will have the same meanings herein.

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

     3.   Date of Grant; Term of Option.   The Option was granted on [___], 2007 (the
“Effective Date”) and may not be exercised later than the date that is ten (10) years after
that date, subject to earlier termination in accordance with the Plan.

     4.   Option Exercise Price.   The per share exercise price of the Option is $[___] (the
“Exercise Price”), which amount is intended to be not less than the Fair Market Value per
Share on the Effective Date.

     5.   Exercise of Option.   The Option will become exercisable only in accordance with the terms
and provisions of the Plan and this Agreement, as follows:

          (a)   Right to Exercise.   The Option will become exercisable with respect to 25% of the Option
Shares on each of the first, second, third and fourth anniversaries of the Effective Date, provided
in each case that the Optionee remains continuously in service with the Company through the
applicable anniversary. For the purposes of this Agreement, “service
with the Company” will be deemed to include service with an Affiliate of the Company for so
long as that entity remains and Affiliate of the Company.

 

 

          (b)   Method of Exercise.   The Optionee may exercise the Option by providing written notice to
the Company stating the election to exercise the Option. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company
or such other person as may be designated by the Company, and shall be accompanied by payment of
the Exercise Price and an amount equal to any required tax withholding. Payment of the Exercise
Price may be made in cash. In addition, this Option may be exercised through means of a “net
settlement,” whereby no Exercise Price will be due and where the number of Share issued upon such
exercise will be equal to: (A) the product of (i) the number of Option Shares as to which the
Option is then being exercised, and (ii) the difference between (a) the then current Fair Market
Value per Share and (b) the Exercise Price, divided by (B) the then current Fair Market Value per
Share. A number of Shares equal to the difference between the number of Option Shares as to which
the Option is then being exercised and the number of Shares actually issued to the Optionee upon
such net settlement will be deemed to have been received by the Company in satisfaction of the
Exercise Price.

          (c)   Share Legends.   Any certificate evidencing an Option Share will contain such legends as
may be required or appropriate under any applicable stockholder agreement or stock purchase
agreement, in addition to any other legend that may be required or appropriate under applicable
law, the Plan or otherwise.

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

          (e)   Restrictions on Exercise.   The Option may not be exercised, and any purported exercise
will be void, if the issuance of the Option Shares upon such exercise would constitute a violation
of any applicable federal or state securities laws or other laws or regulations. In addition, as a
further condition to the exercise of the Option, the Company may require the Optionee to make any
representation or warranty to the Company as may be required by or advisable under any applicable
law or regulation.

     6.   Investment Representations.   The Optionee represents and warrants to the Company that:

          (a)   unless the Option Shares have been registered under the Securities Act of 1933, as amended
(the “Securities Act”), he or she is acquiring the Option (and upon exercise of the Option, will be
acquiring the Option Shares) for investment for his or her own account, not as a nominee or agent,
and not with a view to, or for resale in connection with, any distribution thereof; and

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

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          (c)   he or she is an employee, executive officer, director or consultant of the Company or,
unless resident in a Province of Canada other than British Columbia, an Affiliated Company, has the
benefit of an exemption from the prospectus and registration requirements of applicable Canadian
provincial securities laws; and

          (d)   the Optionee has voluntarily received this Option.

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

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

     8.   Tax Consequences.   The Optionee has reviewed with the Optionee’s own tax advisors the
federal, state, local and foreign tax consequences of the Option. The Optionee is relying solely
on such advisors and not on any statements or representations of the Company or any of its agents
or affiliates. The Optionee understands that he or she (and not the Company) will be responsible
for his or her own tax liabilities arising in connection with this award or the transactions
contemplated by this Agreement.

     9.   No Continuation of Service.   Neither the Plan nor this Option will confer upon the Optionee
any right to continue in the service of the Company or any of its Affiliates, or limit in any
respect the right of the Company or its Affiliates to discharge the Optionee at any time, with or
without Cause and with or without notice.

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

     11.   Entire Agreement.   This Agreement, together with the Plan, and other exhibits attached
thereto or hereto, represents the entire agreement between the parties and supersedes any and all
prior or contemporaneous discussions, understandings or any agreements of any nature, written or
otherwise, relating to the subject matter hereof.

