lululemon athletica inc. (Form: S-3ASR, Received: 01/07/2013 06:02:54)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on January 4, 2013

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

lululemon athletica inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

400 – 1818 Cornwall Avenue

Vancouver, British Columbia

Canada, V6J 1C7

(604) 732-6124

20-3842867

(I.R.S. Employer Identification No.)

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Copy to:

W. Michael Hutchings, Esq.

DLA Piper LLP (US)

701 Fifth Avenue, Suite 7000

Seattle, Washington 98104

Tel: (206) 839-4800

Fax: (206) 839-4801

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. x

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit (2)	Proposed Maximum Aggregate Offering Price (2)	Amount of Registration Fee (3)
Common Stock, par value $0.005 per share	32,378,680(1)	$75.66	$2,449,770,929	$334,149

(1)

The amount to be registered hereunder represents the number of shares of common stock, par value $0.005 per share (the “Common Stock”), of lululemon athletica inc. (“lululemon”) that we may issue from time to time upon redemption, retraction or purchase of an equivalent number of the exchangeable shares of Lulu Canadian Holding, Inc. (“Lulu Canada”), an indirect subsidiary of lululemon, or upon the liquidation, dissolution or winding up of Lulu Canada. Also includes, pursuant to Rule 416(a) under the Securities Act of 1933, as amended, any additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends, recapitalizations or similar transactions.

(2)	Estimated solely for the purpose of calculating the amount of the registration fee.

(3)	The registration fee of $334,149 is calculated in accordance with Rule 457(c) of the Securities Act of 1933, as amended based upon the average of the high and low sales prices of the Common Stock on the Nasdaq Global Select Market on January 2, 2013.

Prospectus

LOGO

32,378,680 Shares

Common Stock

The Offering

This prospectus relates to 32,378,680 shares of our common stock, par value $0.005 per share, that we may issue upon the redemption, retraction or purchase of an equivalent number of the exchangeable shares of Lulu Canadian Holding, Inc. (an indirect wholly-owned subsidiary of ours that we refer to as Lulu Canada in this prospectus), or upon the liquidation, dissolution or winding up of Lulu Canada. The exchangeable shares were issued to Canadian stockholders in connection with our July 2007 reorganization to defer payment of Canadian taxes, and the Company has previously disclosed in its reports filed with the Securities and Exchange Commission that 32,378,680 exchangeable shares and 32,378,680 shares of special voting stock are outstanding. Upon the issuance of the registered shares of common stock upon such redemption, retraction or purchase of outstanding exchangeable shares, the Company will cancel an equal number of currently-outstanding exchangeable shares of Lulu Canada, as well as an equal number of currently outstanding shares of the Company’s special voting stock, so there will be no change in the number of shares of the Company’s common stock deemed outstanding. Because the shares of our common stock offered by this prospectus will be issued only upon a redemption, retraction or purchase of the exchangeable shares or upon the liquidation, dissolution or winding up of Lulu Canada, we will not receive any cash proceeds from this offering. We are paying all expenses of registration incurred in connection with this offering.

Our common stock is quoted on the Nasdaq Global Select Market under the symbol “LULU” and on the Toronto Stock Exchange under the symbol “LLL”.

You should carefully read and evaluate the risk factors included in our periodic reports and other information that we file with the Securities and Exchange Commission. See “ Risk Factors ” on page 2.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is January 4 , 2013.

Table of Contents


The Company			1
Where You Can Find More Information			1
Forward-Looking Statements			2
Risk Factors			2
Use of Proceeds			11
Description of Capital Stock			11
Plan of Distribution			18
Material Tax Considerations			18
Legal Matters			25
Experts			25

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any person, including any salesman or broker, to provide information other than that provided in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of the securities in any jurisdiction where the offer is not permitted. You should assume that the information in this prospectus is accurate only as of the date on its cover page and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference.

The Company

lululemon is a designer and retailer of technical athletic apparel operating primarily in North America and Australia. Our yoga-inspired apparel is marketed under the lululemon athletica and ivivva athletica brand names. We believe consumers associate our brand with innovative, technical apparel products. We offer a comprehensive line of apparel and accessories including pants, shorts, tops and jackets designed for athletic pursuits such as yoga, running and general fitness, and dance-inspired apparel for female youth. As of October 28, 2012, our branded apparel was principally sold through 201 corporate-owned stores that are located in the United States, Canada, Australia and New Zealand and via our e-commerce websites included in our direct to consumer sales channel. Our branded apparel is principally sold through our stores that are primarily located in Canada, the United States, Australia and New Zealand. We believe our vertical retail strategy allows us to interact more directly with, and gain insights from, our customers while providing us with greater control of our brand.

In this prospectus, we refer to lululemon, its wholly-owned and majority-owned subsidiaries and its ownership interest in equity affiliates as “we” or “us,” unless we specifically state otherwise or the context indicates otherwise. Our principal executive offices are located at 400 – 1818 Cornwall Avenue, Vancouver, British Columbia, Canada V6J 1C7, and our telephone number at that location is (604) 732-6124.

Where You Can Find More Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read and copy these materials at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains information we have filed electronically with the SEC, which you can access over the Internet at http://www.sec.gov . You can also obtain information about us at the offices of the NASDAQ Stock Market, One Liberty Plaza, 165 Broadway, New York, New York 10006.

This prospectus is part of a registration statement we have filed with the SEC relating to the shares of our common stock that we may issue upon redemption, retraction or purchase of an equivalent number of exchangeable shares of Lulu Canada, or upon the liquidation, dissolution or winding up of Lulu Canada. As permitted by SEC rules, this prospectus does not contain all the information we have included in the registration statement and the accompanying exhibits and schedules we have filed with the SEC. You may refer to the registration statement, exhibits and schedules for more information about us and our common stock. The statements in this prospectus pertaining to the content of any contract, agreement or other document that is an exhibit to the registration statement necessarily are summaries of their material provisions, and we qualify them in their entirety by reference to those exhibits for complete statements of their provisions. The registration statement, exhibits and schedules are available at the SEC’s public reference room or through its Internet site.

The SEC allows us to “incorporate by reference” the information we have filed with the SEC, which means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the termination of this offering:

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our annual report on Form 10-K for the year ended January 29, 2012;

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our quarterly report on Form 10-Q for the quarter ended April 29, 2012;

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our quarterly report on Form 10-Q for the quarter ended July 29, 2012;

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our quarterly report on Form 10-Q for the quarter ended October 28, 2012; and

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our current reports on Form 8-K on April 25, 2012, June 7, 2012, December 6, 2012 and December 18, 2012.

You may request a copy of these filings, other than an exhibit to these filings unless we have specifically incorporated that exhibit by reference into the filing, at no cost, by writing or telephoning us at the following address:

lululemon athletica inc.

400 – 1818 Cornwall Avenue

Vancouver, British Columbia

Canada V6J 1C7

Telephone: (604) 732-6124

Cautionary Statement Concerning Forward-Looking Statements

This prospectus, including the information we incorporate by reference, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “predicts,” “targets,” “projects,” “could,” “may,” “should” or “would” or other similar expressions that convey the uncertainty of future events or outcomes. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in this prospectus and the documents we have incorporated by reference.

Forward-looking statements may include, but are not limited to, those factors described in “Risk Factors” on page 2 of this prospectus and elsewhere in this prospectus.

The forward-looking statements are not guarantees of future performance, and we caution you not to rely unduly on them. We have based many of these forward-looking statements on expectations and assumptions about future events that may prove to be inaccurate. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.

Risk Factors

Our past performance may not be a reliable indicator of future performance because actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed below. In addition, historical trends should not be used to anticipate results or trends in future periods. You should consider carefully the risk factors identified below before making an investment in the common stock. Factors that might cause our actual results to differ materially from the forward looking statements discussed elsewhere in this prospectus, as well as affect our ability to achieve our financial and other goals, include, but are not limited to, those set forth below.

Our success depends on our ability to maintain the value and reputation of our brand.

Our success depends on the value and reputation of the lululemon athletica brand. The lululemon athletica name is integral to our business as well as to the implementation of our strategies for expanding our business. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts, our ability to provide a consistent, high quality guest experience and our ability to develop and introduce innovative and high-quality products. We rely on social media, as one of our marketing strategies, to have a positive impact on both our brand value and reputation. Our brand could be adversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity. Negative publicity regarding the quality of our products or the production methods of any of our suppliers or manufacturers could adversely affect our reputation and sales. In some cases we may be forced to locate

alternative suppliers or manufacturing sources. Additionally, while we devote considerable efforts and resources to protecting our intellectual property, if these efforts are not successful the value of our brand may be harmed, which could have a material adverse effect on our financial condition.

An economic downturn or economic uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our products.

Many of our products may be considered discretionary items for consumers. Factors affecting the level of consumer spending for such discretionary items include general economic conditions, particularly those in the United States and Canada, and other factors such as consumer confidence in future economic conditions, fears of recession, the availability of consumer credit, levels of unemployment, tax rates and the cost of consumer credit. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions due to credit constraints and uncertainties about the future. The current volatility in the United States economy in particular has resulted in an overall slowing in growth in the retail sector because of decreased consumer spending, which may remain depressed for the foreseeable future. These unfavorable economic conditions may lead consumers to delay or reduce purchase of our products. Consumer demand for our products may not reach our sales targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets, particularly in North America. Our sensitivity to economic cycles and any related fluctuation in consumer demand may have a material adverse effect on our financial condition.

Our sales and profitability may decline as a result of increasing product costs and decreasing selling prices.

Our business is subject to significant pressure on pricing and costs caused by many factors, including intense competition, constrained sourcing capacity and related inflationary pressure, pressure from consumers to reduce the prices we charge for our products and changes in consumer demand. These factors may cause us to experience increased costs, reduce our sales prices to consumers or experience reduced sales in response to increased prices, any of which could cause our operating margin to decline if we are unable to offset these factors with reductions in operating costs and could have a material adverse affect on our financial conditions, operating results and cash flows.

If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. If we are unable to introduce new products or novel technologies in a timely manner or our new products or technologies are not accepted by our customers, our competitors may introduce similar products in a more timely fashion, which could hurt our goal to be viewed as a leader in technical athletic apparel innovation. Our new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of athletic apparel or away from these types of products altogether, and our future success depends in part on our ability to anticipate and respond to these changes. Our failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality products. If we fail to introduce technical innovation in our products, consumer demand for our products could decline. If we experience problems with the quality of our products or negative publicity regarding the quality of our products, consumer demand for our products may decline and we may incur substantial expenses to remedy the problems. Our failure to effectively introduce new products that are accepted by consumers could result in a decrease in net revenue and excess inventory levels, which could have a material adverse effect on our financial condition.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products.

To ensure adequate inventory supply, we must forecast inventory needs and place orders with our manufacturers based on our estimates of future demand for particular products. Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in customer demand for our products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions, and weakening of economic conditions or consumer confidence in future economic conditions. If we fail to accurately forecast customer demand we may experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to guests.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margin to suffer and could impair the strength and exclusivity of our brand. Conversely, if we underestimate customer demand for our products, our manufacturers may not be able to deliver products to meet our requirements, and this could result in damage to our reputation and customer relationships.

If we continue to grow at a rapid pace, we may not be able to effectively manage our growth and the increased complexity of our business and as a result our brand image and financial performance may suffer.

We have expanded our operations rapidly since our inception in 1998 and our net revenue has increased from $40.7 million in fiscal 2004 to $1,000.8 million in fiscal 2011. If our operations continue to grow at a rapid pace, we may experience difficulties in obtaining sufficient raw materials and manufacturing capacity to produce our products, as well as delays in production and shipments, as our products are subject to risks associated with overseas sourcing and manufacturing. We could be required to continue to expand our sales and marketing, product development and distribution functions, to upgrade our management information systems and other processes and technology, and to obtain more space for our expanding workforce. This expansion could increase the strain on our resources, and we could experience serious operating difficulties, including difficulties in hiring, training and managing an increasing number of employees. These difficulties could result in the erosion of our brand image which could have a material adverse effect on our financial condition.

The fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.

The fabrics used by our suppliers and manufacturers include synthetic fabrics whose raw materials include petroleum-based products. Our products also include natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. Increases in the cost of raw materials, including petroleum or the prices we pay for our cotton yarn and cotton-based textiles, could have a material adverse effect on our cost of goods sold, results of operations, financial condition and cash flows.

We rely on third-party suppliers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

We do not manufacture our products or the raw materials for them and rely instead on third-party suppliers. Many of the specialty fabrics used in our products are technically advanced textile products developed and manufactured by third parties and may be available, in the short-term, from only one or a very limited number of sources. For example, Luon fabric, which is included in many of our products, is supplied to the mills we use by a single manufacturer in Taiwan, and the fibers used in manufacturing Luon fabric are supplied to our Taiwanese

manufacturer by a single company. In fiscal 2011, approximately 67% of our products were produced by our top five manufacturing suppliers. We have no long term contracts with our suppliers or manufacturing sources, and we compete with other companies for fabrics, raw materials, production and import quota capacity.

We may experience a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier manufacturer, we may be unable to locate additional supplies of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from our markets or from other participants in our supply chain. Any delays, interruption or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and our results in lower net revenue and income from operations both in the short and long term. We have occasionally received, and may in the future continue to receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. Additionally, if defects in the manufacture of our products are not discovered until after such products are purchased by our guests, our guests could lose confidence in the technical attributes of our products and our results of operations could suffer and our business could be harmed.

We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability.

The market for technical athletic apparel is highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business and results of operations. We compete directly against wholesalers and direct retailers of athletic apparel, including large, diversified apparel companies with substantial market share and established companies expanding their production and marketing of technical athletic apparel, as well as against retailers specifically focused on women’s athletic apparel. We also face competition from wholesalers and direct retailers of traditional commodity athletic apparel, such as cotton T-shirts and sweatshirts. Many of our competitors are large apparel and sporting goods companies with strong worldwide brand recognition, such as Nike, Inc., adidas AG, which includes the adidas and Reebok brands, and The Gap, Inc, which includes the Athleta brand. Because of the fragmented nature of the industry, we also compete with other apparel sellers, including those specializing in yoga apparel. Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, store development, marketing, distribution and other resources than we do. In addition, our technical athletic apparel is sold at a price premium to traditional athletic apparel.

Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. In contrast to our “grassroots” marketing approach, many of our competitors promote their brands through traditional forms of advertising, such as print media and television commercials, and through celebrity endorsements, and have substantial resources to devote to such efforts. Our competitors may also create and maintain brand awareness using traditional forms of advertising more quickly than we can. Our competitors may also be able to increase sales in their new and existing markets faster than we do by

emphasizing different distribution channels than we do, such as catalog sales or an extensive franchise network, as opposed to distribution through retail stores, wholesale or internet, and many of our competitors have substantial resources to devote toward increasing sales in such ways.

In addition, because we own no patents or exclusive intellectual property rights in the technology, fabrics or processes underlying our products, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrication techniques and styling similar to our products.

Any material disruption of our information systems could disrupt our business and reduce our sales.

We are increasingly dependent on information systems to operate our e-commerce website, process transactions, respond to guest inquiries, manage inventory, purchase, sell and ship goods on a timely basis and maintain cost-efficient operations. Any material disruption or slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade our systems, system failures, viruses, computer “hackers” or other causes, could cause information, including data related to customer orders, to be lost or delayed which could — especially if the disruption or slowdown occurred during the holiday season — result in delays in the delivery of merchandise to our stores and customers or lost sales, which could reduce demand for our merchandise and cause our sales to decline. If changes in technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our growth, we could lose customers.

If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet guest expectations could be harmed.

We rely on our distribution facilities for substantially all of our product distribution. Our distribution facilities include computer controlled and automated equipment, which means their operations are complicated and may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, electronic or power interruptions or other system failures. In addition, because substantially all of our products are distributed from three locations, our operations could also be interrupted by labor difficulties, extreme or severe weather conditions or by floods, fires or other natural disasters near our distribution centers. For example, severe weather conditions in Sumner, Washington in 2011, including snow and freezing rain, resulted in disruption in our distribution facilities and the local transportation system. If we encounter problems with our distribution system, our ability to meet guest expectations, manage inventory, complete sales and achieve objectives for operating efficiencies could be harmed.

We are subject to risks associated with leasing retail space subject to long-term and non-cancelable leases.

We do not own any of our store facilities, but instead lease all of our corporate-owned stores under operating leases and our inability to secure appropriate real estate or lease terms could impact our ability to grow. Our leases generally have initial terms of between five and ten years, and generally can be extended only in five-year increments if at all. We generally cannot cancel these leases at our option. If an existing or new store is not profitable, and we decide to close it, as we have done in the past and may do in the future, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. Similarly, we may be committed to perform our obligations under the applicable leases even if current locations of our stores become unattractive as demographic patterns change. In addition, as each of our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could require us to close stores in desirable locations.

Increasing labor costs and other factors associated with the production of our products in China could increase the costs to produce our products.

During fiscal 2011, approximately 49% of our products were produced in China and increases in the costs of labor and other costs of doing business in China could significantly increase our costs to produce our products

and could have a negative impact on our operations, revenue and earnings. Factors that could negatively affect our business include a potential significant revaluation of the Chinese Yuan, which may result in an increase in the cost of producing products in China, labor shortage and increases in labor costs in China, and difficulties in moving products manufactured in China out of Asia and through the ports on the western coast of North America, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors, and natural disasters or health pandemics impacting China. Also, the imposition of trade sanctions or other regulations against products imported by us from, or the loss of “normal trade relations” status with, China, could significantly increase our cost of products imported into North America and/or Australia and harm our business.

We may not be able to successfully open new store locations in a timely manner, if at all, which could harm our results of operations.

Our growth will largely depend on our ability to successfully open and operate new stores. Our approach to identifying locations for our stores typically favors street locations, lifestyle centers and malls where we can be a part of the community. As a result, our stores are typically located near retailers or fitness facilities that we believe are consistent with our guests’ lifestyle choices. Sales at these stores are derived, in part, from the volume of foot traffic in these locations. Our ability to successfully open and operate new stores depends on many factors, including, among others, our ability to:

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identify suitable store locations, the availability of which is outside of our control;

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negotiate acceptable lease terms, including desired tenant improvement allowances;

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hire, train and retain store personnel and field management;

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assimilate new store personnel and field management into our corporate culture;

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source sufficient inventory levels; and

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successfully integrate new stores into our existing operations and information technology systems.

Successful new store openings may also be affected by our ability to initiate our grassroots marketing efforts in advance of opening our first store in a new market. We typically rely on our grassroots marketing efforts to build awareness of our brand and demand for our products. Our grassroots marketing efforts are often lengthy and must be tailored to each new market based on our emerging understanding of the market. Accordingly, there can be no assurance that we will be able to successfully implement our grassroots marketing efforts in a particular market in a timely manner, if at all. Additionally, we may be unsuccessful in identifying new markets where our technical athletic apparel and other products and brand image will be accepted or the performance of our stores will be considered successful.

We may be subject to claims related to our human resources policies or other practices that could result in monetary damages, disrupt our business and lead to negative publicity.

Our stores are located in the United States, Canada, Australia and New Zealand, and as a result, we are subject to the federal, state, provincial and local employment and other laws of each of those countries. We have in the past, and may in the future, be subject to claims that certain of our human resources policies, or other practices, violate such employment or other laws. If our policies or practices fail to comply with any of these laws, we could be subject to monetary damages, and may also be required to modify our policies, which could harm our ability to meet our guest expectations. In addition, such claims may lead to negative publicity regarding our stores and policies, which could impact our brand image and have a material adverse effect on our financial condition.

Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity.