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

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

[This space intentionally left blank; signature page follows.]

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     IN WITNESS WHEREOF, this Agreement has been executed by the parties on the ___ day of

_________, ____.

	 	 	 	 	 
	 	lululemon athletica inc.

 	 
	 	 	 
	 	By: 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 
	 	[OPTIONEE]

 	 
	 
	 	 	 
	 	Signature 	 
	 	 	 
	 	 	 
	 	Address 	 
	 	 	 
	 	 	 
	 	 	 

-5-exv10w13

 

Exhibit 10.13

FORM
OF

AMENDED AND RESTATED

DECLARATION OF TRUST

Forfeitable Exchangeable Shares

l, 2007

 

 

AMENDED AND RESTATED DECLARATION OF TRUST

Forfeitable Exchangeable Shares

THIS DECLARATION OF TRUST is made as of the l day of l, 2007, by Dennis Wilson (the “Trustee”).

WHEREAS pursuant to a stock option plan (the “Option Plan”) of LIPO Investments (Canada) Inc.(“LIPO
Canada”) dated December 1, 2005, Dennis Wilson (the “Trustee”) was appointed as trustee of the Plan
to hold legal title to the shares of LIPO Canada issued on the exercise of options granted under
the Option Plan;

AND WHEREAS pursuant to the provisions of the Option Plan certain options granted under the Option
Plan were issued and designated as “forfeitable shares” and held in trust by the Trustee for the
benefit of the holders thereof subject to certain repurchase and other rights;

AND
WHEREAS in connection with an arrangement agreement (the
“Arrangement Agreement”) dated as of April 26,
2007 among Lululemon Corp. (“Lululemon”), Lululemon
Callco ULC (“Callco”), Lulu Canadian
Holding, Inc. (“Exchangeco”), LIPO Investments (USA), Inc. and LIPO Canada, all shares of LIPO
Canada, including the “forfeitable shares” were exchanged with Exchangeco for exchangeable shares
(“Exchangeable Shares”) of Exchangeco, and none of the Trustee nor the former holders of the
options granted under the Option Plan are now shareholders or option holders of LIPO Canada, so
that it is impractical to continue to record the terms of the trust in the Option Plan;

AND WHEREAS pursuant to the Arrangement Agreement, the Trustee has agreed to enter into a
declaration of trust substantially in the form of this Trust Declaration, to amend and restate the
trust which was created under the Option Plan, to record the terms pursuant to which the Trustee
will hold Exchangeable Shares issued in respect of “forfeitable shares”;

NOW THEREFORE this Declaration records the terms on which the Trustee will hold the Trust Estate
(as defined below) in trust for the benefit of the Beneficial Holders on the terms hereof:

ARTICLE 1

DEFINITIONS

1.1 Definitions

In this Trust Declaration, the following terms shall have the following meanings:

“Arrangement” means the arrangement under part 9, division 5 of the BCA on the terms and subject to
the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto
made in accordance with Article 6 of the Arrangement Agreement or Article 6 of the Plan of
Arrangement or made at the direction of the Court in the Final Order.

“BCA” means the Business Corporations Act (British Columbia), as amended.

“Beneficial Holders” has the meaning assigned in Section 3.1.

 

 

“Board of Directors” means the board of directors of Exchangeco.

“Business Day” means any day on which commercial banks are generally open for business in
Vancouver, British Columbia and New York, New York, other than a Saturday, a Sunday or a day
observed as a holiday in Vancouver, British Columbia under the laws of the Province of British
Columbia or the federal laws of Canada or in New York, New York under the laws of the State of New
York or the federal laws of the United States of America.

“Court” means the Supreme Court of British Columbia.

“Declaration of Trust” means this Declaration of Trust as it may be amended or supplemented from
time to time.

“Effective
Date” means the date following the grant of the Final Order
on which the parties to the Arrangement Agreement agree the
Arrangement becomes effective;

“Effective Time” means the time on the Effective Date at which the Arrangement becomes effective.