The labeling, distribution, importation, marketing and sale of our products are subject to extensive regulation by various federal agencies, including the Federal Trade Commission, Consumer Product Safety

Commission and state attorneys general in the United States, the Competition Bureau and Health Canada in Canada, as well as by various other federal, state, provincial, local and international regulatory authorities in the countries in which our products are distributed or sold. If we fail to comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant penalties or claims, which could harm our results of operations or our ability to conduct our business. In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and could impair the marketing of our products, resulting in significant loss of net sales.

Our fabrics and manufacturing technology are not patented and can be imitated by our competitors.

The intellectual property rights in the technology, fabrics and processes used to manufacture our products are owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain intellectual property protection for our products is therefore limited and we currently own no patents or exclusive intellectual property rights in the technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products. Because many of our competitors have significantly greater financial, distribution, marketing and other resources than we do, they may be able to manufacture and sell products based on our fabrics and manufacturing technology at lower prices than we can. If our competitors do sell similar products to ours at lower prices, our net revenue and profitability could suffer.

Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.

We currently rely on a combination of copyright, trademark, trade dress and unfair competition laws, as well as confidentiality procedures and licensing arrangements, to establish and protect our intellectual property rights. We cannot assure you that the steps taken by us to protect our intellectual property rights will be adequate to prevent infringement of such rights by others, including imitation of our products and misappropriation of our brand. In addition, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States or Canada, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of our brand could be diminished and our competitive position may suffer.

Our future success is substantially dependent on the continued service of our senior management.

Our future success is substantially dependent on the continued service of our senior management and other key employees. The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and achieve our business goals.

We also may be unable to retain existing management, technical, sales and client support personnel that are critical to our success, which could result in harm to our customer and employee relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs.

We do not maintain a key person life insurance policy on Ms. Day or any of the other members of our senior management team. As a result, we would have no way to cover the financial loss if we were to lose the services of members of our senior management team.

Our business is affected by seasonality.

Our business is affected by the general seasonal trends common to the retail apparel industry. Our annual net sales are weighted more heavily toward our fourth fiscal quarter, reflecting our historical strength in sales during the holiday season, while our operating expenses are more equally distributed throughout the year. As a result, a substantial portion of our operating profits are generated in the fourth quarter of our fiscal year. For

example, we generated approximately 37%, 36% and 39% of our full year gross profit during the fourth quarters of fiscal 2011, fiscal 2010 and fiscal 2009, respectively. This seasonality may adversely affect our business and cause our results of operations to fluctuate, and, as a result, we believe that comparisons of our operating results between different quarters within a single fiscal year are not necessarily meaningful and that results of operations in any period should not be considered indicative of the results to be expected for any future period.

Because a significant portion of our sales are generated in countries other than the United States, fluctuations in foreign currency exchange rates have negatively affected our results of operations and may continue to do so in the future.

The reporting currency for our consolidated financial statements is the U.S. dollar. In the future, we expect to continue to derive a significant portion of our net revenue and incur a significant portion of our operating costs in Canada, and changes in exchange rates between the Canadian dollar and the U.S. dollar may have a significant, and potentially adverse, effect on our results of operations. Additionally, a portion of our net revenue is generated in Australia and New Zealand. Our primary risk of loss regarding foreign currency exchange rate risk is caused by fluctuations in the exchange rates between the U.S. dollar, Canadian dollar, Australian dollar and New Zealand dollar. As we recognize net revenue from sales in Canada in Canadian dollars, and the U.S. dollar has strengthened during the first three quarters of fiscal 2012, it has had a negative impact on our Canadian operating results upon translation of those results into U.S. dollars for the purposes of consolidation. However, the loss in net revenue was partially offset by lower cost of sales and lower selling, general and administrative expenses that are generated in Canadian dollars. A 10% depreciation in the relative value of the Canadian dollar compared to the U.S. dollar would have resulted in lost income from operations of approximately $15.8 million in the first three quarters of fiscal 2012 and approximately $8.4 million in the first three quarters of fiscal 2011. Similarly, a 10% depreciation in the relative value of the Australian dollar compared to the U.S. dollar would have resulted in lost income from operations of approximately $0.6 million in the first three quarters of fiscal 2012 and approximately $0.2 million in the first three quarters of fiscal 2011. We have not historically engaged in hedging transactions and do not currently contemplate engaging in hedging transactions to mitigate foreign exchange risks. As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains or losses could have a significant, and potentially adverse, effect on our results of operations.

The operations of many of our suppliers are subject to additional risks that are beyond our control and that could harm our business, financial condition and results of operations.

Almost all of our suppliers are located outside the United States. During fiscal 2011, approximately 3% of our products were produced in Canada, approximately 49% in China, approximately 41% in South and South East Asia and the remainder in the United States, Peru, Israel, Egypt and other countries. As a result of our international suppliers, we are subject to risks associated with doing business abroad, including:

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political unrest, terrorism, labor disputes and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured;

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the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, taxes and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds;

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reduced protection for intellectual property rights, including trademark protection, in some countries, particularly China;

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disruptions or delays in shipments; and

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changes in local economic conditions in countries where our manufacturers, suppliers or guests are located.

These and other factors beyond our control could interrupt our suppliers’ production in offshore facilities, influence the ability of our suppliers to export our products cost-effectively or at all and inhibit our suppliers’ ability to procure certain materials, any of which could harm our business, financial condition and results of operations.

Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome.

The United States and the countries in which our products are produced or sold internationally have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels. For example, under the provisions of the World Trade Organization, or the WTO, Agreement on Textiles and Clothing, effective as of January 1, 2005, the United States and other WTO member countries eliminated quotas on textiles and apparel-related products from WTO member countries. In 2005, China’s exports into the United States surged as a result of the eliminated quotas. In response to the perceived disruption of the market, the United States imposed new quotas, which remained in place through the end of 2008, on certain categories of natural-fiber products that we import from China. These quotas were lifted on January 1, 2009, but we have expanded our relationships with suppliers outside of China, which among other things has resulted in increased costs and shipping times for some products. Countries impose, modify and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost or reduce the supply of products available to us or may require us to modify our supply chain organization or other current business practices, any of which could harm our business, financial condition and results of operations.

Our trademarks and other proprietary rights could potentially conflict with the rights of others and we may be prevented from selling some of our products.

Our success depends in large part on our brand image. We believe that our trademarks and other proprietary rights have significant value and are important to identifying and differentiating our products from those of our competitors and creating and sustaining demand for our products. We have obtained and applied for some United States and foreign trademark registrations, and will continue to evaluate the registration of additional trademarks as appropriate. However, we cannot guarantee that any of our pending trademark applications will be approved by the applicable governmental authorities. Moreover, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. Additionally, we cannot assure you that obstacles will not arise as we expand our product line and the geographic scope of our sales and marketing. Third parties may assert intellectual property claims against us, particularly as we expand our business and the number of products we offer. Our defense of any claim, regardless of its merit, could be expensive and time consuming and could divert management resources. Successful infringement claims against us could result in significant monetary liability or prevent us from selling some of our products. In addition, resolution of claims may require us to redesign our products, license rights from third parties or cease using those rights altogether. Any of these events could harm our business and cause our results of operations, liquidity and financial condition to suffer.

Our limited operating experience and limited brand recognition in new international markets may limit our expansion strategy and cause our business and growth to suffer.

Our future growth depends, to an extent, on our international expansion efforts. We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in any new market. In connection with our initial expansion efforts in Japan, we encountered obstacles we did not face in North America, including cultural and linguistic differences, differences in regulatory environments, labor practices and market practices, difficulties in keeping abreast of market, business and technical developments and foreign guests’ tastes and preferences. We may also encounter difficulty expanding into new international markets because of limited brand recognition leading to delayed acceptance of our technical athletic apparel by guests in these new international markets. Our failure to develop new international markets or disappointing growth outside of existing markets will harm our business and results of operations.

Our founder controls a significant percentage of our stock and is able to exercise significant influence over our affairs.

Our founder, Dennis Wilson, beneficially owns approximately 30% of our common stock. As a result, Mr. Wilson is able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. This concentration of ownership may have various effects including, but not limited to, delaying, preventing or deterring a change of control of our company.

Anti-takeover provisions of Delaware law and our certificate of incorporation and bylaws could delay and discourage takeover attempts that stockholders may consider to be favorable.

Certain provisions of our certificate of incorporation and bylaws and applicable provisions of the Delaware General Corporation Law may make it more difficult or impossible for a third-party to acquire control of us or effect a change in our board of directors and management. These provisions include:

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the classification of our board of directors into three classes, with one class elected each year;

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prohibiting cumulative voting in the election of directors;

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the ability of our board of directors to issue preferred stock without stockholder approval;

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the ability to remove a director only for cause and only with the vote of the holders of at least 66 ² /3% of our voting stock;

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a special meeting of stockholders may only be called by our chairman or Chief Executive Officer, or upon a resolution adopted by an affirmative vote of a majority of the board of directors, and not by our stockholders;

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prohibiting stockholder action by written consent; and

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our stockholders must comply with advance notice procedures in order to nominate candidates for election to our board of directors or to place stockholder proposals on the agenda for consideration at any meeting of our stockholders.

In addition, we are governed by Section 203 of the Delaware General Corporation Law which, subject to some specified exceptions, prohibits “business combinations” between a Delaware corporation and an “interested stockholder,” which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock, for a three-year period following the date that the stockholder became an interested stockholder. Section 203 could have the effect of delaying, deferring or preventing a change in control that our stockholders might consider to be in their best interests.

Use of Proceeds

We will not receive any cash proceeds upon the issuance of the common stock in exchange for the exchangeable shares of Lulu Canada.

Description of Capital Stock

lululemon’s authorized capital stock consists of:

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400,000,000 shares of common stock, par value of $0.005 per share;

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60,000,000 shares of special voting stock, par value $0.000005 per share; and

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5,000,000 shares of preferred stock, par value $0.01 per share.

As of January 1, 2013, 112,012,189 shares of common stock, and 32,378,680 shares of our special voting stock were issued and outstanding. No shares of lululemon’s preferred stock are issued or outstanding as of the date of this prospectus.

In the discussion that follows, we have summarized the material provisions of lululemon’s amended and restated certificate of incorporation and amended and restated bylaws relating to its capital stock. This discussion is subject to the relevant provisions of Delaware law and is qualified in its entirety by reference to lululemon’s amended and restated certificate of incorporation and amended and restated bylaws. You should read the provisions of the amended and restated certificate of incorporation and amended and restated bylaws as currently in effect for more details regarding the provisions described below and for other provisions that may be important to you. We also have summarized certain provisions of the exchangeable shares of Lulu Canada. You should read the Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares of Lulu Canada and related agreements for more details regarding the exchangeable shares. Copies of those documents are filed as exhibits to this prospectus.

Common Stock

Holders of our common stock are entitled to one vote for each share on all matters submitted to a vote of stockholders, and do not have cumulative voting rights in the election of directors. Subject to preferences that may be granted to any holders of another class of shares, holders of our common stock are entitled to receive ratably only those dividends as may be declared by our board of directors out of funds legally available therefor, as well as any distributions to our stockholders. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in all of our assets remaining after we pay our liabilities and distribute the liquidation preference of any class of our shares that has a liquidation preference over our common stock.

Holders of our common stock have no preemptive or other subscription or conversion rights. There are no redemption or sinking fund provisions applicable to our common stock.

Preferred Stock

Our board of directors has the authority, without action by our stockholders, to designate and issue preferred stock in one or more series and to designate the rights, preferences and privileges of each series, which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until our board of directors determines the specific rights of the holders of such preferred stock. However, the effects might include, among other things:

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restricting dividends on the common stock;

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diluting the voting power of the common stock;

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impairing the liquidation rights of the common stock; or

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delaying or preventing a change in our control without further action by the stockholders.

The issuance of our preferred stock could have the effect of delaying, deferring, or preventing a change in our control. No shares of preferred stock are outstanding, and we have no present plans to issue any shares of preferred stock.

Special Voting Stock

The number of shares of special voting stock outstanding is equal to the number of exchangeable shares that are issued by Lulu Canada. The special voting shares are issued to holders of exchangeable shares. Holders of

special voting shares are able to vote in person or by proxy on any matters put before holders of our common stock at any stockholders meeting. Each special voting share carries one vote. Such votes may be exercised for the election of directors and on all other matters submitted to a vote of our stockholders.

Our special voting shares do not entitle their holders to receive dividends or distributions from us or to receive any consideration in the event of our liquidation, dissolution or winding-up. To the extent exchangeable shares are exchanged for shares of our common stock, a number of special voting shares as corresponds to the number of exchangeable shares thus exchanged will be cancelled without consideration.

Exchangeable Shares

In connection with the issuance of the exchangeable shares as part of our corporate reorganization in July 2007, Lulu Canada issued exchangeable shares to certain of our Canadian equityholders at the time of the reorganization. The exchangeable shares of Lulu Canada, together with the special voting shares, are intended to be the economic equivalent to shares of our common stock. The rights, preferences, restrictions and conditions attaching to the exchangeable shares include the following:

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Any holder of exchangeable shares is entitled at any time to require Lulu Canada to redeem any or all of the exchangeable shares registered in such holder’s name in exchange for one share of our common stock for each exchangeable share presented and surrendered, plus a cash payment in an amount equal to any accrued and unpaid dividends on such exchangeable shares at the time of redemption. The right of a holder of exchangeable shares to require Lulu Canada to redeem such holder’s exchangeable shares is referred to herein as the put right.

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If we declare a dividend on our common stock, the holders of exchangeable shares are entitled to receive from Lulu Canada the same dividend, or an economically equivalent dividend, on their exchangeable shares.

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Holders of exchangeable shares are not entitled to receive notice of or to attend any meeting of the stockholders of Lulu Canada or to vote at any such meeting, except as required by law or as specifically provided in the exchangeable share conditions.

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Lulu Canada will have the right to force the exchange of all exchangeable shares for shares of our common stock (and payment of any accrued and unpaid dividends on the exchangeable shares) at any time after the earlier of (i) the 40th anniversary of our corporate reorganization, (ii) the date on which fewer than 10% of the originally issued exchangeable shares remain outstanding or (iii) the occurrence of certain specified events such as a change of control of us.

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The right of holders of exchangeable shares to require Lulu Canada to redeem their exchangeable shares and the right of Lulu Canada to redeem the exchangeable shares, both as described above, are subject to the overriding right of Lululemon Callco ULC, our wholly-owned subsidiary (“Callco”), to purchase such shares for a price of one share of our common stock for each exchangeable share, together with all declared and unpaid dividends on such exchangeable share.

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Holders of exchangeable shares will be entitled to vote their special voting shares.

Exchange Trust Agreement

In connection with the issuance of exchangeable shares as part of our corporate reorganization in July 2007, we entered into an exchange trust agreement with Lulu Canada and a third party-trustee named therein, or the trustee.

Under the exchange trust agreement, the holders of exchangeable shares may instruct the trustee to exercise the right to require Callco to purchase all outstanding exchangeable shares in certain events. The purchase price payable by Callco for the exchangeable shares will be equal to one share of our common stock for each exchangeable share, together with any accrued and unpaid dividends on the exchangeable share.

In accordance with the terms of the exchangeable share support agreement described below, we will not exercise any voting rights with respect to any exchangeable shares held by us or our subsidiaries, although we may appoint proxy-holders with respect to such exchangeable shares for the sole purpose of attending meetings of the holders of exchangeable shares in order to be counted as part of the quorum for such meetings.

With the exception of administrative changes for the purpose of adding covenants of any or all parties for the protection of the beneficiaries thereunder, making certain necessary amendments or curing or correcting any ambiguity, inconsistent provision, or manifest error (in each case provided that our board of directors and the board of directors of Lulu Canada is of the good faith opinion that such changes or corrections are not prejudicial to the rights or interests of the holders of the exchangeable shares), the exchange trust agreement may not be amended without the approval of the holders of the exchangeable shares given in the manner specified therein.

The trust created by the exchange trust agreement will continue until the earliest to occur of the following events:

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no outstanding exchangeable shares or shares or rights convertible into or exchangeable for exchangeable shares are held by a beneficiary (other than by us or any of our subsidiaries); and

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we and Lulu Canada together elect in writing to terminate the exchange trust agreement and such termination is approved by the beneficiaries as set forth in the provisions to the exchangeable shares.

Exchangeable Share Support Agreement

In connection with the issuance of the exchangeable shares as part of our corporate reorganization in July 2007, we also entered into an exchangeable share support agreement with Lulu Canada and Callco. Pursuant to the exchangeable share support agreement, for so long as any exchangeable shares (other than exchangeable shares held by us or any of our subsidiaries) remain outstanding:

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Lulu Canada and we will take all actions and do all things as are reasonably necessary or desirable to enable and permit it and us, in accordance with applicable law, to perform our respective obligations and complete all such actions and all such things as are necessary or desirable to enable and permit us to deliver or cause to be delivered shares of our common stock to the holders of exchangeable shares who exercise their put rights.

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Lulu Canada, Callco and we will take all such actions and do all things as are necessary or desirable to enable and permit them and us, in accordance with applicable law, to perform our respective obligations arising upon the exercise by Lulu Canada or Callco of their rights to acquire exchangeable shares, including without limitation all such actions and all such things as are necessary or desirable to enable and permit us to deliver or cause to be delivered shares of our common stock to the holders of exchangeable shares in accordance with the provisions of such rights.

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Neither we nor Lulu Canada may take any action in order to liquidate, dissolve or wind-up, each a voluntary liquidation, or proceed with any voluntary liquidation, unless the other concurrently takes action to voluntarily liquidate or proceeds with a voluntary liquidation.

We will send to the holders of exchangeable shares, to the extent not already sent to holders of the special voting shares, the notice of each meeting at which our stockholders are entitled to vote, together with the related meeting materials, including without limitation, any circular or information statement. Such mailing will commence on the same day as we send such notice and materials to our stockholders. We will also send to the holders of exchangeable shares copies of all information statements, interim and annual financial statements, reports and other materials that we send to our stockholders at the same time as such materials are sent to our stockholders. We will also use reasonable efforts to obtain and deliver a copy of any materials sent by a third party to our stockholders, including dissident proxy and information circulars (and related information and materials) and tender and exchange offer circulars, as soon as reasonably practicable after receipt of such materials by us or by our stockholders (if such receipt is known by us), to the extent not already sent to holders of the special voting shares.

The exchangeable share support agreement provides that, in the event of any proposed tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to the shares of our common stock which is recommended by our board of directors, we will use all reasonable efforts expeditiously and in good faith to take all actions necessary or desirable to enable and permit holders of exchangeable shares to participate in such transaction to the same extent and on an economically equivalent basis as holders of shares of our common stock, without discrimination.

In order to assist us in complying with our obligations under the exchangeable share support agreement, Lulu Canada and Callco are required to notify us as soon as practicable upon the exercise of their rights to acquire exchangeable shares.

In order to assist Lulu Canada in complying with its obligations under the exchangeable share support agreement, we will notify Lulu Canada as soon as possible upon a proposed declaration by us of any dividend on our shares of common stock and take all such other actions as are reasonably necessary, in cooperation with Lulu Canada, to ensure that the respective declaration date, record date and payment date for a dividend on our shares of common stock shall be the same as the declaration date, record date and payment date for the corresponding dividend on the exchangeable shares, subject to all applicable laws.

Under the exchangeable share support agreement, we have agreed not to exercise any voting rights attached to the exchangeable shares owned by us or any of our subsidiaries on any matter considered at meetings of holders of exchangeable shares. With the exception of administrative changes for the purpose of adding covenants of any or all parties, making certain necessary amendments or curing or correcting any ambiguity, inconsistent provision or manifest error (in each case provided that our board of directors and the boards of directors of Lulu Canada and Callco are of the good faith opinion that such changes or corrections are not prejudicial to the rights or interests of the holders of the exchangeable shares), the exchangeable share support agreement may not be amended without the approval of the holders of the exchangeable shares as provided in the exchangeable share support agreement.

Indemnification and Limitation on Directors’ and Officers’ Liability

As permitted by Section 102 of the Delaware General Corporation Law, our amended and restated certificate of incorporation and amended and restated bylaws limit the liability of our directors for monetary damages for breach of their fiduciary duties, except for liability that cannot be eliminated under the Delaware General Corporation Law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for any of the following:

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any breach of their duty of loyalty to the corporation or the stockholder;

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acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

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unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

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any transaction from which the director derived an improper personal benefit.

This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

As permitted by Section 145 of the Delaware General Corporation Law, our amended and restated certificate of incorporation and our amended and restated bylaws also provide that we shall indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law and that we may advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions. We believe that indemnification under our amended and restated certificate of incorporation and our amended and restated bylaws covers at least negligence and gross negligence on the part of indemnified parties.

Our amended and restated certificate of incorporation also permits us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether our amended and restated certificate of incorporation or Section 145 of the Delaware General Corporation Law would permit indemnification. We have obtained directors’ and officers’ liability insurance to provide our directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, errors and other wrongful acts.

We also have entered into separate indemnification agreements with each of our directors and executive officers, which are in addition to and broader than the indemnification provided for in our charter documents. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of such person’s services as a director or executive officer or at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.

Anti-Takeover Effects of Provisions of Our Charter, Our Bylaws and Delaware Law

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws, and applicable provisions of the Delaware General Corporation Law, may make it more difficult for or prevent a third party from acquiring control of us or changing our board of directors and management. These provisions may have the effect of deterring hostile takeovers or delaying changes in our control or in our management. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and in the policies furnished by them and to discourage certain types of transactions that may involve an actual or threatened change in our control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, these provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in our management.

Undesignated Preferred Stock

The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change the control of our company. This may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

No Cumulative Voting

Our amended and restated certificate of incorporation and our amended and restated bylaws do not provide for cumulative voting in the election of directors. The combination of ownership by a few stockholders of a significant portion of our issued and outstanding common stock and lack of cumulative voting will make it more difficult for our other stockholders to replace our board of directors or for another party to obtain control of us by replacing our board of directors.

Stockholder Meetings

Our charter documents provide that a special meeting of stockholders may be called only by our chairman of the board, chief executive officer or president, or upon a resolution adopted by or affirmative vote of a majority of the board of directors, and not by the stockholders.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors.

Elimination of Stockholder Action by Written Consent

Our amended and restated certificate of incorporation eliminates the right of stockholders to act by written consent without a meeting.

Election and Removal of Directors

Our amended and restated certificate of incorporation and amended and restated bylaws provide for our board of directors to be divided into three classes, with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. The provision for a classified board could prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our board of directors until the second annual stockholders meeting following the date the acquiring party obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us and could increase the likelihood that incumbent directors will retain their positions.

Directors may be removed with cause by the vote of a two-thirds of the shares represented in person or by proxy at a meeting entitled to vote generally in the election of directors, voting as a single class.

Size of Board and Vacancies

Our amended and restated certificate of incorporation provides that the number of directors on our board of directors will be fixed exclusively by our board of directors. Newly created directorships resulting from any increase in our authorized number of directors will be filled solely by the vote of our remaining directors in office. Any vacancies in our board of directors resulting from death, resignation or removal from office or other cause will be filled solely by the vote of our remaining directors in office.

Section 203 of the Delaware General Corporation Law

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that such stockholder became an interested stockholder, with the following exceptions:

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prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested holder;

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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; and

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on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines business combination to include the following:

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any merger or consolidation involving the corporation and the interested stockholder;

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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or

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the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges, or other financial benefits by or through the corporation.

In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation or any entity or person affiliated with or controlling or controlled by such entity or person.

Plan of Distribution

We will distribute the shares of common stock covered by this prospectus only upon the redemption, retraction or purchase of the exchangeable shares of Lulu Canada, and no broker, dealer or underwriter has been engaged in connection with the redemption, retraction or purchase. Each exchangeable share of Lulu Canada will be redeemed, retracted or purchased for one share of our common stock. We will pay all expenses incurred in connection with the distribution described in this prospectus.

Material Tax Considerations

Canadian Federal Income Tax Considerations

The following is a summary of the principal Canadian federal income tax considerations arising under the Income Tax Act (Canada) (the “ITA”) in respect of the holding, redemption, retraction or other disposition of exchangeable shares, and the holding and disposition of our common stock which is qualified for distribution under this Registration Statement on the redemption, retraction or purchase of exchangeable shares, generally applicable to holders of exchangeable shares who, for purposes of the ITA, and at all relevant times, hold such exchangeable shares, and will hold such common stock as capital property and deal at arm’s length with, and are not affiliated with, lululemon, Callco or Lulu Canada.

This summary does not apply to a holder: (i) with respect to whom lululemon is or will be a “foreign affiliate” within the meaning of the ITA, (ii) that is a “financial institution” for the purposes of the mark-to-market rules in the ITA, (iii) an interest in which is a “tax shelter investment” as defined in the ITA, (iv) that is a “specified financial institution” as defined in the ITA, or (v) who has made a “functional currency” election under section 261 of the ITA. Any such holders should consult their own tax advisors with respect to their particular circumstances.

Exchangeable shares and common stock will generally be considered to be capital property to a holder unless such securities are held in the course of carrying on a business of trading or dealing in securities, or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade. Certain holders who are residents of Canada for purposes of the ITA and whose exchangeable shares might not otherwise qualify as capital property may be entitled to make an irrevocable election in accordance with subsection 39(4) of the ITA to have such exchangeable shares, and every “Canadian security” (as defined in the ITA) owned by such holder in the taxation year of the election and in all subsequent taxation years deemed to be capital property. However, exchangeable shares of a holder in respect of which a valid election was made under subsection 85(1) or 85(2) of the ITA will not be Canadian securities to such holder for this purpose and therefore will not be deemed to be capital property under subsection 39(4) of the ITA. In addition, common stock will not constitute Canadian securities for the purposes of this election. Holders who do not hold their exchangeable shares as capital property or who will not hold their common stock as capital property should consult their own tax advisors regarding their particular circumstances.

This summary is based on the facts set out in this document, the current provisions of the ITA and the regulations thereunder and our understanding of the published administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) publicly available prior to the date of this document. This summary takes into account all proposed amendments to the ITA and the regulations thereunder that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (“Proposed Amendments”) and assumes that such Proposed Amendments will be enacted substantially as proposed. However, no assurance can be given that such Proposed Amendments will be enacted in the form proposed, or at all.

This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to the acquisition, holding and disposition of exchangeable shares or common stock. Except for the Proposed Amendments, this summary does not take into account or anticipate any changes in law or any changes in the CRA’s administrative policies and assessing practices, whether by judicial, governmental or legislative action or decision, nor does it take into account other federal or any provincial, territorial or foreign tax legislation or considerations, which may differ from the Canadian federal income tax considerations described herein.

This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular holder. This summary does not take into account your particular circumstances and does not address considerations that may be particular to you. Therefore, you should consult your own tax advisors regarding your particular circumstances.

For purposes of the ITA, all amounts relating to the acquisition, holding or disposition of securities (including dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in foreign currency must be converted into Canadian dollars generally based on the Bank of Canada noon spot exchange rate on the date such amounts arise or such other rate of exchange as is acceptable to the Minister of National Revenue (Canada).

Exchangeable Shares

Redemption, Exchange and Disposition of Exchangeable Shares

A holder will be considered to have disposed of exchangeable shares:

(i)

on a redemption (including pursuant to a retraction by the holder or a purchase by Lulu Canada) of such exchangeable shares by Lulu Canada; and

(ii)

on an acquisition of such exchangeable shares by Callco.

However, as discussed below, the Canadian federal income tax consequences of the disposition for the holder will be different depending on whether the event giving rise to the disposition is a redemption, retraction or purchase by Lulu Canada or an acquisition by Callco.

A holder who exercises the right to require the redemption of an exchangeable share by giving a retraction request may not be able to control whether the exchangeable share will be acquired by Callco under the retraction call right or redeemed by Lulu Canada.

Exchange of Exchangeable Shares – Redemption, Retraction or Purchase by Lulu Canada

On a redemption (including pursuant to a retraction by the holder or a purchase by Lulu Canada) of an exchangeable share by Lulu Canada, the holder of that exchangeable share will be deemed to have received a dividend equal to the amount, if any, by which the “redemption proceeds” exceed the paid-up capital (for purposes of the ITA) of the exchangeable share at the time of redemption. See “ Canadian Federal Income Tax Considerations – Exchangeable Shares – Dividends on Exchangeable Shares ” below. For these purposes, the “redemption proceeds” will be the fair market value at the time of the redemption of the common stock received on the redemption plus any other amount received by the holder as part of the consideration other than amounts

required to be included in income as a dividend. On the redemption, the holder of an exchangeable share will also be considered to have disposed of the exchangeable share for proceeds of disposition equal to the “redemption proceeds” less the amount of such deemed dividend. The holder will in general realize a capital gain (or a capital loss) equal to the amount by which such proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to such holder of the exchangeable shares. In the case of a holder of exchangeable shares that is a corporation, in some circumstances, the amount of any deemed dividend arising on the redemption of exchangeable shares may be treated as proceeds of disposition and not as a dividend in accordance with specific rules in the ITA. Such holders should consult their own tax advisors concerning this possibility. For a description of the tax treatment of capital gains and losses, see “ Canadian Federal Income Tax Considerations – Taxation of Capital Gains or Capital Losses ” below.

Exchange of Exchangeable Shares – Callco Purchase

On the exchange of an exchangeable share by the holder with Callco for common stock, the holder will generally realize a capital gain (or a capital loss) to the extent the proceeds of disposition of the exchangeable share, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the holder of the exchangeable share. For these purposes, the proceeds of disposition will be the fair market value at the time of the exchange of the common stock received on the exchange plus an amount equal to any declared and unpaid dividends on the exchangeable share. For a description of the tax treatment of capital gains and losses, see “ Canadian Federal Income Tax Considerations – Taxation of Capital Gains or Capital Losses ” below. The acquisition by Callco of an exchangeable share from the holder thereof will not result in a deemed dividend to the holder.

On February 23, 2005, the Minister of Finance (Canada) reaffirmed a prior commitment to introduce a new rule in the ITA that would allow holders of shares of a Canadian corporation to exchange such shares for shares of a non-Canadian corporation on a tax-deferred basis. It is possible that the tax proposals described in this announcement, if enacted, could, from the time any such change is considered to be in force, allow a holder to exchange exchangeable shares for common stock on a tax-deferred basis. However, no specifics were announced regarding what the requirements for such treatment may be and there is no assurance that the commitment will be honoured or that any such new rules will be enacted.

Disposition of Exchangeable Shares other than on an Exchange

A disposition or deemed disposition of exchangeable shares by a holder, other than on the redemption (including pursuant to a retraction by the holder or a purchase by Lulu Canada) or purchase by Callco, will generally result in a capital gain (or a capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the holder of those exchangeable shares immediately before the disposition. For a description of the tax treatment of capital gains and losses, see “ Canadian Federal Income Tax Considerations – Taxation of Capital Gains or Capital Losses ” below.

Exchange of Exchangeable Shares – Special Voting Stock

On the redemption, retraction or purchase of exchangeable shares, a like number of shares of special voting stock will be cancelled for no consideration. Provided that such shares of special voting stock have nominal fair market value at the time of cancellation and that no part of the consideration payable on a redemption, retraction or purchase of exchangeable shares is allocable to such shares of special voting stock, a holder should not realize or be deemed to realize any dividend or capital gain on the disposition of such shares of special voting stock.

Dividends on Exchangeable Shares

In the case of a holder who is an individual, dividends received or deemed to be received on the exchangeable shares will be included in computing the holder’s income and will be subject to the gross-up and dividend tax credit rules that apply to taxable dividends received from corporations resident in Canada. Provided

that appropriate designations are made by Lulu Canada, such dividend will be treated as an “eligible dividend” for the purposes of the ITA and a holder who is an individual resident in Canada will be entitled to an enhanced dividend tax credit in respect of such dividends. There are limitations on the ability of a corporation to designate dividends and deemed dividends as eligible dividends.

In the case of a holder that is a corporation, dividends received or deemed to be received on the exchangeable shares will be required to be included in computing the corporation’s income for the taxation year in which such dividends are received and will generally be deductible in computing the corporation’s taxable income. Since the exchangeable shares are not listed on a designated stock exchange for purposes of the ITA, dividends received or deemed to be received on exchangeable shares by a holder that is a corporation may not be deductible in computing the corporation’s taxable income. Such holders should consult their own tax advisors concerning this possibility. In the case of a holder of exchangeable shares that is a corporation, in some circumstances the amount of any deemed dividend arising on the redemption (including pursuant to a retraction by the holder or a purchase by Lulu Canada) of exchangeable shares may be treated as proceeds of disposition and not as a dividend in accordance with specific rules in the ITA. Corporate holders should consult their own tax advisors for advice with respect to the potential application of these provisions.

A holder that is a “private corporation” or a “subject corporation” (each as defined in the ITA) may be liable under Part IV of the ITA to pay a refundable tax of 33 ¹ / ₃ % on dividends received or deemed to be received on the exchangeable shares to the extent that such dividends are deductible in computing the holder’s taxable income. A holder that, throughout the relevant taxation year, is a “Canadian-controlled private corporation” (as defined in the ITA) may be liable to pay a refundable tax of 6 ² / ₃ % on its “aggregate investment income” (as defined in the ITA), including any dividends that are not deductible in computing taxable income.

The exchangeable shares are taxable preferred shares and short-term preferred shares for the purposes of the ITA. A holder of exchangeable shares that is a corporation which receives or is deemed to receive dividends on such shares may be subject to the 10% tax under Part IV.1 of the ITA.

Common Stock

Acquisition and Disposition of the Common Stock

The cost of the common stock received on the redemption, retraction or purchase of an exchangeable share will be equal to the fair market value of such common stock at the time of such event and will generally be averaged with the adjusted cost base of any other common stock held at that time by the holder as capital property for the purpose of determining the holder’s adjusted cost base of such common stock.

A disposition or deemed disposition of the common stock by a holder will generally result in a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the holder of the common stock immediately before the disposition. For a description of the tax treatment of capital gains and losses, see “ Canadian Federal Income Tax Considerations – Taxation of Capital Gains or Capital Losses ” below.

Dividends on the Common Stock

A holder will be required to include in computing such holder’s income for a taxation year the amount of dividends, if any, received on the common stock. Dividends received on the common stock by a holder who is an individual will not be subject to the gross-up and dividend tax credit rules in the ITA normally applicable to taxable dividends received from corporations resident in Canada. A holder that is a corporation will not be entitled to deduct the amount of such dividends in computing its taxable income.

A holder that, throughout the relevant taxation year, is a “Canadian-controlled private corporation” (as defined in the ITA) may be liable to pay a refundable tax of 6 ² / ₃ % on its “aggregate investment income” (as defined in the ITA), including any dividends that are not deductible in computing taxable income.

Any United States non-resident withholding tax on these dividends generally will be eligible for foreign tax credit or deduction treatment to the extent and under the circumstances provided for in the ITA.

Taxation of Capital Gains or Capital Losses

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a holder in a taxation year must be included in the holder’s income for the year, and one-half of any capital loss (an “allowable capital loss”) realized by a holder in a taxation year must be deducted from taxable capital gains realized by the holder in that year (subject to and in accordance with rules contained in the ITA). Allowable capital losses for a taxation year in excess of taxable capital gains for that year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the ITA.

A holder that, throughout the relevant taxation year, is a “Canadian-controlled private corporation” (as defined in the ITA) may be liable to pay a refundable tax of 62/3% on its “aggregate investment income” (as defined in the ITA), including any taxable capital gains.

If the holder of an exchangeable share is a corporation, the amount of any capital loss realized on a disposition or deemed disposition of such share may be reduced by the amount of dividends received or deemed to have been received by it on such share (and in certain circumstances a share exchanged for such share) to the extent and under circumstances prescribed by the ITA. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns such shares or where a trust or partnership of which a corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such shares.

Holders to whom these rules may be relevant should consult their own tax advisors.

Alternative Minimum Tax

Individuals and certain trusts that receive or are deemed to receive taxable dividends on common stock or exchangeable shares, or that realize a capital gain on the disposition or deemed disposition of common stock or exchangeable shares, may realize an increase in their liability for alternative minimum tax under the ITA.

Foreign Property Information Reporting

In general, a “specified Canadian entity” for a taxation year or fiscal period whose total cost amount of “specified foreign property” (both as defined in the ITA) at any time in the year or fiscal period exceeds C$100,000, is required to file an information return for the year or period disclosing prescribed information, including the cost amount, any dividends received in the year, and any gains or losses realized in the year in respect of such property. On March 4, 2010, Proposed Amendments to expand existing reporting requirements with respect to specified foreign property to require more detailed information were announced. As of the date hereof, no detailed legislative proposals or revised administrative policies with respect to such amended reporting requirements have been made public. Subject to certain exceptions, a holder will be a specified Canadian entity.

Specified foreign property is defined in the ITA to include shares of the capital stock of a non-resident corporation and property that, under the terms or conditions thereof or any agreement related thereto, is convertible into, exchangeable for or confers a right to acquire, property that is a share of the capital stock of a non-resident corporation. As such, exchangeable shares, common stock and certain exchange and voting rights relating thereto are specified foreign property to a holder. Accordingly, holders of such properties should consult their own tax advisors regarding compliance with these rules.

Offshore Investment Fund Property

The ITA contains rules which may require a taxpayer to include in income in each taxation year an amount in respect of the holding of an “offshore investment fund property”. These rules could apply to a holder of common stock if each of two conditions are satisfied.

The first condition for such rules to apply is that the value of the common stock may reasonably be considered to be derived, directly or indirectly, primarily from portfolio investments in: (i) shares of one or more corporations, (ii) indebtedness or annuities, (iii) interests in one or more corporations, trusts, partnerships, organizations, funds or entities, (iv) commodities, (v) real estate, (vi) Canadian or foreign resource properties, (vii) currency of a country other than Canada, (viii) rights or options to acquire or dispose of any of the foregoing, or (ix) any combination of the foregoing (“Investment Assets”).

The second condition for such rules to apply to a holder is that it must be reasonable to conclude that one of the main reasons for the holder acquiring or holding the common stock was to derive a benefit from portfolio investments in Investment Assets in such a manner that the taxes, if any, on the income, profits and gains from such Investment Assets for any particular year are significantly less than the tax that would have been applicable under Part I of the ITA had the income, profits and gains been earned directly by the holder.

If applicable, these rules would generally require a holder to include in income for each taxation year in which the holder owns common stock (i) an imputed return for the taxation year computed on a monthly basis and determined by multiplying the holder’s “designated cost” (as defined in the ITA) of the common stock at the end of the month by 1/12th of the total of the prescribed rate for the period that includes such month and two per cent, less (ii) the holder’s income for the year (other than a capital gain) from the common stock determined without reference to these rules. Any amount required to be included in computing a holder’s income under these provisions will be added to the adjusted cost base to the holder of its common stock.

The application of these rules depends, in part, on the reasons for a holder acquiring or holding common stock. Holders are urged to consult their own tax advisors regarding the application and consequences of these rules, in their own particular circumstances.