“Eligible Person” means any individual regularly employed on a full-time or part-time basis by
Lululemon or any company in which Lululemon is a direct or indirect shareholder or with which
Lululemon does not act at arm’s length or other persons who perform management or consulting
services for Lululemon or any company in which Lululemon is a direct or indirect shareholder or
with which Lululemon does not act at arm’s length in any such
case on an ongoing basis.

“Exchange Trust Agreement” means the Agreement made between Lululemon, Callco, the Company and a
third party trustee in connection with the Plan of Arrangement, substantially in the form and
content of Exhibit C annexed to the Reorganization Agreement with such changes thereto as the parties
to the Arrangement Agreement, acting reasonably, may agree, a copy of which is available at the
registered office of the Company.

“Exchangeable Share Provisions” means the rights, privileges, restrictions and conditions attaching
to the Exchangeable Shares, which rights, privileges, restrictions and conditions shall be
substantially as set out in Appendix 1 of the Plan of Arrangement.

“Exchangeable Shares” means the non-voting exchangeable shares in the capital of Exchangeco, having
substantially the rights, privileges, restrictions and conditions set out in the Exchangeable Share
Provisions.

“Final Order” means the order of the Court approving the Plan of Arrangement as such order may be
amended at any time prior to the Effective Date or, if appealed, then, unless such appeal is
withdrawn or denied, as affirmed.

“Forfeitable Shares” means those Exchangeable Shares issued pursuant to the Plan of Arrangement in
exchange for LIPO Canada Shares which were designated as “forfeitable shares” pursuant to the LIPO
Option Plan, until such shares cease to be forfeitable in accordance with the conditions set out in
Appendix A.

 

 

“Government Entity” means any federal, provincial, state, local or foreign government or any court
of competent jurisdiction, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign.

“Insolvency Event” means the institution by Exchangeco of any proceeding to be adjudicated a
bankrupt or insolvent or to be wound up, or the consent of Exchangeco to the institution of
bankruptcy, insolvency or winding-up proceedings against it, or the filing of a petition, answer or
consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws,
including without limitation the Companies Creditors’ Arrangement Act (Canada) and the Bankruptcy
and Insolvency Act (Canada), and the failure by Exchangeco to contest in good faith any such
proceedings commenced in respect of Exchangeco within 30 days of becoming aware thereof, or the
consent by Exchangeco to the filing of any such petition or to the appointment of a receiver, or
the making by Exchangeco of a general assignment for the benefit of creditors, or the admission in
writing by Exchangeco of its inability to pay its debts generally as they become due, or Exchangeco
not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to Section 6.6 of the Exchangeable Share Provisions.

“Lock-up
Agreement” means the lock-up agreement entered into by each
of the Beneficial Holders pursuant to the terms of the Reorganization
Agreement.

“Lululemon Common Stock” means the common stock of Lululemon, par value US$0.01 per share and any
other securities into which such shares may be changed.

“person” means any individual, a general or limited partnership, a corporation, a trust, a joint
venture, an unincorporated organization, a limited liability entity, any other entity and any
Government Entity.

“Plan of Arrangement” means the plan of arrangement substantially in the form and content of
Exhibit B to the Arrangement Agreement and any amendments or variations thereto made in accordance
with Article 6 of the Arrangement Agreement or Article 6 of the Plan of Arrangement or made at the
direction of the Court.

“Reorganization
Agreement” means the Agreement and Plan of Reorganization
dated April 26, 2007 by and among Lululemon, Exchangeco, LIPO
Canada, LIPO USA and certain other parties.

“Subsidiary” of any person means any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other organization is directly or
indirectly owned or controlled (i) by such person, (ii) by any one or more of its subsidiaries, or
(iii) by such person and one or more of its subsidiaries; provided, however, that no person that is
not directly or indirectly wholly-owned by any other person shall be a subsidiary of such other
person unless such other person controls, or has the right, power or ability to control, that
person.

“Trust” means the trust created by this Trust Declaration.

“Trust
Estate” means the Forfeitable Shares, any other securities and any money or other
property which may be held by the Trustee from time to time pursuant to this Trust Declaration.

“Trustee” means Dennis Wilson and, subject to the provisions of Article 6, includes any successor
trustee.

 

 

ARTICLE 2

PURPOSE OF TRUST DECLARATION

2.1 Continuance of Trust

Effective as at the time of the amendment of the Option Plan pursuant to the Plan of Arrangement,
the trust established by the Option Plan is hereby continued for the benefit of the Beneficial
Holders from time to time, and the Trustee agrees to hold the Forfeitable Shares and the Trust
Estate as trustee for the Beneficial Holders on the terms set out in this Trust Declaration.

ARTICLE 3

PROVISIONS APPLICABLE TO FORFEITABLE SHARES

3.1 Forfeitable Shares

Upon completion of the Plan of Arrangement, the Forfeitable Shares shall be issued to and
registered in the name of the Trustee, to be held in trust for the respective beneficial holders
(the “Beneficial Holders”) thereof pursuant to the terms of this Article 3. Shares which are
designated as Forfeitable Shares will be entitled to become non-forfeitable in accordance with the
conditions set out in Appendix A.

3.2 Trustee Agreements Related to Forfeitable Shares

The Trustee acknowledges and agrees that, other than as set forth in this Trust Declaration:

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

 

 

	 	 	 	pertaining to the Forfeitable Shares without delivering proof to any person
(including, without limitation, any other party to any such instrument or document)
of its authority to do so and any person may act in reliance on any such instrument
or document and for all purposes any such instrument or document will be binding on
the Beneficial Holder.

3.3 Voting Rights

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

3.4 Forfeiture of Shares

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

3.5 Ceasing to be Forfeitable Shares

Upon the
later of (a) an Exchangeable Share ceasing to be a Forfeitable Share
and (b) the expiry of the Lock-up Agreement to which the Beneficial
Holder is a party, the provisions of this Article 3
shall cease to apply to such Share and legal title will pass to the Beneficial Holder thereof who
shall thenceforth be the sole legal and beneficial owner thereof. Promptly thereafter the Trustee
shall direct Exchangeco’s transfer agent to reregister such share in the name of such Beneficial
Holder, direct Exchangeco to deliver or cause to be delivered such re-registered share certificate
to the Beneficial Holder promptly after receipt thereof from the transfer agent and pay over to the
Beneficial Holder all benefits, interest, profit or advantage which have been received by the
Trustee in respect of such Forfeitable Shares.

ARTICLE 4

CONCERNING THE TRUSTEE

4.1 Powers and Duties of the Trustee

In addition to the rights set out in Article 3, but subject to his duties and obligations
hereunder, the Trustee will have in his capacity as Trustee of the Trust, the unfettered discretion
at any time and from time to time to administer the Trust Estate in whatever manner the Trustee may
determine, as if he were the sole owner of the Trust Estate, including, without limitation, the
power, duty and authority to:

 

 

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

In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is
granted) such incidental and additional rights, powers, duties and authority not in conflict with
any of the provisions of this Trust Declaration as the Trustee, acting in good faith and in the
reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary rights, powers, duties and authorities by
the Trustee shall be final, conclusive and binding upon all persons.

The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly
and in good faith and with a view to the best interests of the Beneficial Holders and shall
exercise the care, diligence and skill that a reasonable person would exercise in comparable
circumstances.

The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue
of the powers conferred on it hereby unless and until he shall be specifically required to do so
under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to
take any act, action or proceeding as a result of any default or breach of any provision hereunder,
unless and until notified in writing of such default or breach, which notices shall distinctly
specify the default or breach desired to be brought to the attention of the Trustee, and in the
absence of such notice the Trustee may for all purposes of this Trust Declaration conclusively
assume that no default or breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained herein.

4.2 Income Tax Returns and Reports

The Trustee shall, to the extent necessary, prepare and file on behalf of the Trust appropriate
United States and Canadian income tax returns and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any securities exchange or other
trading system through which the Exchangeable Shares are traded. In connection therewith, the
Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers
necessary or advisable (who may be experts or advisors to Lululemon or Exchangeco).