United States Federal Income Tax Considerations To Non-U.S. Holders

The following is a summary of the material United States federal income tax consequences to Non-U.S. Holders, as defined below, of the ownership and disposition of common stock and of the exchange of exchangeable shares for common stock. This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential United States federal income tax consequences that may apply to a Non-U.S. Holder as a result of the ownership and disposition of exchangeable shares and common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular Non-U.S. Holder that may affect the United States federal income tax consequences to such Non-U.S. Holder nor does it address the United States state or local tax consequences or the foreign tax consequences of the ownership and disposition of the common stock or exchangeable shares. Accordingly, this summary is not intended to be, and should not be construed as, legal or United States federal income tax advice with respect to any Non-U.S. Holder. Except as specifically provided under “Exchange of Exchangeable Shares for Common Stock” below, this summary does not address the United States federal income tax consequences to Non-U.S. Holders of their ownership and disposition of exchangeable shares. Accordingly, Non-U.S. Holders should consult their own tax advisors regarding the United States tax consequences (including the potential application and operation of any income tax treaties) of the ownership and disposition of exchangeable shares. U.S. Holders (as defined below) who own exchangeable shares or who acquire common stock should consult their own tax advisors as to the United States tax consequences of owning and disposing such shares.

Scope of This Summary

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), final and temporary United States Treasury regulations promulgated thereunder, administrative pronouncements and judicial decisions, in each case as in effect of the date hereof, all of which are subject to change, possibly with retroactive effect. No advance income tax ruling has been sought or obtained from the United States Internal Revenue Service (the “IRS”) regarding the United States federal income tax consequences described herein.

Accordingly, all holders are strongly urged to consult their tax advisors with regard to the application of the United States federal, state, local and other tax consequences and the non-United States tax consequences of the ownership and disposition of exchangeable shares and the common stock in light of their particular circumstances.

For purposes of this summary, the term “Non-U.S. Holder” means any person that is a beneficial owner of exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock) other than a person who is a U.S. Holder. The term “U.S. Holder” means a beneficial owner of exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock) that is (a) a citizen or an individual resident of the United States for United States federal income tax purposes, (b) a corporation (or other entity taxable as a corporation for United States federal income tax purposes) organized under the laws of the United States or any political subdivision thereof, including the States and the District of Columbia, (c) an estate the income of which is subject to United States federal income taxation regardless of its source, or (d) a trust which (i) is subject to the primary jurisdiction of a court within the United States and for which one or more United States persons have authority to control all substantial decisions, or (ii) has a valid election in effect under applicable United States Treasury Regulations to be treated as a U.S. person.

The term U.S. Holder also includes certain former citizens and residents of the United States. If a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of the exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock), the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership.

Non-U.S. Holders Subject to Special United States Federal Income Tax Rules Not Addressed

This summary does not address the United States federal income tax consequences to certain categories of Non-U.S. Holders subject to special rules, including Non-U.S. Holders that are (a) banks, financial institutions, or insurance companies, (b) regulated investment companies or real estate investment trusts, (c) brokers or dealers in securities or currencies or traders in securities or currencies that elect to apply a mark-to-market accounting method, (d) tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts, (e) holders that own exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock) as part of a straddle, hedge, constructive sale, conversion transaction, or other integrated investment, (f) holders that acquired exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock) in connection with the exercise of employee stock options or otherwise as compensation for services, (g) holders that have a “functional currency” other than the U.S. dollar, (h) holders that are liable for the “alternative minimum tax” under the Code, (i) holders that hold exchangeable shares (or, following any exchange of exchangeable shares for common stock, a beneficial owner of common stock) other than as a capital asset within the meaning of Section 1221 of the Code, (j) holders that own or have owned directly, indirectly, or constructively 5% or more, by voting power or value, of the outstanding equity interests of lululemon, or (k) U.S. expatriates. Non-U.S. Holders that are subject to special provisions under the Code, including Non-U.S. Holders described immediately above, should consult their own tax advisors regarding the United States federal income, United States state and local, and non-United States tax consequences of disposition of exchangeable shares and the ownership and disposition of common shares.

Exchange of Exchangeable Shares for Common Stock

You generally will not be subject to United States federal income tax on any gain realized on the exchange of exchangeable shares for the common stock unless (i) the gain is effectively connected with your trade or business in the United States or, if a treaty applies, is attributable to your permanent establishment in the United States, or (ii) you are an individual and you are present in the United States for 183 days or more during the taxable year of disposition and certain other conditions are satisfied.

Dividends on the Common Stock

Dividends paid to you as a Non-U.S. Holder of the common stock generally will be subject to withholding of United States federal income tax at a rate of 30%, which rate may be subject to reduction by an applicable income tax treaty (generally 15% on dividends paid to eligible residents of Canada under the Canada-United States Income Tax Treaty), unless the dividend is effectively connected with the conduct of your trade or business within the United States (or if a tax treaty applies, is attributable to your United States permanent establishment), in which case the dividend will be taxed at ordinary United States federal income tax rates. If you are a corporation, such effectively connected income may also be subject to an additional “branch profits tax.” You will be required to satisfy certain certification requirements to claim treaty benefits or otherwise claim a reduction of, or exemption from, the withholding tax described above.

Sale or Exchange of the Common Stock

You generally will not be subject to United States federal income tax on any gain realized on the sale or exchange of shares of the common stock unless (i) the gain is effectively connected with your trade or business in the United States or, if a treaty applies, is attributable to your permanent establishment in the United States, or (ii) you are an individual and you are present in the United States for 183 days or more during the taxable year of disposition and certain other conditions are satisfied.

Information Reporting and Backup Withholding

Non-U.S. Holders are generally subject to information reporting requirements with respect to dividends paid by us to you and any tax withheld with respect to such dividends. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty. You will be subject to a backup withholding tax, currently at the rate of 28%, unless applicable certification requirements are met. Payment of the proceeds of a sale of shares of the common stock within the United States or by a U.S. payor or U.S. middleman, is subject to both backup withholding and information reporting unless you, as the beneficial owner, certify under penalties of perjury that you are not a United States person for purposes of the Code (and the payor does not have actual knowledge or reason to know that you are a United States person) or otherwise establishes an exemption. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against your U.S. federal income tax liability, if any, or will be refunded to the extent it exceeds such liability, if you furnish the required information to the IRS. Each Non-U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding tax rules.

Legal Matters

DLA Piper LLP (US), Seattle, Washington, our outside counsel, will issue an opinion about the legality of any securities we offer through this prospectus.

Experts

The consolidated financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended January 29, 2012 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

Prospectus

LOGO

32,378,680 Shares

Common Stock

January 4, 2013

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.

Other Expenses of Issuance and Distribution.

The following table sets forth expenses payable by lululemon in connection with the issuance and distribution of the securities being registered. All the amounts shown are estimates.


SEC registration fee	$	334,149
Printing expenses		10,000
Legal fees and expenses		25,000
Accounting fees and expenses		10,000
Miscellaneous		—

Total	$	379,149

Item 15.

Indemnification of Directors and Officers.

Delaware General Corporation Law

Section 145 of the Delaware General Corporation Law (the “DGCL”) empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director or officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by that person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A Delaware corporation may indemnify directors, officers, employees and others against expenses (including attorneys’ fees) in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the person to be indemnified has been adjudged to be liable to the corporation. Where a director or an officer is successful on the merits or otherwise in the defense of any action referred to above or in defense of any claim, issue or matter therein, the corporation must indemnify that director or officer against the expenses (including attorneys’ fees) which he or she actually and reasonably incurred in connection therewith.

Section 102(b)(7) of the DGCL provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL or (4) for any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we shall indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law and that we may advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions. We believe that indemnification under our amended and restated certificate of incorporation and our amended and restated bylaws covers at least negligence and gross negligence on the part of indemnified parties.

II-1

Our amended and restated certificate of incorporation also permits us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our amended and restated certificate of incorporation or Section 145 of the Delaware General Corporation Law would permit indemnification. We have obtained directors’ and officers’ liability insurance to provide our directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, errors and other wrongful acts.

We have entered into separate indemnification agreements with each of our directors and executive officers, which is in addition to and, in some instances, broader than the indemnification provided for in our charter documents. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of this person’s services as a director or executive officer or at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.

The Company also maintains directors’ and officers’ liability insurance for its directors and officers that protects them from certain losses arising from claims or charges made against them in their capacities as directors or officers of the Company.

The Company maintains insurance policies under which the Company’s directors and officers are insured, within the limits and subject to the limitations of the policies, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities which might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such directors or officers.

Item 16.

Exhibits.

Incorporated by Reference

Exhibit No

Exhibit Title

Filed
Herewith

Form

Exhibit
No.

File No.

Filing Date

2.1

Agreement and Plan of Reorganization dated as of April 26, 2007, by and among the parties named therein

2.2

Exchange Trust Agreement dated as of July 26, 2007, between lululemon athletica inc., Lulu Canadian Holding, Inc. and Computershare Trust Company of Canada

2.3

Exchangeable Share Support Agreement dated as of July 26, 2007, between lululemon athletica inc., Lululemon Callco ULC and Lulu Canadian Holding, Inc.

2.4

Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares, dated as of July 26, 2007, by and among the parties named therein

2.5

Amended and Restated Arrangement Agreement dated as of June 18, 2007, by and among the parties named therein

2.6

Plan of Arrangement and Exchangeable Share Provisions dated as of June 18, 2007, by and among the parties named therein

4.1

Form of Specimen Stock Certificate of lululemon athletica inc.

5.1

Opinion of DLA Piper LLP (US)

23.1

Consent of PricewaterhouseCoopers LLP

II-2

Item 17.

Undertakings

(a)	The undersigned Registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however , that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act to any purchaser:

(A)

Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a

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purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(5)

That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to the registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

(b)

The undersigned Registrant hereby further undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, lululemon athletica inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, Canada, on January 4, 2013.


lululemon athletica inc.

By:		/s/ Christine Day
		Christine M. Day Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Christine M. Day and John E. Currie and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:


Signature	Title	Date

/s/ Christine Day Christine M. Day	Chief Executive Officer and Director (Principal Executive Officer)	January 4, 2013

/s/ John Currie John E. Currie	Chief Financial Officer (Principal Financial and Accounting Officer)	January 4, 2013

/s/ Dennis Wilson Dennis J. Wilson	Chairman of the Board	January 4, 2013

/s/ Michael Casey Michael Casey	Director	January 4, 2013

/s/ RoAnn Costin RoAnn Costin	Director	January 4, 2013

/s/ William Glenn William H. Glenn	Director	January 4, 2013

/s/ Martha Morfitt Martha A.M. Morfitt	Director	January 4, 2013



/s/ Rhoda Pitcher Rhoda M. Pitcher	Director	January 4, 2013

/s/ Thomas Stemberg Thomas G. Stemberg	Director	January 4, 2013

/s/ Jerry Stritzke Jerry Stritzke	Director	January 4, 2013

/s/ Emily White Emily White	Director	January 4, 2013

INDEX TO EXHIBITS

Item 16.

Exhibits.

Incorporated by Reference

Exhibit No

Exhibit Title

Filed
Herewith

Form

Exhibit
No.

File
No.

Filing
Date

2.1

Agreement and Plan of Reorganization dated as of April 26, 2007, by and among the parties named therein

2.2

Exchange Trust Agreement dated as of July 26, 2007, between lululemon athletica inc., Lulu Canadian Holding, Inc. and Computershare Trust Company of Canada

2.3

Exchangeable Share Support Agreement dated as of July 26, 2007, between lululemon athletica inc., Lululemon Callco ULC and Lulu Canadian Holding, Inc.

2.4

Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares, dated as of July 26, 2007, by and among the parties named therein

2.5

Amended and Restated Arrangement Agreement dated as of June 18, 2007, by and among the parties named therein

2.6

Plan of Arrangement and Exchangeable Share Provisions dated as of June 18, 2007, by and among the parties named therein

4.1

Form of Specimen Stock Certificate of lululemon athletica inc.

5.1

Opinion of DLA Piper LLP (US)

23.1

Consent of PricewaterhouseCoopers LLP

Exhibit 2.1

Agreement and Plan of Reorganization

By and Among

Lululemon Corp.,

a Delaware corporation,

Lululemon Athletica USA, Inc.,

a Nevada corporation,

Lululemon Athletica Inc.,

a company formed under the laws of British Columbia,

LIPO Investments (USA), Inc.,

a company formed under the laws of British Columbia,

LIPO Investments (Canada), Inc.,

a company formed under the laws of British Columbia,

Lulu Canadian Holding, Inc.,

a company formed under the laws of British Columbia,

and

Each of the Parties Whose Name Appears on Schedule I and Schedule II Hereto

Dated: April 26, 2007

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the “ Agreement ”) is made as of this 26th day of April, 2007 by and among (i) Lululemon Corp., a Delaware corporation (the “ Company ”), (ii) Lululemon Athletica USA, Inc., a Nevada corporation (“ USA ”), (iii) Lululemon Athletica Inc., a company formed under the laws of British Columbia (“ LAI ”), (iv) LIPO Investments (USA), Inc., a company formed under the laws of British Columbia (“ LIPO USA ”), (v) LIPO Investments (Canada), Inc., a company formed under the laws of British Columbia (“ LIPO Canada ”), (vi) Lulu Canadian Holding, Inc., a company formed under the laws of British Columbia (“ Canadian Holding ”), (vii) each of the parties whose name appears on Schedule I hereto (each, an “ Investor ”), and (viii) each of the parties whose name appears on Schedule II hereto (each, a “ LIPO Holder ”). Capitalized terms used, but not otherwise defined herein, shall have the meanings set forth in Article 10.

BACKGROUND

The Company’s Board of Directors (the “Board”) has reviewed the ownership and distribution of the authorized capital stock of the Company and its subsidiaries. In particular, the Board has considered the authorized and outstanding capital structure of the Company, USA and LAI, which as of the date of this Agreement, is comprised of the following:

•

108,495 shares of Series A Participating Convertible Preferred Stock of the Company (the “ Company Series A Preferred Stock ”), stated value US$859.11 per share;

•

116,994 shares of Series TS Participating Convertible Preferred Stock of the Company (the “ Company Series TS Preferred Stock ”), stated value US$10.281 per share;

•

222,296 shares of Participating Preferred Stock of USA (the “ USA Participating Preferred Stock ”), stated value US$10.405 per share;

•

10,000 shares of Non-Participating Preferred Stock of USA (“ USA Non-Participating Preferred Stock ”), stated value per share US$1.00 per share;

•

options to purchase an aggregate of 1,897,000 shares of common stock of USA, par value US$.001 per share (the “ USA Common Stock ”) at an exercise price of US$0.21 per share;

•

106,702 Class A Shares of LAI, no par value (the “ LAI Class A Shares ”), reference amount US$859.11 per share;

•

115,594 Class B Shares of LAI, no par value (the “ LAI Class B Shares ”), reference amount US$859.11 per share;

•

options to acquire an aggregate of 1,897,000 Class C Shares of LAI, no par value (“ LAI Class C Shares ”), at an exercise price of US$1.18 per share.

Each of the Company Series A Preferred Stock, Company Series TS Preferred Stock, LAI Class A Share and LAI Class B Share accrues dividends at a rate of 8% per annum, compounded quarterly.

The Company directly owns 100% of the USA Participating Preferred Stock and the Institutional Investors and LIPO USA own 48% and 52%, respectively, of the USA Non-Participating Preferred Stock. The Company indirectly owns all of the issued and outstanding LAI Class A Shares and LIPO Canada owns all of the issued and outstanding LAI Class B Shares. The outstanding LAI Class A Shares and LIPO Class B Shares represent 48% and 52%, respectively, of the equity interests in LAI.

LIPO Canada and LIPO USA (collectively, the “LIPO Entities”) are companies that are controlled by Dennis Wilson. Substantially all of the assets of LIPO Canada and LIPO USA consists of their holdings in LAI and USA, respectively. As of the date of this Agreement, (i) LIPO Canada’s outstanding capitalization is comprised of 117,000,362 common shares, no par value (“ LIPO Canada Common Shares ”), of which 2,344,917 shares are designated as “forfeitable,” and options to purchase an aggregate of 10,476,250 LIPO Canada Common Shares (“ LIPO Canada Options ”), at an exercise price of $0.99 per share, and (ii) LIPO USA’s outstanding capitalization is comprised of 117,000,362 common shares, no par value (“ LIPO USA Common Shares ”), of which 2,344,917 shares are designated as “forfeitable”, and options to purchase an aggregate of 10,476,250 LIPO USA Common Shares (“ LIPO USA Options ”), at an exercise price of $0.01 per share.

The Board and, by execution of this Agreement, the Investors have determined to effect a firm commitment initial public offering (the “ Offering ”) of shares of the Company’s common stock, par value US$0.01 per share (the “ Company Common Stock ”) pursuant to a registration statement under the Securities Act of 1933, as amended, and the rules and regulations thereunder (the “ Securities Act ”) filed with the United States Securities and Exchange Commission (the “ SEC ”) on Form S-1. In furtherance thereof, the Board has approved the offering of Company Common Stock in the U.S. and Canada. Regardless of the amount of gross proceeds received by the Company in the Offering, the Board and the Investors desire to have the proposed Offering be deemed a “Qualified IPO” for purposes of the Company’s Stockholders Agreement, dated December 5, 2005 (the “ Company Stockholders Agreement ”).

Based on the foregoing, the Company and the Board have determined that it is advisable and in the best interests of the Company and its stockholders to effect a reorganization of the Company and its subsidiaries (the “ Reorganization ”). In furtherance thereof, each of the parties hereto has agreed to the completion of the Reorganization and to take such actions as may be requested by the Board to complete the Reorganization immediately after an underwriting agreement for the Offering has been executed by the Company and the underwriters participating in the Offering (the “ Reorganization Effective Time ”). The current outstanding equity of the Company, USA and LAI in the aggregate is owned 48% by the Investors and 52% by the LIPO Entities. Immediately after completion of the Reorganization, the Investors and the LIPO Entities will hold the same relative ownership percentages in the Company on a consolidated basis.

In connection with the Reorganization, Canadian Holding will amend its articles of incorporation substantially in the form attached hereto as Exhibit A (the “ Amended Canadian Holding Charter ”) to designate a new class of shares (the “ Exchangeable Shares ”) having the rights, preferences and privileges set forth in the exchangeable shares provision attached to the Plan of Arrangement (as defined below) and contemporaneously with the execution of this Agreement, the Company, Canadian Holding, LIPO USA and LIPO Canada entered into an arrangement agreement in the form attached hereto as Exhibit B (the “ Arrangement Agreement ”), attached to which is a plan of arrangement (the “ Plan of Arrangement ”) setting out certain steps of the reorganization then affecting Canadian Holding and the LIPO Entities. Each Exchangeable Share may, in accordance with its terms and the terms of the Exchange Trust Agreement (as defined below) and the Plan of Arrangement, be exchanged by the holder thereof for one share of Company Common Stock. At the Reorganization Effective Time, the Company, Canadian Holding and Computershare Trust Company of Canada (the “ Exchangeable Shares Trustee ”)

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will enter into an exchange trust agreement substantially in the form of Exhibit C hereto (the “ Exchange Trust Agreement ”) under which the Exchangeable Shares Trustee will be granted certain rights and will agree to certain obligations for the benefit of the holders of Exchangeable Shares. In addition, the Company, Canadian Holding and Lululemon Callco ULC, an Alberta unlimited liability company which is a wholly-owned subsidiary of the Company (“ Callco ”), will enter into a support agreement substantially in the form of Exhibit D hereto (the “ Exchangeable Share Support Agreement ”) pursuant to which the Company will agree to support the obligations of Canadian Holding and Callco.