 

 

4.3 Action of Beneficial Holders

No Beneficial Holder shall have the right to institute any action, suit or proceeding or to
exercise any other remedy authorized by this Trust Declaration for the purpose of enforcing any of
its rights or for the execution of any trust or power hereunder unless the Beneficial Holder has
requested the Trustee to take or institute such action, suit or proceeding and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not otherwise, the
Beneficial Holder shall be entitled to take proceedings in any court of competent jurisdiction such
as the Trustee might have taken; it being understood and intended that no one or more Beneficial
Holders shall have any right in any manner whatsoever to affect, disturb or prejudice the rights
hereby created by any such action, or to enforce any right hereunder, except subject to the
conditions and in the manner herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except
only as herein provided, and in any event for the equal benefit of all Beneficial Holders.

4.4 Reliance Upon Declarations

The Trustee shall not be considered to be in contravention of any of his rights, powers, duties and
authorities hereunder if, when required, it acts and relies in good faith upon statutory
declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or
required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such statutory declarations, certificates, opinions or reports comply with
the provisions of this Trust Declaration.

4.5 Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the execution of the
trusts, rights, duties, powers and authorities of this Trust Declaration.

4.6 Conflicting Claims

If conflicting claims or demands are made or asserted with respect to any interest of any
Beneficial Holder in any Exchangeable Shares, including any disagreement between the heirs,
representatives, successors or assigns succeeding to all or any part of the interest of any
Beneficial Holder in any Exchangeable Shares, resulting in conflicting claims or demands being made
in connection with such interest, then the Trustee shall be entitled, at its sole discretion, to
refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may
elect not to exercise any rights hereunder subject to such conflicting claims or demands and, in so
doing, the Trustee shall not be or become liable to any person on account of such election or its
failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be
entitled to continue to refrain from acting and to refuse to act until:

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

 

 

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

If the Trustee elects to recognize any claim or comply with any demand made by any such adverse
claimant, it may in its discretion require such claimant to furnish such surety bond or other
security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between
all conflicting claims or demands.

4.7 Acceptance of Trust

The Trustee hereby accepts the Trust created and provided for by and in this Trust Declaration and
agrees to perform the same upon the terms and conditions herein set forth and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the various persons who shall from
time to time be Beneficial Holders, subject to all the terms and conditions herein set forth.

ARTICLE 5

LIMITATION OF LIABILITY

5.1 Limitation of Liability

The Trustee shall not be held liable for any loss or damage relating to any matter regarding the
Trust or the performance of its duties and obligations hereunder, including, without limitation,
any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or
any loss incurred on any investment of funds pursuant to this Trust Declaration, except to the
extent that such loss is attributable to the fraud, gross negligence, recklessness, wilful
misconduct or bad faith on the part of the Trustee.

The Trustee will not be liable to the Trust or to any Beneficial Holder for the acts, omissions,
receipts, neglects or defaults of any person, firm or corporation employed or engaged by it as
permitted hereunder, or for joining in any receipt or act of conformity, or for any loss, damage or
expense caused to the Trust through the insufficiency or deficiency of any security in or upon
which any of the monies of or belonging to the Trust shall be laid out or invested, or for any loss
or damage arising from the bankruptcy, insolvency or tortious act of any person, firm or
corporation with whom or which the Trust Estate or any part of it shall be lodged or deposited, or
for any loss occasioned by error in judgment or oversight on the part of the Trustee, or for any
other loss, damage or misfortune which may happen in the execution by the Trustee of his duties
hereunder, except to the extent that the Trustee does not meet the standard of care set out in
Section 4.1 and except as set out in this Article 5.

ARTICLE 6

CHANGE OF TRUSTEE

6.1 Resignation

The Trustee, or any Trustee hereafter appointed, may at any time resign by appointing a successor
trustee provided that such resignation shall not take effect until the date of the

 

 

appointment of a successor trustee and the acceptance of such appointment by the successor trustee.

6.2 Successor Trustee

Any successor trustee appointed as provided under this Trust Declaration shall execute an
instrument accepting such appointment. Thereupon the resignation or removal of the predecessor
trustee shall become effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and obligations of its
predecessor under this Trust Declaration, with the like effect as if originally named as trustee in
this Trust Declaration.

6.3 Declaration of Trustee

If the Trustee dies during the term of this Trust before he has resigned and appointed a successor
trustee, the persons who are the executors and trustees of the last will and testament of the
Trustee will have the right to appoint a successor trustee of the Trust.

6.4 Notice of Successor Trustee

Upon acceptance of appointment by a successor trustee as provided herein, the successor trustee
shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficial
Holder.

ARTICLE 7

AMENDMENTS AND SUPPLEMENTAL TRUST DECLARATIONS

7.1 Amendments, Modifications, etc.

This Trust Declaration may not be amended or modified except by an Agreement in writing executed by
the Trustee and approved by the Beneficial Holders in accordance with Section 10.2 of the
Exchangeable Share Provisions.

7.2 Ministerial Amendments

Notwithstanding the provisions of Section 7.1, the Trustee may in writing, at any time and from
time to time, without the approval of the Beneficial Holders, amend or modify this Trust
Declaration for the purposes of:

	 	(a)	 	adding to the covenants of any or all parties hereto for the protection of the
Beneficial Holders hereunder if the Trustee is of the good faith opinion that such
additions will not be prejudicial to the rights or interests of the Beneficial Holders;
	 
	 	(b)	 	making such amendments or modifications not inconsistent with this Trust
Declaration as may be necessary or desirable with respect to matters or questions
which, in the good faith opinion of the Trustee, having in mind the best interests of
the Beneficial Holders it may be expedient to make, provided that the Trustee,

 

 

	 	 	 	acting on the advice of counsel, is of the opinion that such amendments and
modifications will not be prejudicial to the interests of the Beneficial Holders; or
	 
	 	(c)	 	making such changes or corrections which, on the advice of counsel to the
Trustee, are required for the purpose of curing or correcting any ambiguity or defect
or inconsistent provision or clerical omission or mistake or manifest error, provided
that the Trustee, acting on the advice of counsel is of the opinion that such changes
or corrections will not be prejudicial to the rights and interests of the Beneficial
Holders.

7.3 Meeting to Consider Amendments

The Trustee will request Exchangeco to call a meeting or meetings of the Beneficial Holders for the
purpose of considering any proposed amendment or modification requiring approval pursuant hereto.
Any such meeting or meetings shall be called and held in accordance with the articles of
Exchangeco, the Exchangeable Share Provisions and all applicable laws.

7.4 Execution of Supplemental Trust Declarations

No amendment to or modification or waiver of any of the provisions of this Trust Declaration
otherwise permitted hereunder shall be effective unless made in writing and signed by the Trustee.
From time to time, the Trustee may, subject to the provisions of this Trust Declaration, execute
and deliver, trust agreements or other instruments supplemental hereto, which thereafter shall form
part hereof, for any one or more of the following purposes:

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

ARTICLE 8

TERMINATION

8.1 Term

The Trust created by this Trust Declaration shall continue until the earliest to occur of the
following events:

	 	(a)	 	no outstanding Forfeitable Shares are held by the Trustee;

 

 

	 	(b)	 	the Trustee elects in writing to terminate the Trust and such termination is
approved by the Beneficial Holders in accordance with section 10.2 of the Exchangeable
Share Provisions; and
	 
	 	(c)	 	21 years after the death of the last survivor of the descendants of His Majesty
King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland
living on the date of the creation of the Trust.

8.2 Survival of Trust Declaration

This Trust Declaration shall survive any termination of the Trust and shall continue until there
are no Forfeitable Shares outstanding held by the Trustee; provided, however, that the provisions
of Article 5 shall survive any such termination of this Trust Declaration.