The following events will occur in the sequence set forth in Article 1:

(A)

Each vested option to acquire LIPO Canada Common Shares will be exercised. Thereafter, each holder of LIPO Canada common shares (each, a “ LIPO Canada Holder ”) will exchange its LIPO Canada Common Shares for either, or a combination of, shares of Company Common Stock or Exchangeable Shares, and each remaining option to acquire LIPO Canada Common Shares will automatically be exchanged for an option to acquire LIPO USA Common Shares, in each case, in the manner more particularly provided in the Arrangement Agreement and the Plan of Arrangement. The aggregate number of shares of Company Common Stock and Exchangeable Shares to be issued in exchange for LIPO Canada Common Shares will be equal to LIPO Canada’s pro rata portion of the LIPO Share Amount and each holder of LIPO Canada Common Shares will receive its pro rata portion of such aggregate number.

(B)

LIPO USA, with respect to its shares of Company Series TS Preferred, will receive shares of Company Common Stock that are equal to its pro rata portion of the LIPO Share Amount.

(C)

Each holder of shares of Company Series A Preferred Stock will receive: (i) its pro rata portion of the Common Share Amount, and (ii) a number of shares of Company Common Stock that is equal to the Investment Value, as of the Reorganization Effective Time, of such Company Series A Preferred Stock, divided by the IPO Price.

(D)

USA will purchase all outstanding shares of USA Non-Participating Preferred Stock for a purchase price equal to the Investment Value of such stock, payable in cash.

(E)

Each holder of Exchangeable Shares will purchase from the Company a number of shares of a special class of voting stock of the Company (the “ Special Voting Shares ”) that is equal to the number of Exchangeable Shares issued to such holder at the Reorganization Effective Time.

(F)

Each option to purchase a share of USA Common Stock then outstanding shall become an option to purchase an adjusted number of shares of Company Common Stock at an adjusted exercise price, as more particularly set forth herein.

(G)

Each option to purchase a LAI Class C Share then outstanding shall become an option to purchase an adjusted number of shares of Company Common Stock at an adjusted exercise price, as more particularly set forth herein.

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(H)

The Company will contribute any shares of Canadian Holding that it may hold in connection with the Reorganization to Callco.

(I)

Canadian Holding and LIPO Canada will amalgamate pursuant to the provisions of the Business Corporations Act (British Columbia).

In connection with the Reorganization, the Participating Holders have executed and delivered the Amended and Restated Registration Rights Agreement in the form of Exhibit E hereto (the “ Restated Registration Rights Agreement ”) to the Company to be held in escrow and released upon completion of the Reorganization. The Restated Registration Rights Agreement shall become effective upon and shall supersede the Registration Rights Agreement, dated as of December 5, 2005, by and among the Company, the Institutional Investors, LIPO USA and LIPO Canada (the “ Original Registration Rights Agreement ”) as of the Reorganization Effective Time.

The Company will amend and restate the Company’s Amended and Restated Certificate of Incorporation (the “ Original Certificate of Incorporation ”) in the form of the Amended and Restated Certificate of Incorporation attached hereto as Exhibit F (the “ Step One Charter ”) to effect certain provisions of the Reorganization, to designate the special class of voting stock.

Prior to the closing of the Offering (the “ Closing ”), the Company will amend and restate the Step One Charter in the form of the Amended and Restated Certificate of Incorporation attached hereto as Exhibit G (the “ Step Two Charter ”).

Each of the foregoing actions was approved by the Board at a duly convened meeting on April 26, 2007 and the Board has unanimously recommended that the Company’s stockholders approve and adopt this Agreement and the transactions contemplated hereby. On or prior to the date of this Agreement, the holders of at least 66 2/3% of the votes represented by the outstanding Company Series A Preferred Stock, Company Series B Preferred Stock and Company Series TS Preferred Stock, voting as a single class (the “ Preferred Supermajority ”), will have approved this Agreement and the transactions contemplated hereby.

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NOW THEREFORE, in consideration of the foregoing and the covenants, promises and representations set forth herein, and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto agree as follows:

Article 1

Reorganization

The Reorganization shall be completed in the following sequence; subject to the Supreme Court of British Columbia issuing a final order approving the Plan of Arrangement pursuant to Section 291(4) of the Business Corporations Act (British Columbia) in accordance with the terms of the Arrangement Agreement.

1.1. Exchange or Repurchase of Outstanding Stock.

(a) Company Preferred Stock . Upon the Reorganization Effective Time and as part of the Reorganization, the following transactions shall occur:

(i) Company Series A Preferred Stock . Each issued and outstanding share of Series A Preferred Stock will be exchanged for a number of shares of Common Stock equal to the sum of (A) the product of ( x ) the Investment Value of such share of Company Series A Preferred Stock, as of the Reorganization Effective Time, divided by the Total Investment Value, ( y ) multiplied by the Common Share Amount, and (B) the quotient of the Investment Value of such Company Series A Preferred Stock, as of the Reorganization Effective Time, divided by the IPO Price.

(ii) Company Series TS Preferred Stock . Each issued and outstanding share of Company Series TS Preferred Stock will be exchanged for a number of shares of Common Stock equal to the product of ( x ) the quotient of the Investment Value of such share of Company Series TS Preferred Stock, as of the Effective Time, divided by the aggregate Investment Value of all outstanding Company Series TS Preferred Stock as of the Reorganization Effective Time, multiplied by ( y ) the product of the USA Percentage multiplied by the LIPO Share Amount.

(b) USA Non-Participating Preferred Stock . Upon the Reorganization Effective Time and as part of the Reorganization, but after giving effect to the transactions contemplated by Section 1.1(a), USA will repurchase each issued and outstanding share of USA Non-Participating Preferred Stock from the holders thereof for a per share purchase price equal to the Investment Value of such share.

1.2. Reorganization of LIPO Canada.

(a) Five minutes following completion of the transactions contemplated by Section 1.1, LIPO Canada, LIPO USA and Canadian Holding shall cause the terms of the Plan of Arrangement to be consummated in the order provided therein. In accordance with the Arrangement Agreement and the Plan of Arrangement, LIPO Canada Holders will exchange their LIPO Canada common shares in exchange for either, or a combination of, shares of Company Common Stock and Exchangeable Shares. The aggregate number of shares of Company Common Stock and Exchangeable Shares that may be issued under the terms of the Arrangement Agreement and the Plan of Arrangement will be equal to the product of the LAI Percentage multiplied by the LIPO Share Amount. Of the foregoing total number of shares, (i) Slinky Financial ULC (“ Slinky ”), an Alberta unlimited company controlled by Mr. Wilson, will receive a number of shares of Company Common Stock that is equal to the number of shares of Company Common Stock that is set forth for Mr. Wilson or Slinky in the final prospectus for the Offering, and (ii) the remainder will be issued as Exchangeable Shares to the LIPO Canada Holders with respect to all other LIPO Canada shares then outstanding, in proportion to their relative ownership of LIPO Canada Common Shares.

(b) Contemporaneously with the transactions contemplated by Section 1.2(a), as provided in the Arrangement Agreement and the Plan of Arrangement, each holder of Exchangeable Shares shall purchase a number of Special Voting Shares that is equal to the number of Exchangeable Shares issued to such holder at the Reorganization Effective Time. The aggregate purchase price for all Special Voting Shares issued pursuant to this Section 1.2(b) shall be Cdn$1,000.00. The purchase price payable by each purchaser of Special Voting Shares shall be such purchaser’s pro rata share of such aggregate purchase price. The Special Voting Shares shall be uncertificated.

(c) Upon issuance at the Reorganization Effective Time, all of the Exchangeable Shares issued by Canadian Holding pursuant to this Agreement, the Arrangement Agreement and the Plan of Arrangement and all of the Special Voting Shares issued by the Company pursuant to this Agreement, the Arrangement Agreement and the Plan of Arrangement shall be duly authorized and validly issued, fully paid and nonassessable.

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1.3. Lululemon Callco ULC. Any time prior to the amalgamation contemplated by Section 1.5, the Company will contribute the shares of Canadian Holding it holds to Callco. The authorized capital of Callco will consist of redeemable preferred shares and common shares having such rights, designations and preferences and issued in such amount and purchase prices as shall be determined by the Board and the board of directors of Callco.

1.4. Option Exchanges. Five minutes following the completion of the transactions contemplated by Section 1.2,

(a) each option to purchase shares of USA Common Stock then outstanding shall be exchanged for an option to purchase a number shares of Company Common Stock equal to the number of shares of USA Common Stock set forth in the option agreement governing such option multiplied by the USA Percentage, at an adjusted exercise price equal to the exercise price set forth in such option agreement, divided by the USA Percentage, and the parties hereby determine that (i) the fair market value of the shares of Company Common Stock underlying such new option minus the aggregate exercise price under such new option does not exceed (ii) the fair market value of the shares of USA Common Stock underlying the options to purchase shares of USA Common Stock immediately before the exchange, minus the aggregate exercise price under such exchanged option to purchase USA Common Stock; and

(b) each option to purchase LAI Class C Shares then outstanding shall be exchanged for an option to purchase a number shares of Company Common Stock equal to the number of LAI Class C Shares set forth in the option agreement governing such option multiplied by the LAI Percentage, at an adjusted exercise price equal to the exercise price set forth in such option agreement, divided by the LAI Percentage, and the parties hereby determine that (i) the fair market value of the shares of Company Common Stock underlying such new option minus the aggregate exercise price under such new option does not exceed (ii) the fair market value of the LAI Class C Shares underlying the options to purchase LAI Class C Shares immediately before the exchange, minus the aggregate exercise price under such exchanged option to purchase LAI Class C Shares.

The following is an example of the foregoing option share amount and exercise price adjustments. This example is provided for illustration purposes only. Assume that a hypothetical holder holds an option to acquire 5,000 shares of USA Common Stock at an exercise price of $0.21 per share and an option to acquire 5,000 LAI Class C Shares at an exercise price of $1.18 per share and that the USA Percentage and LAI Percentage is 15% and 85%, respectively. Based on the foregoing, upon completion of the Reorganization, (a) the option to acquire 5,000 shares of USA Common Stock at an exercise price of $0.21 per share would become an option to acquire 750 shares of Company Common Stock (i.e., 5,000 x 0.15) at an adjusted exercise price of $1.40 (i.e., $0.21 / 0.15), and (b) the option to acquire 5,000 LAI Class C Shares at an exercise price of $1.18 per share would become an option to acquire 4,250 shares of Company Common Stock (i.e., 5,000 x 0.85) at an adjusted exercise price of $1.39 (i.e., $1.18 / 0.85, or $1.39).

(c) The Company, LAI and USA will use all commercially reasonable efforts to obtain the written acknowledgement of all holders of options to purchase shares of USA Common Stock and all holders of options to purchase LAI Class C Shares, pursuant to which such holders acknowledge that at the Reorganization Effective Time, pursuant to this Agreement and the 2007 Equity Incentive Plan of the Company, such holders’ options to purchase shares of USA Common Stock and options to purchase LAI Class C Shares will be exchanged for options to purchase shares of Company Common Stock in the manner described in this Section 1.4, without any further act or formality on the part of such holders.

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1.5. Amalgamation. Five minutes following the completion of the transactions contemplated by Section 1.4, Canadian Holding and LIPO Canada will be amalgamated pursuant to Sections 273 of the Business Corporations Act (British Columbia). The amalgamation contemplated by this Section 1.5 shall be completed prior to the IPO Closing.

1.6. Allocation of Assets. The portion of the Company’s total fair market value that is attributable to the fair market value of USA (the “ USA Percentage ”), and the portion of the Company’s total fair market value that is attributable to the fair market value of LAI (the “ LAI Percentage ”), will each be expressed as a percentage, with the sum of the two adding to 100%. As soon as reasonably practicable after the execution of this Agreement, the Company will allocate the relative contribution to the Company’s total fair market value by USA and LAI. Any determination of such allocation will be made by the Board, in its discretion, in consultation with and on information provided by, the Company’s employees and advisors. The parties hereto agree that this Section 1.5 does not impose any obligation on the Company, USA or LAI to obtain a valuation report with respect to the Company or any of its subsidiaries or either of the LIPO Entities.

1.7. Fractional Shares. In the event that a fractional number of shares of capital stock is issuable as a result of the consummation of the transactions contemplated by Sections 1.1 or 1.2, such fractional number shall be rounded to the nearest whole share. Any rounding required in respect of the transactions undertaken in Section 1.3 shall be effected to preserve the deferred exchange contemplated by subsection 7(1.4) of the Income Tax Act (Canada).

1.8. Adjustments. The class and number of any shares referred to in this Agreement will be adjusted equitably (without duplication) for any change in the class of or any increase or decrease in the number of outstanding shares resulting from stock splits, reverse stock splits, stock dividends, stock combinations, consolidations, mergers, reclassifications, recapitalizations or other similar transactions that take place after the date hereof and prior to the Closing. Any adjustments required in respect of the transactions undertaken in Section 1.3 shall be effected to preserve the deferred exchange contemplated by subsection 7(1.4) of the Income Tax Act (Canada).

1.9. Deliveries. At least three (3) business days prior to the Reorganization Effective Time, each Investor, Slinky and Mr. Wilson, in his individual capacity and in his capacity as trustee of the other LIPO Canada Holders, shall deliver to the Company and Canadian Holding stock certificates representing the capital stock tendered by such Investor, Slinky or Mr. Wilson, as the case may be, pursuant to Sections 1.1 and 1.2, along with duly endorsed stock powers, if required. At the Reorganization Effective Time, the Company and Canadian Holding shall issue to each Person whose certificates have been tendered certificates evidencing the number of shares of Company Common Stock and Exchangeable Shares held of record by such Person after giving effect to the Reorganization and the Stock Split.

1.10. Failure to Deliver Shares. If a holder of shares of capital stock of the Company, LAI, USA or LIPO Canada (the “ Transferring Holder ”) fails to deliver its shares of capital stock in accordance with the terms of this Agreement, each of the Company and its direct and indirect subsidiaries may, at its option, in addition to all other remedies it may have, send to the Transferring Holder the stock certificates for the shares of capital stock for which such Transferring Holder is entitled to pursuant to the terms of this Agreement and cancel on its books the stock certificate(s) representing such shares of capital stock. The Transferring Holder failing to deliver share certificates in accordance with this Agreement shall reimburse the Company and its direct and indirect subsidiaries for any legal or other expenses reasonably incurred by them in connection with the enforcement of obligations under this Agreement or utilizing the remedies set forth in this Section 1.10.

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1.11. Closing. In the event the Closing does not occur, the parties hereto agree to cooperate and work in good faith to execute and deliver such agreements and consents and amend such documents as may be necessary to re-establish the rights, preferences and privileges that the holders of capital stock and options in the Company, LAI, USA, LIPO Canada and LIPO USA had prior to the consummation of the Reorganization, taking into consideration applicable tax rules and regulations and all other relevant factors that the parties hereto may determine in light of current facts and circumstances.

Article 2

Consents to Transactions and Effect of Offering

2.1. Consent of Investors and LIPO Holders. Each of the Investors and LIPO Holders hereby voluntarily:

(a) approves and instructs the Company to effect, the Offering pursuant to a Registration Statement under the Securities Act filed with the SEC on Form S-1;

(b) agrees that notwithstanding the terms of the Company Stockholders Agreement, the Offering shall be deemed and treated as, a “Qualified IPO” for purposes of the Company Stockholders Agreement, regardless of whether the Company receives gross cash proceeds (before underwriting discounts, commissions and fees) of less than US$75 million; and

(c) approves and adopts (to the extent applicable to such person) the Reorganization and the form, terms and conditions of this Agreement, the Arrangement Agreement and the Plan of Arrangement and all of the transactions contemplated herein and therein.

2.2. Consent of Lulu Canadian Holding and LIPO Canada. Lulu Canadian Holding and LIPO Canada, being the only shareholders of LAI, hereby approve and adopt the Reorganization and the form, terms and conditions of this Agreement, the Arrangement Agreement and the Plan of Arrangement and all of the transactions contemplated herein and therein.

2.3. Amendment to and Termination of Company Stockholder Agreement.

(a) Upon execution of this Agreement, the matters set forth in Section 2.1(b) shall have been approved by (i) the holders of 66 2/3% of the outstanding Company Series A Preferred Stock, and (ii) the holders of 66 2/3% of the outstanding Company Series TS Preferred Stock. Such holders and the Company agree that the Company Stockholders Agreement is hereby amended to the extent provided in Section 2.1(b), effective as of the date of this Agreement.

(b) Pursuant to Section 11.1 of the Company Stockholders Agreement, effective as of the Closing, the Stockholders Agreement shall automatically terminate and shall not be of any force or effect thereafter.

2.4. Termination of Other Stockholder Agreements. Pursuant to Section 7.1 of USA’s Stockholders Agreement dated as of December 5, 2005 (“ USA Stockholders Agreement ”) and Section 8.1 of LAI’s Shareholders Agreement dated as of December 5, 2005 (“ LAI Shareholders Agreement ”), the USA Stockholders Agreement and LAI Shareholders Agreement, respectively, shall automatically terminate and shall not be of any force or effect thereafter, effective as of the Reorganization Effective Time.

2.5. Termination of Stock Purchase Agreement Provisions. Section 7.5 of the Stock Purchase Agreement dated as of December 5, 2005 by and among LAI, Canadian Holding, Mr. Wilson, certain of the Investors and certain other parties (the “ Canadian Stock Purchase Agreement ”) and Section

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7.5 of the Stock Purchase Agreement dated as of December 5, 2005 by and among the Company, USA, Mr. Wilson, certain of the Investors and certain other parties (the “ USA Stock Purchase Agreement ”), relating to access to financial reports and other information, shall automatically terminate and shall not be of any force or effect thereafter, effective as of the Reorganization Effective Time. Section 7.6 of the Canadian Stock Purchase Agreement and Section 7.9 of the USA Stock Purchase Agreement, relating to insurance, shall automatically terminate and shall not be of any force or effect thereafter, effective as of the Reorganization Effective Time. Section 7.4 of the USA Stock Purchase Agreement, relating to the composition of the board of directors of USA, shall automatically terminate and shall not be of any force or effect thereafter, effective as of the Reorganization Effective Time.

Article 3

Representations and Warranties of the Company and its Subsidiaries

Each of the Company, LAI, USA and Canadian Holding (each, a “ Lululemon Entity ”) hereby, severally and not jointly, represents, warrants, covenants, agrees and acknowledges to the Investors the following to be true and correct in all respects as to itself:

3.1. Organization and Standing. Such Lululemon Entity is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with full corporate power and authority to own, lease and operate its respective properties and assets and to carry on its respective business and operations.

3.2. Authority.

(a) Such Lululemon Entity has full corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Lululemon Entity and constitutes the legal, valid and binding obligation of the Lululemon Entity, enforceable in accordance with its terms except as enforcement may be limited by insolvency, bankruptcy, moratorium or other laws affecting creditors’ rights generally and except as enforcement may be limited by principles of equity (collectively, the “ Enforceability Exceptions ”). Except as set forth in Section 3.3, no other action is required to authorize the execution, delivery and performance of this Agreement, and the consummation by such Lululemon Entity of the transactions contemplated hereby.

(b) With respect to the Company, subject to the approval of the Preferred Super Majority, the approval of the holders of the Company Series A Preferred Stock, voting as a separate class, and the approval of the holders of the Company Series TS Preferred Stock, voting as a separate class, all corporate acts and other proceedings required to be taken by or on the part of the Company to authorize the Company to execute, deliver and perform this Agreement have been duly and properly taken.

3.3. Non-Contravention, etc. Neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated hereby does or will constitute, result in or give rise to any material breach or violation of, or any material default or right or material cause of action under, any material contractual obligation, the certificate of incorporation, bylaws or similar governing documents of such Lululemon Entity or any of its subsidiaries as in effect on the date hereof, any laws, orders, decrees, awards or orders of any court or governmental entity to which the Company or any of its subsidiaries is subject. Except for (a) such filings as may be required by Delaware General Corporate Law and applicable laws of British Columbia in connection with the Reorganization and the Offering and the filings required by the SEC and market regulatory bodies in connection with the Offering, (b) the approvals set forth in the Arrangement Agreement, and (c) the approval of the Company’s stockholders under the Original Certificate of Incorporation and the Company Stockholders

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Agreement, no approval, consent, waiver, authorization or other order of, and no declaration, filing, registration, qualification or recording with, any governmental authority or any other Person is required to be obtained or made by or on behalf of such Lululemon Entity in connection with the execution, delivery or performance of this Agreement and the transactions contemplated hereby by such Lululemon Entity.

3.4. Capitalization.

(a) Company . The Company hereby makes the following representations:

(i) As of the date of this Agreement, the Company is authorized to issue 40,750,000 shares of capital stock, of which (A) 35,000,000 shares have been designated as Company Common Stock, and (B) 5,750,000 shares of preferred stock, $0.01 par value per share. Of such shares of preferred stock, 250,000 shares have been designated as Company Series A Preferred Stock, 250,000 shares have been dated as Company Series B Preferred Stock, 250,000 shares have been designated as Company Series TS Preferred Stock and 5,000,000 shares have not been designated any class or series of preferred stock. As of the date of this Agreement, the Company’s issued and outstanding capital stock consists of 108,495 shares of Company Series A Preferred Stock and 116,994 shares of Company Series TS Preferred Stock. As of the date of this Agreement, no shares of Company Series B Preferred Stock or Company Common Stock are issued and outstanding. All of the issued and outstanding shares of capital stock of the Company are duly and validly issued and outstanding and are fully paid and nonassessable.

(ii) There are no other shares of capital stock or other equity securities of the Company outstanding and no outstanding Equity Rights relating to the capital stock of the Company. Except as specifically contemplated by this Agreement, no Person has any Equity Right with respect to capital stock or other equity securities of the Company.

(iii) Upon issuance at the Closing, all of the shares of Company Common Stock to be issued pursuant to Sections 1.1 and 1.2 will be duly authorized and validly issued, fully paid and nonassessable.

(b) USA . USA hereby makes the following representations:

(i) As of the date of this Agreement, USA is authorized to issue 10,232,296 shares of capital stock, of which (i) 10,000,000 shares have been designated as USA Common Stock, and (ii) 232,296 shares of preferred stock, $0.001 par value per share. Of such shares of preferred stock, 222,296 shares have been designated as USA Participating Preferred Stock and 10,000 shares have been designated as USA Non-Participating Preferred Stock. As of the date of this Agreement, USA’s issued and outstanding capital stock consists of 222,296 shares of USA Participating Preferred Stock, 10,000 shares of USA Non-Participating Preferred Stock and options to purchase 1,897,000 shares of USA Common Stock. All of the issued and outstanding shares of capital stock of the Company are duly and validly issued and outstanding and are fully paid and nonassessable.

(ii) Except for the options described in Section 3.4(b)(i) or as specifically contemplated by this Agreement, (A) there are no other shares of capital stock or other equity securities of USA outstanding and no outstanding Equity Rights relating to the capital stock of USA, and (B) no Person has any Equity Right with respect to capital stock or other equity securities of USA.

(i) As of the date of this Agreement, LAI is authorized to issue an unlimited number of LAI Class A Common Shares, LAI Class B Common Shares and LAI Class C

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Common Shares. As of the date of this Agreement, LAI’s issued and outstanding capital stock consists of 106,702 LAI Class A Shares, 115,594 LAI Class B Shares and options to purchase 1,897,000 shares of LAI Class C Shares. All of the issued and outstanding shares of capital stock of the Company are duly and validly issued and outstanding and are fully paid and nonassessable.

(ii) Except for the options described in Section 3.4(b)(i) as specifically contemplated by this Agreement, (A) there are no other shares of capital stock or other equity securities of LAI outstanding and no outstanding Equity Rights relating to the capital stock of LAI, and (B) no Person has any Equity Right with respect to capital stock or other equity securities of LAI.

Article 4

Representations and Warranties of Investors

Each Investor, severally and not jointly with the other Investors, hereby represents, warrants, covenants, agrees and acknowledges to the Company the following to be true and correct in all respects as to itself:

4.1. Authorization. If the Investor is a corporation, limited partnership, limited liability company, trust or other entity, (a) the Investor has all requisite power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, (b) the execution and delivery by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby and the performance of the Investor of its obligations hereunder have been duly and validly authorized by the Investor by all necessary action, and (c) no other action is required to authorize the execution, delivery and performance of this Agreement, and the consummation by the Investor of the transactions contemplated hereby. If the Investor is an individual, the Investor has full legal capacity to execute and deliver this Agreement and to perform his or her obligations hereunder, and to consummate the transactions contemplated hereby.

4.2. Enforceability. This Agreement has been duly and validly executed and delivered by the Investor and constitutes a legal, valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforcement may be limited by insolvency, bankruptcy, moratorium or other laws affecting creditors’ rights generally and except as enforcement may be limited by principles of equity.

4.3. Non-Contravention, etc. Neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated hereby does or will constitute, result in or give rise to any material breach or violation of, or any material default or right or material cause of action under, any material contractual obligation or the certificate of incorporation, bylaws, partnership agreement, operating agreement or other organizational documents of the Investor or any legal requirement applicable to the Investor. Assuming the accuracy of the representations set forth in Sections 3.3 and 8.5 and compliance with the agreements contained herein, no approval, consent, waiver, authorization or other order of, and no declaration, filing, registration, qualification or recording with, any governmental authority or any other Investor, including, without limitation, any Investor to any contractual obligation of the Investor, is required to be obtained or made by or on behalf of the Investor in connection with the execution, delivery or performance of this Agreement and the transactions contemplated hereby by the Investor.

4.4. Title to Shares. The Investor is the record and beneficial owner of the shares of Company Series A Preferred Stock, Company Series TS Preferred Stock and USA Non-Participating Preferred Stock set forth opposite its name on Schedule 4.4 hereto and has good, marketable and valid title to such shares, free and clear of all liens and encumbrances other than those transfer restrictions created by applicable under the Securities Act and Applicable Laws, the Company Stockholder Agreement and the USA Stockholder Agreement.

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4.5. Review of S-1 and Business and Records. The Investor has received a draft of the Company’s Registration Statement, dated as of April 24, 2007. Prior to the execution of this Agreement, such Investor and its advisers have been provided with full and free access and opportunity to inspect, review, examine and inquire about the Company’s Registration Statement, dated as of April 24, 2007 and all books, records and information (financial or otherwise) of the Company, its business and affairs, and such Investor and its advisers have made such inspection, review, examination and inquiry as they have deemed appropriate; and the Investor and its advisers have been offered the opportunity to ask such questions and obtain such additional information concerning the Company and its business and affairs as each Investor and its advisers have requested so as to understand the nature of the investment in the Company Common Stock and to verify the accuracy of the information obtained as a result of their investigation.

4.6. Securities Laws.

(a) The Investor is an “accredited investor” as such term is defined in Rule 501 of Regulation D under the Securities Act, and if the Investor is an entity, has not been organized for the purpose of acquiring the shares of Company Stock pursuant to this Agreement.

(b) The Investor understands and acknowledges that its shares of Company Common Stock will not be registered under the Securities Act or any other Applicable Laws, except as provided in Section 6.2, and are being offered in transactions not requiring registration (or any equivalent thereof) under the Securities Act or any other Applicable Laws, and may not be offered, sold, transferred or otherwise disposed except (i) in compliance with the registration requirements of the Securities Act and any other Applicable Laws or pursuant to an exemption therefrom or in a transaction not subject thereto, (ii) the Company has received an opinion from its counsel that the proposed sale, transfer or disposition does not require registration under the Securities Act or any other Applicable Laws, or (iii) as set forth in Section 8.5.

(c) The Investor acknowledges and agrees that each share certificate evidencing shares of Company Common Stock issued pursuant to this Agreement (unless issued pursuant to a registration statement under the Securities Act), and any share certificate issued in replacement thereof, shall be stamped or otherwise imprinted with appropriate legends reflecting restrictions on transferability in accordance with the Applicable Laws, and transfer restrictions of like effect will be provided by the Company and its transfer agent, and the Investor acknowledges and agrees to such legends, transfer agent instructions and transfer restrictions, on behalf of such Investor and each subsequent Permitted Transferee of such Investor.

(d) The shares of Company Common Stock to be acquired in accordance with this Agreement are being acquired by such Investor for investment and not as a nominee or agent for the benefit of any other person, and such Investor has no current intention of distributing, reselling or assigning the Company Common Stock in violation of the Securities Act.

(e) The Investor is aware that: (i) an investment in the Company involves a high degree of risk, lack of liquidity and substantial restrictions on transferability of interest; and (ii) no Federal or state agency has made any finding or determination as to the fairness for investment by the public, nor has made any recommendation or endorsement, of the Company Common Stock.

(f) The Investor or his, her or its representatives, as the case may be, together with its advisers, have such knowledge and experience in financial, tax, and business matters,

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and, in particular, investments in securities, so as to enable them to utilize the information made available to them in connection with the Company Common Stock to evaluate the merits and risks of an investment in the Company Common Stock and to make an informed investment decision with respect thereto.

4.7. No Reliance. Except with respect to the matters set forth in Section 8.5, the Investor is not relying on the Company or any of its employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Company Common Stock, and the Investor has relied on the advice of, or have consulted with, only its own advisers with respect to such matters.

4.8. Representations of Dennis Wilson. For purposes of this Article 4, Mr. Wilson shall be deemed to be an Investor and is making the representations set forth in this Article 4 with respect to himself in all respects as if he were an Investor.

Article 5

Representations and Warranties of LIPO Entities and LIPO Holders

Each of the LIPO Entities and LIPO Canada Holders, jointly and severally, represent, warrant, covenant, agree and acknowledge to the Company the following to be true and correct in all respects. These representations, warranties and covenants made by Mr. Wilson under this Article 5 are in addition to the representations, warranties and covenants made by Mr. Wilson in Article 4.

5.1. Organization and Standing. LIPO Canada is a corporation duly organized, validly existing and in good standing under the laws of the Province of British Columbia, with full corporate power and authority to own, lease and operate its properties and assets and to carry on its business and operations.

5.2. Authority. LIPO Canada has full corporate power and authority to execute, deliver and perform this Agreement and the Arrangement Agreement and, subject to obtaining the necessary shareholder and option holder approvals as contemplated by the Arrangement Agreement, LIPO Canada has full corporate power and authority to consummate the transactions contemplated hereby and thereby. This Agreement and the Arrangement Agreement have been duly executed and delivered by LIPO Canada and constitutes the legal, valid and binding obligation of LIPO Canada, enforceable in accordance with its terms except as enforcement may be limited by the Enforceability Exceptions. No other action is required to authorize the execution, delivery and performance of this Agreement or the Arrangement Agreement, and the consummation by LIPO Canada of the transactions contemplated hereby or thereby, other than as set forth in the Arrangement Agreement.

5.3. Non-Contravention, etc. Neither the execution, delivery or performance of this Agreement or the Arrangement Agreement nor the consummation of the transactions contemplated hereby or thereby does or will constitute, result in or give rise to any material breach or violation of, or any material default or right or material cause of action under, any material contractual obligation, the certificate of incorporation, bylaws or similar governing documents of LIPO Canada as in effect on the date hereof, any laws, orders, decrees, awards or orders of any court or governmental entity to which the Company or any of its subsidiaries is subject. Except as set forth in the Arrangement Agreement, no approval, consent, waiver, authorization or other order of, and no declaration, filing, registration, qualification or recording with, any governmental authority or any other Person is required to be obtained or made by or on behalf of LIPO Canada in connection with the execution, delivery or performance of this Agreement or the Plan of Arrangement and the transactions contemplated hereby or thereby by LIPO Canada.

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5.4. Capital Stock of LIPO Canada.

(a) As of the date of this Agreement, LIPO Canada is authorized to issue an unlimited number of LIPO Canada Common Shares, of which 117,000,362 LIPO Canada Common Shares are issued and outstanding, and has 10,746,250 LIPO Canada Options issued and outstanding. All of the issued and outstanding Common Shares are duly and validly issued and outstanding and are fully paid and nonassessable.

(b) Except for the options described in Section 5.4(a) or as specifically contemplated by this Agreement, (i) there are no other shares of capital stock or other equity securities of LIPO Canada outstanding and no outstanding Equity Rights relating to the capital stock of LIPO Canada, and (ii) no Person has any Equity Right for the purchase, subscription or issuance of any securities of LIPO Canada.

5.5. Liabilities; Litigation. LIPO Canada does not have any Liabilities, except liabilities or obligations relating to the LIPO Canada Stock Option Plan. There is no Litigation pending or, to the knowledge of Mr. Wilson, threatened against LIPO Canada at law or in equity before any governmental authority which questions the validity or seeks to prevent the consummation of this Agreement or the Plan of Arrangement by LIPO Canada or the transactions contemplated hereby or thereby.

5.6. Regulation S.

(a) Each LIPO Holder acknowledges and agrees that each share certificate evidencing the Special Voting Shares and Exchangeable Shares issued pursuant to this Agreement, the Arrangement Agreement and the Plan of Arrangement, and each share certificate evidencing shares of Company Common Stock issued upon exchange of any Exchangeable Share (unless issued pursuant to a registration statement under the Securities Act), and any share certificate issued in replacement thereof, shall be stamped or otherwise imprinted with the legends in substantially the form below and transfer restrictions of like effect will be provided by the Company and Canadian Holding to their respective transfer agents, and each LIPO Holder acknowledges and agrees to such legends, transfer agent instructions and transfer restrictions, on behalf of such LIPO Holder and each subsequent Permitted Transferee of such LIPO Holder:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE OFFERED, REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOT OFFER, REOFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF OR DISTRIBUTE DIRECTLY OR INDIRECTLY THESE SECURITIES IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS, OR AREAS SUBJECT TO ITS JURISDICTION, OR TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON EXCEPT (A) TO THE COMPANY OR A SUBSIDIARY OF THE COMPANY, (B) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT

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FOR THE SECURITIES UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH AN EXEMPTION FROM REGISTRATION UNDER THE ACT OR (D) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, INCLUDING RULES 904 AND 905 THEREOF. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF FURTHER AGREES THAT ANY HEDGING TRANSACTIONS INVOLVING THE SECURITIES WILL BE CONDUCTED IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRANSFER AGENT, AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER, IN EACH OF THE FOREGOING CASES, TO REQUIRE DELIVERY OF A CERTIFICATION OF TRANSFER AND OPINION OF COUNSEL IN FORM SATISFACTORY TO THEM. AS USED HEREIN, THE TERMS “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

(b) Each of the LIPO Holders understands and acknowledges that the Exchangeable Shares, Special Voting Shares and shares of Company Common Stock issued upon exchange of any Exchangeable Share have not been registered under the Securities Act or any other applicable securities law, are being offered in transactions not requiring registration under the Securities Act or any other securities laws, and may not be offered, sold, transferred or otherwise disposed except in compliance with the registration requirements of the Securities Act or any other applicable securities law or pursuant to an exemption therefrom or in a transaction not subject thereto.

(c) Each LIPO Holder represents and warrants that at the time the commitment to purchase the Exchangeable Shares and the Special Voting Shares was originated, he, she or it was outside the United States and was not a U.S. person (and was not acquiring for the account or benefit of a U.S. person) within the meaning of Regulation S under the Securities Act. No offer to purchase the Exchangeable Shares or the Special Voting Shares was made by such LIPO Holder in the United States.

(d) Each LIPO Holder is acquiring the Exchangeable Shares and Special Voting Shares for his or its own account, or for one or more persons for whom he or it is acting as a fiduciary, trustee or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, subject to any requirement of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor pursuant to Rule 144, Regulation S or any other exemption from registration available under the Securities Act.

(e) Each LIPO Holder agrees on his, her or its own behalf and on behalf of any person for whom it is acquiring the Exchangeable Shares and the Special Voting Shares, and each subsequent permitted transferee of the Exchangeable Shares and the Special Voting Shares by its acceptance thereof will be deemed to have agreed, that all subsequent offers and sales of the Special Voting Shares, the Exchangeable Shares and shares of Company Common Stock issued in exchange therefor shall be made only (i) to the Company or a subsidiary thereof, (ii) pursuant to a registration statement which has been declared effective under the Securities Act, (iii) pursuant to offers and sales to non-U.S. persons that occur outside the United States within the meaning of Regulation S under the Securities Act and in compliance with Rules 904 and 905 thereunder, or (iv) pursuant to any other available exemption from the registration requirements of the Securities Act.

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(f) Each LIPO Holder represents and agrees on his, her or its behalf and on behalf of any person for whom he or it is acquiring the Special Voting Shares, the Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, and each subsequent permitted transferee of the Special Voting Shares, the Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, by his, her or its acceptance thereof, will be deemed to have agreed, that (i) no subscription, resale or other transfer of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor has been arranged to return the Exchangeable Shares or shares of Company Common Stock issued in exchange therefor to the U.S. securities markets or to a U.S. citizen or resident, and (ii) any hedging transaction involving the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor will be conducted only in compliance with the requirements of the Securities Act.

(g) Each LIPO Holder acknowledges, and each subsequent permitted transferee will be deemed to have acknowledged, (i) that the Company, Canadian Holding and their transfer agents reserve the right, prior to any offer, sale or other transfer of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, to require delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company, Canadian Holding and their respective transfer agents, (ii) that each certificate evidencing the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor will contain a legend substantially as set forth in Section 5.6(a) and (iii) that the foregoing restrictions apply to holders of beneficial interests in the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, as well as to record holders of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor.

(h) Each LIPO Holder acknowledges and agrees that the Company, Lulu Canadian Holding and their respective transfer agents will not be required to accept for registration of transfer any Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor by such LIPO Holder, except upon presentation of evidence satisfactory to the Company, Canadian Holding and their transfer agents of compliance with the restrictions set forth in this agreement.

(i) Each LIPO Holder acknowledges that the Company, Canadian Holding and their respective Affiliates and transfer agents and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of the Exchangeable Shares and the Special Voting Shares are no longer accurate, it shall promptly notify the Company. If such LIPO Holder is acquiring the Exchangeable Shares and the Special Voting Shares as a fiduciary or agent for one or more other persons, such LIPO Holder represents that he or it has sole investment discretion with respect to such shares and it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such other person; and that each such other person is eligible to purchase the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, as applicable.

(j) Each LIPO Holder agrees that he or it will give to each person to whom he or it transfers the Special Voting Shares, Exchangeable Shares, or shares of Company Common Stock issued in exchange therefor, notice of any restrictions on transfer of such security.

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(k) Each LIPO Holder understands that no United States or U.S. state agency has passed on or made any recommendation or endorsement of the Exchangeable Shares or the Special Voting Shares.

(l) Each LIPO Holder has satisfied himself, herself or itself as to the full observance of the laws of its jurisdiction in connection with the acquisition of the Special Voting Shares and Exchangeable Shares or any use of this Agreement, including (i) the legal requirements within his, her or its jurisdiction for the purchase of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, and any sale or transfer thereof, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor. Each LIPO Holder’s acquisition of and payment for, and its continued ownership of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, will not violate any applicable securities or other laws of its jurisdiction.