ARTICLE 9

GENERAL

9.1 Notices

All notices, requests, claims, demands, waivers and other communications under this Trust
Declaration shall be in writing and shall be deemed given (a) five Business Days following sending
by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile, provided
that the facsimile transmission is promptly confirmed by telephone, (c) when delivered, if
delivered personally to the intended recipient and (d) one Business Day following sending by
overnight delivery via a courier service that is nationally recognized in the U.S. and Canada and,
in each case, addressed to a party at the following address for such party.

If to the Trustee, to:

Dennis Wilson

#2 2108 West 4th Avenue

Vancouver, BC V6K 1N6

If to the Beneficial Holders to the last address in the central securities register for
Exchangeco.

or to such other address(es) as shall be furnished in writing by any such party to the other party
hereto in accordance with the provisions of this Section 9.1.

9.2 Interpretation

When a reference is made in this Trust Declaration to an Article or a section, such reference shall
be to an Article or a section of this Trust Declaration unless otherwise indicated. The table of
contents and headings contained in this Trust Declaration are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Trust Declaration. Whenever the words
‘include’, ‘includes’ or ‘including’ are used in this Trust Declaration, they shall be deemed to be
followed by the words ‘without limitation’. The terms ‘this Trust Declaration’, ‘hereof’, ‘herein’
and ‘hereunder’ and similar expressions refer to this Trust Declaration and not to any particular
Article, section or other portion hereof and include any agreement or instrument

 

 

supplementary or ancillary hereto. Words importing the singular number only shall include the
plural and vice versa. Words importing any gender shall include all genders. If any date on which
any action is required to be taken under this Trust Declaration is not a Business Day, such action
shall be required to be taken on the next succeeding Business Day.

9.3 Severability

If any term or other provision of this Trust Declaration is invalid, illegal or incapable of being
enforced by any rule or law, or public policy, all other conditions and provisions of this Trust
Declaration shall nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Trust
Declaration so as to effect the original intent of the parties as closely as possible to the end
that the transactions contemplated hereby are fulfilled to the extent possible.

9.4 Counterparts

This Trust Declaration may be executed in one or more counterparts, all of which shall be
considered one and the same Trust Declaration and shall become effective when one or more
counterparts have been signed by each of the parties hereto and delivered to the other parties.

9.5 Governing Law

This Trust Declaration shall be governed by, and construed in accordance with, the laws of the
Province of British Columbia and the laws of Canada applicable therein, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.

9.6 Enforcement

The parties hereto agree that irreparable damage would occur in the event that any of the
provisions of this Trust Declaration were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of any provision of this Trust Declaration and to
enforce specifically the terms and provisions of this Trust Declaration in any court of competent
jurisdiction in the Province of British Columbia, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any court of competent jurisdiction in the
Province of British Columbia, in the event any dispute arises out of this Trust Declaration, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any action relating to
this Trust Declaration in any court other than any court of competent jurisdiction in the Province
of British Columbia, and (d) waives any right to trial by jury with respect to any action related
to or arising out of this Trust Declaration.

 

 

9.7 No Waiver

No provisions of this Trust Declaration shall be deemed waived by any party, unless such waiver is
in writing and signed by the authorized representatives of the person against whom it is sought to
enforce such waiver.

9.8 Expenses

Except as expressly set forth in this Trust Declaration, all costs and expenses and third party
fees, paid or incurred in connection with this Trust Declaration shall be paid in accordance with
section 7.6 of the Arrangement Agreement.

9.9 Further Assurances

From time to time, as and when requested by any party, each party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall take, or cause to
be taken, all such further or other actions, as such other party may reasonably deem necessary or
desirable to consummate the transactions contemplated by this Trust Declaration.

IN WITNESS WHEREOF the Trustee has caused this Trust Declaration to be duly executed under seal as
of the date first above written.

	 	 	 	 	 
	By :
	 	 	 	 
	 

	 	 	 	 
	 

	 	DENNIS WILSON, in his capacity as trustee	 	 

 

 

APPENDIX A

RELEASE CONDITIONS ATTACHED TO FORFEITABLE SHARES

The
number of Exchangeable Shares which cease to be forfeitable on the dates set out below shall be

determined by multiplying the appropriate number in the chart below by the Exchange Ratio (as

defined in the Plan of Arrangement).

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

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