(m) Each LIPO Holder and his or its representatives have been solely responsible for such LIPO Holder’s own due diligence investigation of the Company and its subsidiaries including, Canadian Holding, and their management and business, for his or its own analysis of the merits and risks of this investment, and for his or its own analysis of the fairness and desirability of the terms of the investment. No LIPO Holder has relied on any representations or other information (whether oral or written) from the Company or any of its agents or affiliates other than as specifically set forth in this Agreement or the Arrangement Agreement, and no oral or written representations have been made or oral or written information furnished to the LIPO Holder or his or its advisors in connection with this Agreement which were in any way inconsistent with this Agreement or the Arrangement Agreement. In taking any action or performing any role relative to the arranging of the proposed acquisition of the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor, each LIPO Holder has acted solely in his or its own interest and those of any other person for whom such LIPO Holder is acquiring the Special Voting Shares, Exchangeable Shares or shares of Company Common Stock issued in exchange therefor as a fiduciary, trustee or agent, and no LIPO Holder or any of his, her or its representatives has acted as an agent of the Company or its subsidiaries. Each LIPO Holder has carefully considered and has, to the extent such LIPO Holder believes such discussion necessary, discussed with his or its professional legal, tax and financial advisers the suitability of an acquisition of securities in the Company and Lulu Canadian Holding for such LIPO Holder’s particular tax and financial situation. Each LIPO Holder recognizes that an investment in the Company and its subsidiaries involves certain risks, and such LIPO Holder has taken full cognizance of and understands all of the risk factors relating to the Company, the Special Voting Shares and the Exchangeable Shares.

5.7. Authority as Trustee. Except as set forth in the Arrangement Agreement, Mr. Wilson has all requisite power and authority to (a) act as agent and trustee of the shareholders of the LIPO Entities and to transfer shares of capital stock of LIPO Canada held by such shareholders in accordance with the terms of this Agreement, the Plan of Arrangement and the Arrangement Agreement, and (b) on behalf of the shareholders of LIPO Entities, execute, deliver and perform this Agreement and the Arrangement Agreement and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Mr. Wilson, on behalf of the shareholders of the LIPO Entities, of this Agreement and the Arrangement Agreement and the consummation by the transactions contemplated hereby and thereby and the performance of Mr. Wilson, on behalf of the LIPO Entities, of the LIPO Entities obligations hereunder and thereunder have been duly and validly authorized by all necessary action. Except as set forth in the Arrangement Agreement, no other action is required for Mr. Wilson to execute, deliver and perform this Agreement and the Arrangement Agreement and to consummate the transactions contemplated hereby, in each case, on behalf of the LIPO Canada shareholders.

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Article 6

Registration Rights

6.1. Registration Rights Agreement. Each of the parties hereto acknowledge and agree that the Original Registration Rights Agreement does not apply to the Offering nor does the Original Registration Rights Agreement provide any Person with registration rights in connection with the Offering. The parties hereto agree that the only registration rights with respect to the Offering are set forth in Section 6.2 and that such registration rights shall only be extended to the persons whose name appears on Schedule 6.2 (collectively, the “ Participating Holders ”).

6.2. Registration Rights with Respect to the Offering.

(a) Agreement to Register Shares . Subject to the conditions set forth in this Section 6.2, the Company agrees to include, as shares to be sold under the Registration Statement, a portion of the Stockholder Shares. Each Participating Holder hereby requests that the Company register the number, or dollar value, of Stockholder Shares set forth opposite its name on Schedule 6.2, subject to Section 6.2(b). Without regard to whether Schedule 6.2 reflects a number or dollar value of Stockholder Shares to be registered, the number of shares (including the number of shares represented by any indicated dollar value) to be included in the Registration Statement remains subject to the sole discretion of the lead co-managing underwriters of the Offering (the “ Underwriters ”), to decrease such number at any time prior to the effectiveness of the Registration Statement, in the manner set forth in Section 6.2(b).

(b) Priority of Registration Rights . If the Underwriters inform the Company (an “ Incidental Cutback Notice ”) that, in their opinion, the total amount of Stockholder Shares to be included in the Offering exceeds the number which can be sold in the Offering without being likely to have a significant adverse effect on the price, timing or distribution of the Company Common Stock (the foregoing, an “ Underwriter Cutback Condition ”), then the Company shall include in such registration only the number of Stockholder Shares which, in the good faith opinion of the Underwriters can be included without having such an adverse effect, selected in the following order:

(i) first , the Stockholder Shares requested to be included by the Participating Holders pursuant to this Section 6.2 allocated pro rata based on the number of Stockholder Shares owned by such Participating Holder as a percentage of the number of Stockholder Shares held by all Participating Holders seeking to participate in such registration; and

(ii) second , securities, if any, requested to be included by the Company in such registration;

provided, however , in no event shall any particular Participating Holder be permitted to include in such registration any Stockholder Shares in excess of the number of Stockholder Shares which such Participating Holder originally sought to include in such registration.

(c) Conditions to Company’s Registration Obligations . In addition to the condition set forth in Section 6.2(d), the obligations of the Company to include the Stockholder Shares of any Participating Holder in the Registration Statement are expressly subject to the following conditions:

(i) such Participating Holder shall become a party to the underwriting agreement by and among the Company, the underwriters who are parties thereto and the other Participating Holders for the Offering;

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(ii) such Participating Holder cooperates with the Company and the Underwriters as requested by the Company and/or Underwriters in connection with the Registration Statement and the Offering, including, without limitation, providing such information as is requested by them for inclusion in the Registration Statement and executing such agreements, acknowledgments and certificates as are customary in transactions of this type; and

(iii) the Registration Statement is not withdrawn and/or the Offering is not completed for any reason.

(d) Agreement of Underwriters . The obligations of the Company and the rights of the Participating Holders under this Section 6.2 are expressly conditioned on the consent and agreement of the Underwriters to include the Stockholder Shares in the Offering. In the event that the Underwriters determine, in their sole discretion, not to include the Stockholder Shares in the Offering, the Company’s obligations under this Section 6.2 shall cease and be of no further force or effect.

(e) Registration Fees and Expenses .

(i) The Company shall pay all of the expenses incurred in connection with its compliance with this Section 6.2, including (A) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or the NASD, (B) all fees and expenses of compliance with state securities or “blue sky” laws, including all reasonable fees and disbursements of one counsel in connection with any survey of state securities or “blue sky” laws and the preparation of any memorandum thereon, (C) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses related to the preparation by the Company of the Registration Statement or the Prospectus included therein, agreements with underwriters, and any other ancillary agreements, certificates or documents arising out of or related to the foregoing (including expenses of printing certificates for shares of the Company Common Stock in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses), (D) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company, and (E) all fees and expenses incurred in connection with the listing of shares of Company Common Stock on any securities exchange, Nasdaq, New York Stock Exchange, Toronto Stock Exchange or other trading medium. In addition, in all cases the Company shall pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company. In addition, the Company shall pay all reasonable fees and disbursements of legal counsel of each of the Participating Holders.

(ii) Each Participating Holder shall be responsible for all underwriting discounts, selling commissions and transfer taxes, if any, applicable to the sale of its Stockholder Shares.

(f) Indemnification . The indemnification provisions of Section 2.7 of the Original Registration Rights Agreement are incorporated herein by reference as if such section was stated herein in its entirety and shall apply to the Offering and be binding on the Company and the Participating Holders. All references in Section 2.7 of the Original Registration Rights Agreement to “Holder” or “holder” shall be read as a reference to “Participating Holder” and all references therein to “Registrable Securities” shall be a reference to “Stockholder Shares”.

(g) Non-Transferability . The rights and obligations of the Participating Holder under this Section 6.2 may not be transferred or assigned without the written agreement of the Company, other than to a Permitted Transferee.

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6.3. No Other Registration Rights . Each of the Participating Holders acknowledges and agrees that the Company’s agreement to register the Stockholder Shares pursuant to Section 6.2 does not create any further right of the Participating Holder to have any of its shares registered in any subsequent registration of the offer and sale of Company securities under the Securities Act (whether in an offering by the Company or for the account of any Company securityholder) except as set forth in the Amended and Restated Registration Rights Agreement of the Company attached hereto as Exhibit H (the “ Restated Registration Rights Agreement ”) which shall be entered into as of the Reorganization Effective Time. Each of the Participating Holders has executed and delivered the Restated Registration Rights Agreement to the Company to be held in escrow and released upon completion of the Reorganization. Upon completion of the Reorganization, the Company shall release the executed signature pages of the Participating Holders to the Restated Registration Rights Agreement and deliver a fully executed copy of the Registration Rights Agreement to each of the Participating Holders. The Company and each of the Participating Holders agree that, effective as of the Reorganization Effective Time, the Restated Registration Rights Agreement shall (i) supersede the Original Registration Rights Agreement, and (ii) govern the registration rights of the Participating Holders.

6.4. Registration Rights with Respect to Exchangeable Shares . The Company hereby agrees that following the date on which the Company is eligible to file a Shelf Registration Statement, it shall file a Shelf Registration Statement with respect to the shares of Company Common Stock that are issuable upon exchange of the Exchangeable Shares for the benefit of holders of Exchangeable Shares. The Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective under the Securities Act as expeditiously as reasonably possible thereafter. To the extent permitted by SEC rules, regulation and policy, the Shelf Registration Statement filed by the Company pursuant to this Section 6.4 shall be filed as a primary Shelf Registration Statement relating to the issuance of the Company Common Stock that are issuable upon exchange of the Exchangeable Shares. If the Company is not permitted by SEC rules, regulations and policy to file a primary Shelf Registration Statement, then the Shelf Registration Statement filed by the Company pursuant to this Section 6.4 shall be filed as a secondary Shelf Registration Statement relating to the resale of Company Common Stock issuable upon exchange of the Exchangeable Shares (“ Resale Registration Statement ”). Any Shelf Registration Statement filed pursuant to this Section 6.4 shall be for the benefit of holders of Exchangeable Shares which are issued pursuant to the Plan of Arrangement and shall include the shares of Company Common Stock issuable upon the exchange of such holders’ Exchangeable Shares. The Company shall use reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming a part thereof to be usable for so long as there are any Exchangeable Shares that were issued in accordance with the Plan of Arrangement are issued and outstanding; provided, however , the Company’s obligation to maintain the effectiveness of the Shelf Registration Statement filed pursuant to this Section 6.4 shall terminate with respect to any shares of Company Common Stock covered thereby upon the earlier of (a) the date on which all of such shares of Company Common Stock have been sold pursuant to the Shelf Registration Statement or withdrawn from registration, (b) in the case of a Resale Registration Statement, the date on which the shares of Company Common Stock may be sold within a three-month period pursuant to Rule 144 under the Securities Act, and (c) the date on which the Company Common Stock is no longer registered under Section 12 of the Exchange Act. The Company’s obligation to file a Resale Shelf Registration Statement as provided in this Section 6.4 with respect to each holder of Exchangeable Shares shall be subject to the condition that each such holder agree in writing to limit the volume of public sales of such shares to the number of shares which such holder would have been permitted to sell under Rule 144 if the shares being sold were “control securities” under Rule 144 under the Securities Act.

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Article 7

Covenants Relating to Public Company Status

7.1. Market Stand-Off.

(a) Each of the Investors and LIPO Holders hereby agrees that, in connection with any underwritten registration of any Stockholder Shares under the Securities Act, including the Offering, such investor shall not sell or otherwise transfer (including through short-sales, hedging or similar transactions) any Stockholder Shares (a “ Holdback ”) during the period specified by the Board; provided, however , such period shall not exceed one hundred eighty (180) days (but, with respect to the Offering, subject to extension on the same terms as the provision for extension contained in the Lock-Up Agreement) following the effective date of the applicable registration statement filed under the Securities Act (the “ Market Standoff Period ”); provided, further , to be effective, such Holdback shall apply to all members of the Board during the same Market Standoff Period. The Company may impose stop-transfer instructions with respect to Stockholder Shares subject to the foregoing restrictions until the end of such Market Standoff Period.

(b) In addition, if requested by any managing underwriter or book runner of any such offering (the “ Managing Underwriter ”), each Holder will execute and deliver such documents, agreements and instruments as the Managing Underwriter shall reasonably require to enable the Underwriter to obtain the benefit of the Holdback during the Market Standoff Period so long as all investors owning at least five percent (5%) of the stock of the Company and all members of the Board enter into substantially the same documents, agreements and instruments in favor of the Managing Underwriter.

(c) In connection with the foregoing, each of the Investors and LIPO Holders hereby appoints Advent as its attorney-in-fact, with full power of substitution, to execute and deliver all documents, agreements and instruments to be executed and delivered by such investor, and to take all actions to be taken by such investor, in each case in connection with effecting any Holdback.

7.2. Lock-Up Agreements; Stop Transfer Instructions.

(a) As soon as practicable after the execution of this Agreement, but prior to the Reorganization Effective Time, each of the Investors and Wilson Related Investors hereby agrees to execute and deliver to the Company a lock-up agreement, in form and substance reasonably satisfactory to the Underwriters, the Investors and Wilson Related Investors (the “Lock-Up Agreement”), pursuant to which each of them will be bound by certain restrictions on the sale or distribution of capital stock of the Company. Mr. Wilson shall cause each Wilson Related Investor to sign the Lock-Up Agreement at such time.

(b) During the six month period after the Closing, the Company will not, without the consent of each of Advent, Highland and Mr. Wilson include in any Registration any shares of capital stock held by any shareholder of the Company.

(c) Upon the Closing, the Company shall require that the transfer agent for the Company Common Stock make a notation in its records prohibiting the transfer of any shares of Company Common Stock held by the Investors and certain other shareholders for the period set forth in the Lock-Up Agreement (the “Lock-Up Period”). During the Lock-Up Period, the Company shall not, without the prior consent of Underwriters, instruct the transfer agent to remove the notation in its records relating to the prohibition on transfer of any shares of the Company Common Stock, or any other securities convertible into or exercisable or exchangeable for the Company Common Stock, that are subject to the Lock-Up Agreement and currently or hereafter owned by any Investor or Wilson Related Investor. At the Closing, each Investor and Wilson Related Investor agrees to surrender to the Company each certificate representing shares of Company Common Stock and each certificate representing Exchangeable Shares in order to effectuate the provisions of this Section 7.2(c).

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7.3. R eporting Obligations. Each Investor and Wilson Related Investor shall be responsible for filing and for the content of his, her or its reports relating to the securities of the Company as may be required under Sections 13 and 16 of the Exchange Act (“ Reports ”) and any other Applicable Laws. Except as the Company may determine to be necessary based on a written opinion of counsel, the Company will not take any position contrary to the determinations underlying the Reports of the Investors and Wilson Related Investors (including any determination by any Investor or Wilson Related Investor that the filing of any such reports is not necessary) with regard to transactions in securities of the Company occurring on or prior to the Closing. In no event will the Company have any liability to any Investor or Wilson Related Investor for the content of any Report, the failure to file any Report, or otherwise relating to the Reports.

7.4. Rule 144 Information. At all times following the Closing until the date on which the Company Common Stock is no longer registered under Section 12 of the Exchange Act, the Company will file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and will take such further action as any Investor may reasonably request, all to the extent required to enable the Investors to sell their respective Company Common Stock pursuant to Rule 144 adopted by the SEC under the Securities Act or any similar rule or regulation hereafter adopted by the SEC.

Article 8

Additional Agreements and Covenants

8.1. Compliance with the Income Tax Act (Canada). The parties to this Agreement other than the Investors will take such action as may be required to comply with Section 116 of the Income Tax Act (Canada) in respect of the transactions contemplated herein and to facilitate compliance with such provisions by holders of LIPO Canada Common Shares, LIPO Canada Options, LIPO USA Common Shares, LIPO USA Options and options to purchase LAI Class C Shares in respect of the transactions contemplated herein.

8.2. Access to Financial Reports and Other Information.

(a) From and after the Closing, except as otherwise determined by the Board, the Company shall provide the Institutional Investors:

(i) as soon as practicable and, in any event within 30 days after the end of each month, the unaudited consolidated balance sheet of the Company and its subsidiaries as at the end of such month and the related unaudited statements of income and cash flow for such month, including but not limited to, a comparative analysis showing budgeted to actual numbers for consolidated revenues and expenses, and for the portion of the fiscal year then ended, in each case prepared in manner that is consistent with past practices;

(ii) as soon as practicable and, in any event, within 60 days after the end of each of the first three fiscal quarters of each fiscal year, the unaudited consolidated balance sheet of the Company and its subsidiaries as at the end of such fiscal quarter and the related unaudited statements of income and cash flow for such fiscal quarter, including but not limited to, a comparative analysis showing budgeted to actual numbers for consolidated revenues and expenses, and for the portion of the fiscal year then ended, in each case prepared in accordance with GAAP (except that such quarterly reports shall contain no footnotes or year-end adjustments) setting forth in comparative form (A) the figures for the corresponding quarter and portion of the previous fiscal year, and (B) the figures for the corresponding quarter and portion of the then current fiscal year as set forth in the Company’s annual operating budget;

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(iii) as soon as practicable and, in any event, within 60 days after the end of each fiscal year, the unaudited consolidated balance sheet of the Company and its subsidiaries as at the end of such fiscal year and the related unaudited statements of income and cash flow for such fiscal year, including but not limited to, a comparative analysis showing budgeted to actual numbers for desk level brokerage revenue and contribution margins, commercial division revenues and expenses, and consolidated indirect expenses, in each case prepared in accordance with GAAP, setting forth in comparative form (A) the figures for the previous fiscal year, and (B) the figures for the then current fiscal year as set forth in the Company’s annual operating budget;

(iv) as soon as practicable and, in any event, within 90 days after the end of each fiscal year, (A) the audited consolidated balance sheet of the Company and its subsidiaries as at the end of such fiscal year and the related audited statements of income and cash flow for such fiscal year, in each case prepared in accordance with GAAP and certified by a “big 4” firm of independent public accountants (or any successor to such a firm), together with a comparison of the figures in such financial statements with the figures for the previous fiscal year, (B) the figures set forth in the Company’s annual operating budget, (C) any management letters or other correspondence from such accountants and (D) the Company’s annual operating budget for the coming fiscal year, as approved by the Board;

(v) promptly following the preparation thereof, a copy of any revisions to the annual operating budget delivered pursuant to Section 8.2(a), as approved by the Board; and

(vi) as promptly as reasonably practicable, such other information with respect to Company and its subsidiaries as may reasonably be requested by the Institutional Investors.

(b) The Company’s obligation to deliver and materials or other information under Section 8.2(a) shall be deemed satisfied to the extent such information is included in the Company’s filings with the SEC.

(c) The Company shall keep, and shall cause each of its subsidiaries to keep, proper books, records and accounts in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each of its subsidiaries to permit, representatives of the Investors who are also members of the Board, upon reasonable notice and during normal business hours, to visit and inspect any of their respective properties, to examine and make copies from any of their respective books and records and to meet and discuss the affairs, finances and accounts of the Company and its subsidiaries with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired. Any examination conducted pursuant to this section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Company and its subsidiaries.

8.3. Insurance.

(a) The Company shall carry and maintain adequate insurance with financially sound and reputable insurers against directors’ and officers’ liability, in amounts of coverage sufficient in the reasonable business judgment of the Board to protect the directors and officers of the Company and its subsidiaries which must be on terms reasonably acceptable to the Institutional Investors.

(b) The Company shall obtain “key man” life insurance and disability insurance on Mr. Wilson naming the Company as loss payee in an amount equal to Ten Million United

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States Dollars ($10,000,000) in the case of the life insurance, and Ten Million United States Dollars ($10,000,000) in the case of the disability insurance, which in each case shall be no less favorable in coverage than any applicable insurance obtained by the Company and relating to Mr. Wilson which is in effect immediately prior to the date of this Agreement. The Company maintain each such insurance policies until the second anniversary of the Closing.

8.4. Confidentiality. Each Investor agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than to monitor, report on (including to its investors, lenders and/or limited partners) or manage its investment in the Company, any Confidential Information, unless such Confidential Information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 8.4), (b) is or has been independently developed or conceived by the Investor without use of the Company’s Confidential Information or (c) is or has been made known or disclosed to the Investor by a third party unless at the time of the proposed disclosure by such party, the Investor has knowledge that the disclosure was made to such party in breach of an obligation of confidentiality such party had to the Company; provided, however, that each Investor may disclose Confidential Information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (ii) to any affiliate, provided that the Confidential Information is disclosed on a confidential basis to such affiliate, or (iii) as may otherwise be required by law, legal process or regulatory requirements, provided that it takes reasonable steps to minimize the extent of any such required disclosure.

8.5. Rule 144. The Company hereby agrees and acknowledges that, based on rules and regulations of the SEC and applicable interpretations thereof as of the date hereof, each Investor’s holding period for shares of Company Series A Preferred Stock and Company Series TS Preferred Stock shall be “tacked” to the holding period of Such Investor’s shares of Company Common Stock acquired upon the exchange of such Investor’s Company Series A Preferred Stock and Company Series TS Preferred Stock in the Reorganization for the purpose of calculating the holding period of shares of Company Common Stock under Rule 144(d) under the Securities Act. The Company agrees that it will take such further action as any Investor may reasonably request, all to the extent required from time to time to enable such Investor to resell such shares of Company Common Stock without registration under the Securities Act, within the limitations of exemptions provided by Rule 144 under the Securities Act, as amended from time to time.

Article 9

Termination

9.1. Termination. This Agreement shall terminate and be wholly without force or effect on such date that the Company provides written notice to the Investors and the LIPO Holders that the Board has determined not to proceed with the Offering; provided , however , that the provisions of Section 1.11 (Closing), Section 8.4 (Confidentiality), Article 10 (Definitions and Construction) and Article 11 (Miscellaneous) shall survive such termination of this Agreement. A written notice by the Company to the Investors and LIPO Holders pursuant to which they are advised that the Reorganization or the Offering is delayed shall not be deemed a notice that the Board has determined not to proceed with the Offering.

9.2. Effect of Termination. Upon the termination of this Agreement and, except with respect to Sections 8.4, all obligations of the Company, the Investors and the LIPO Holders under this Agreement shall cease and the Company Stockholders Agreement, USA Stockholders Agreement, LAI Shareholders Agreement and Original Company Registration Rights Agreement shall remain in full force and effect (including the rights to designate directors thereunder).

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Article 10

Definitions and Construction

10.1. Definitions. For purposes of this Agreement, the following capitalized terms and phrases shall have the meanings ascribed to them below:

“ $ ” means, except as otherwise set forth herein, shall refer to United States Dollars.

“ Advent ” means Advent International Corporation, a Delaware corporation.

“ 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.

“ Advent Investor ” means the Advent Funds and each of their respective Permitted Transferees, and any stockholder of the Company who is a party to a voting agreement or has granted an irrevocable proxy and/or power of attorney, pursuant to which Advent (or an Affiliate thereof) has the right to vote any capital stock of the Company on behalf of such stockholder.

“ Affiliate ” means, as to any specified Person, (a) any other person controlling, controlled by or under common control with such specified Person, (b) any other Person of which such specified Person is an officer, employee, agent, director, shareholder or partner or (c) any family member of such specified Person or of any individual who is an Affiliate of such specified Person by reason of clause (a) of this definition; provided, however, that no Person shall be deemed an Affiliate of any other Person solely by reason of any investment in the Company. The term “control,” with respect to any Person, means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or a partnership interest, by contract or otherwise. With respect to each of the Institutional Investor, the term “Affiliate” shall also include (i) any entity in which such Institutional Investor (or one of its Affiliates) is a general partner or member, and (ii) each investor in such Institutional Investor, but only in connection with the liquidation, winding up or dissolution of the Institutional Investor, and only to the extent of such investor’s pro rata share in the Institutional Investor. With respect to each Advent Fund, the term “Affiliate” shall also include any investment fund managed by Advent. For purposes of this definition, “family member” means, as to any Person who is a natural person, such Person’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.

“ Applicable Laws ” means any applicable state and provincial securities laws and, to the extent applicable to offers or sales of securities, the Exchange Act.

“ 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.

“ Brooke Investor ” means Brooke Funds and each of its Permitted Transferees.

“ Common Share Amount ” means 22,229,600 shares of Company Common Stock.

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“ Confidential Information ” shall mean any information concerning the Company (whether prepared by the Company, its advisors or otherwise) which has been or is furnished or otherwise disclosed to an Investor before, now or in the future by or on behalf of the Company which is identified to the Investor as confidential non-public information.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“ Equity Rights ” means all arrangements, calls, commitments, contracts (written or oral), options, rights to subscribe to, scrip, understandings, warrants, or other binding obligations of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of a Person or by which a Person is or may be bound to issue additional shares of its capital stock or other Equity Rights.

“ Highland ” means Highland Capital Partners, Inc., a Delaware corporation.

“ 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.

“ Highland Investors ” means Highland Funds and each of their respective Permitted Transferees, and any stockholder of the Company who is a party to a voting agreement or has granted an irrevocable proxy and/or power of attorney, pursuant to which Highland (or an Affiliate thereof) has the right to vote any capital stock of the Company on behalf of such stockholder.

“ Institutional Investors ” means the Advent Investors, Brooke Investors and Highland Investors.

“ Investment Value ” means, with respect to any share of Company Series A Preferred Stock, Company Series TS Preferred Stock and USA Non-Participating Preferred Stock, the sum of ( x ) the stated value of such share of capital stock, plus ( y ) the accrued and unpaid dividends, if any, on such share of capital stock, as of a particular date of determination. “Investment Value” means, with respect to any share of LAI Class B Share, the sum of ( x ) the LAI Class B Share reference amount of such share of capital stock pursuant to applicable share provisions, plus ( y ) the accrued and unpaid dividends on such share of capital stock, as of a particular date of determination.

“ IPO Price ” means the initial public offering price of a share of Company Common Stock in the Offering.

“ Liability ” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether known or unknown, and whether accrued, absolute, contingent, matured or unmatured.

“ LIPO Canada Value ” means the Investment Value of the LAI Class B Shares held by LIPO Canada, as of the date of determination.

“ LIPO Share Amount ” means the number of shares of Company Common Stock that is equal to the sum of (i) the Total LIPO Value, divided by the Total Investment Value, multiplied by the Common Share Amount, plus (ii) the Total LIPO Value, divided by the IPO Price.

“ LIPO USA Value ” means Investment Value of the Series TS Preferred Stock as of the date of determination.

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“ Litigation ” means any action, arbitration, lawsuit, claims, complaint, criminal prosecution, governmental or other examination, audit (other than regular audits of financial statements by outside auditors), hearing, administrative or other proceeding, in any case relating to or affecting a party, its business, its records, its policies, its practices, its compliance with laws, its actions, its assets, or the transactions contemplated by this Agreement or the Plan of Arrangement.

“ Person ” means a natural person or any governmental authority, or legal or commercial entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity.

“ Permitted Transferee ” means, with respect to an Investor,

(a) an Affiliate of such Investor;

(b) any Person to whom such Investor may transfer its shares of Company Common Stock to hold such shares as such investor’s nominee;

(c) following the Offering, in the case of an Advent Fund, Brooke Fund or Highland Fund, any Person who receives securities in a distribution by such holder to its members, partners or shareholders;

(d) in the case of an Advent Fund, Brooke Fund or Highland Fund, any Person who receives securities in a liquidating distribution by such fund or holder to its members, partners or shareholders;

(e) in the case of an Advent Fund, Brooke Fund or Highland Fund, 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;

(f) in the case of an Advent Fund, Brooke Fund or Highland Fund, any other Advent Fund, Brooke Fund or Highland Fund; and

(g) in the event of the death or incompetence of the Participating Holder, a legal representative of the Participating Holder.

“ Person ” means any individual, estate, legal representative, trust, partnership, association, organization, firm, company or corporation, joint venture, any other business entity, unincorporated or incorporated, any nation or any state or territory thereof or any public officer, agency, board or instrumentality thereof.

“ Prospectus ” means the Prospectus include in any Registration Statement, all amendments and supplements to such Prospectus and all material incorporated by reference in such Prospectus.

“ Registration Statement ” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the Prospectus, amendments, supplements, and post-effective amendments to such registration statement, and all exhibits to, and all material incorporated by reference in, such registration statement.

-27-

“ Shelf Registration Statement ” means a Registration Statement of the Company filed with the SEC on Form S-3 for an offering to be made on a continuous or delayed basis pursuant to Rule 145 under the Securities Act (or any similar rule that may be adopted by the SEC) covering shares of Company Common Stock.

“ Stockholders Shares ” means shares of Company Common Stock held by, or that will be issued to, the Participating Holders in the Reorganization, or that are issuable to the Participating Holders upon exchange of Exchangeable Shares.

“ Total LIPO Value ” means the sum of the LIPO Canada Value and LIPO USA Value, as of the date of determination.

“ Total Investment Value ” means the sum of the Investment Value of all outstanding shares of Company Series A Preferred Stock, Company Series TS Preferred Stock and LAI Class B Shares, as of the date of determination.

“ Wilson Related Investor ” means, collectively, Mr. Wilson, LIPO Investments (USA) Inc., LIPO Investments (Canada) Inc., Five Boys Investments ULC, Slinky Financial ULC and Oyoyo Holdings, Inc., and their respective transferees, successors and assigns.

10.2. Construction.

(a) For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders.

(b) Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.

(c) The words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

(d) Except as otherwise indicated, all references in this Agreement to “Sections,” “Exhibits” and “Schedules” are intended to refer to Sections of this Agreement, and Exhibits and Schedules to this Agreement, as the context may require.

(e) The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Article 11

Miscellaneous

11.1. Survival of Representations and Warranties. The representations and warranties set forth in Article 3, Article 4 and Article 5 shall survive indefinitely. All covenants set forth in this Agreement shall survive indefinitely, except to the extent that an earlier date for termination of any particular covenant is expressly set forth herein.

11.2. Expenses. The Company agrees to pay all reasonable out-of-pocket expenses and costs of the Investors (including reasonable attorney and other professional fees and expenses) incurred in connection with the negotiation and execution of this Agreement and the transactions contemplated by this Agreement.

11.3. Assignment and Binding Effect.

(a) This Agreement may not be assigned by any party hereto without the prior written consent of the Company. Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the parties hereto, including upon any transfers of any capital stock issued pursuant hereto and

-28-

in compliance herewith. Except as expressly provided herein, nothing expressed or mentioned in this Agreement is intended or shall be construed to give any Person other than the parties hereto and their respective successors and assigns any legal or equitable right, remedy or claim under or in or in respect of this Agreement or any provision herein contained.

(b) Each of the Investors and LIPO Holders hereby agrees that, until the Closing or earlier termination of this Agreement, it shall not sell or otherwise transfer (i) any of its shares of Series A Preferred Stock, Series TS Preferred Stock or USA Non-Participating Preferred Stock or common shares of LIPO USA or LIPO Canada or any option to acquire common shares of LIPO USA or LIPO Canada, or any interest in any of the foregoing, or (ii) any shares of capital stock issued to it pursuant to the terms hereof, or any interest in any such shares, in each case except to a Permitted Transferee, and then only if (A) the Permitted Transferee of such shares acknowledges that such shares are subject to the provisions of this Agreement and further agrees to comply with the provisions of this Agreement to the same extent as if such purchaser or other transferee were the selling or transferring Investor or LIPO Holder, as the case may be, by signing a joinder substantially in the form of Exhibit A hereto, and (B) in the event Mr. Wilson or any entity he controls seeks to transfer any shares of LIPO Canada, the Permitted Transferee shall specify in writing to the Company as to whether such shares will be exchanged either for Exchangeable Shares or shares of Company Common Stock, in each case in accordance with Section 1.2. Any attempted sale or transfer of shares in violation of this Section 11.3 shall be null and void, and the Company shall not, and the Company shall cause its subsidiaries not to, in any way give effect to any such impermissible sale or transfer.

(c) Each party hereto agrees and acknowledges that every consent, acknowledgement and agreement made by such party is expressly intended to be given and undertaken with respect to securities held by such party in his or its individual capacity as well as any fiduciary capacity, including, as trustee.

11.4. Entire Agreement. This Agreement supersedes all prior agreements among the parties with respect to the subject matter hereof. This Agreement contains the entire agreement among the parties with respect to the subject matter hereof except where expressly otherwise stated herein.

11.5. Amendments; Waivers.

(a) This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto, and no claimed amendment, modification, termination or waiver shall be binding unless in writing and signed by the Investor against whom or which such claimed amendment, modification, termination or waiver is sought to be enforced. Any term or provision of this Agreement may be waived at any time by the parties hereto who are entitled to the benefit thereof by a written instrument executed by such parties.

(b) Notwithstanding the provisions of Section 11.5(a), this Agreement may be amended or modified from time to time by an instrument executed by the Company, USA and LAI, without the approval of the Investors or the LIPO Holders, for the purposes of:

(i) making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which the board of directors of each of the Company, USA and LAI, determine to be expedient to make, provided that such amendments or modifications are not prejudicial to the rights or interests of any party who has not approved such amendments or modification; and

(ii) making such changes or corrections which, on the advice of counsel to the Company, USA and LAI, 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 such changes or corrections are not prejudicial to the rights or interests of any party who has not approved such changes or corrections.

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11.6. Notices. Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given only if delivered personally (to the attention of the Person identified) to the address of such Person maintained on the books and records of the Company, or sent by facsimile transmittal or by certified mail, postage prepaid, or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication will be deemed to have been given as of the date so delivered or telegraphed or, if mailed, three business days after the date so mailed.

11.7. Choice of Law; Jurisdiction; Venue; WAIVER OF JURY TRIAL.

(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware without regard to the application of the principles of conflicts or choice of laws.

(b) Each of the parties hereto hereby submit to the non-exclusive jurisdiction of the federal or state courts of the State of Delaware with respect to any action or legal proceeding commenced by either of them with respect to this Agreement. Each of them irrevocably waives any objection they now have or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum and consents to the service of process in any such action or proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth herein or at such other address as either of them shall furnish in writing to the other.

(c) THE PARTIES HERETO EACH HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT, FRAUD OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT.

11.8. Severability. Any provision of this Agreement which is invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11.9. Counterparts. This Agreement may be executed in any number of counterparts, which when taken together, shall constitute but one and the same instrument. Any and all counterparts may be executed by facsimile.

[ Remainder of Page Intentionally Left Blank ]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first above written.


Lululemon Corp.

By:	/s/ John Currie
	Name:	John Currie
	Title:	CFO

Lululemon Athletica USA Inc.

By:	/s/ John Currie
	Name:	John Currie
	Title:	CFO

Lululemon Athletica Inc.

By:	/s/ John Currie
	Name:	John Currie
	Title:	CFO

LIPO Investments (USA) Inc.

By:	/s/ Dennis Wilson
	Name:	Dennis Wilson
	Title:	Authorized Signatory

LIPO Investments (Canada) Inc.

By:	/s/ Dennis Wilson
	Name:	Dennis Wilson
	Title:	Authorized Signatory

Lulu Canadian Holding, Inc.

By:	/s/ Dennis Wilson
	Name:
	Title:


/s/ Dennis Wilson
Dennis Wilson, in his individual capacity and as trustee, acting on behalf of the shareholders and option holders of LIPO Investments (USA), Inc. and LIPO Investments (Canada), Inc.

Five Boys Investments ULC

By:		/s/ Dennis Wilson
		Name:
		Title:

Slinky Financial ULC

By:		/s/ Dennis Wilson
		Name:
		Title:

/s/ Rhoda Pitcher
Rhoda Pitcher

/s/ Susanne Conrad
Susanne Conrad


Advent International GPE V Limited Partnership
Advent International GPE V-A Limited Partnership
Advent International GPE V-B Limited Partnership
Advent International GPE V-G Limited Partnership
Advent International GPE V-I Limited Partnership

By:	GPE V GP Limited Partnership, General Partner

	By:	Advent International LLC, General Partner

		By:	Advent International Corporation, Manager

		By:	/s/ David M. Mussafer
			Name:	David M. Mussafer
			Title:	Managing Director


Advent Partners III Limited Partnership
Advent Partners GPE V Limited Partnership
Advent Partners GPE V-A Limited Partnership
Advent Partners GPE V-B Limited Partnership

By:	Advent International LLC, General Partner

	By:	Advent International Corporation, Manager

	By:	/s/ David M. Mussafer
		Name:	David M. Mussafer
		Title:	Managing Director


Brooke Private Equity Advisors Fund I-A, L.P.
Brooke Private Equity Advisors Fund I(D), L.P.

By:	Brooke Private Equity Advisors, L.P., its General Partner

	By:	Brooke Private Equity Management LLC, its General Partner

		By:	/s/ John Brooke
			Name:	John Brooke
			Title:	Manager

Highland Capital Partners VI Limited Partnership

By:	Highland Management Partners VI Limited Partnership, its General Partner

	By:	Highland Management Partners VI, Inc., its General Partner

		By:	/s/ Paul Maeder
			Name:
			Title:

Highland Capital Partners VI-B Limited Partnership

By:	Highland Management Partners VI Limited Partnership, its General Partner

	By:	Highland Management Partners VI, Inc., its General Partner

		By:	/s/ Paul Maeder
			Name:
			Title:

Highland Capital Entrepreneurs’ Fund VI Limited Partnership

By:	HEF VI Limited Partnership, its General Partner

	By:	Highland Management Partners VI, Inc., its General Partner

		By:	/s/ Paul Maeder
			Name:
			Title:

SCHEDULE I


INVESTOR	SHARES OF COMPANY STOCK				SHARES OF USA STOCK
	Series A Preferred Stock		Series TS Preferred Stock		Non-Participating Preferred Stock
Advent International GPE V Limited Partnership		11,426		-0-		508
Advent International GPE V-A Limited Partnership		28,378		-0-		1,261
Advent International GPE V-B Limited Partnership		23,978		-0-		1,066
Advent International GPE V-G Limited Partnership		18,318		-0-		814
Advent International GPE V-I Limited Partnership		2,749		-0-		122
Advent Partners III Limited Partnership		148		-0-		7
Advent Partners GPE V Limited Partnership		398		-0-		18
Advent Partners GPE V-A Limited Partnership		148		-0-		7
Advent Partners GPE V-B Limited Partnership		253		-0-		11
Brooke Private Equity Advisors Fund I-A		480		-0-		21
Brooke Private Equity Advisors Fund I-(D), Limited Partnership		120		-0-		5
Highland Capital Partners VI Limited Partnership		13,518		-0-		601
Highland Capital Partners VI-B Limited Partnership		7,411		-0-		330
Highland Entrepreneurs’ Fund VI Limited Partnership		670		-0-		29
Rhoda Pitcher		250		-0-		-0-
Susanne Conrad		250		-0-		-0-
R. Brad Martin		151		-0-		-0-
LIPO Investments (USA), Inc		-0-		116,994		5,200
Total		108,646		116,994		10,000

Exhibit 2.2

EXCHANGE TRUST AGREEMENT

Between:

LULULEMON ATHLETICA INC.

- and -

LULU CANADIAN HOLDING INC.

- and -

COMPUTERSHARE TRUST COMPANY OF CANADA

July 26, 2007

TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS		1
1.1	Definitions	1

ARTICLE 2 PURPOSE OF AGREEMENT		5
2.1	Establishment of Trust	5

ARTICLE 3 EXCHANGE RIGHT AND AUTOMATIC EXCHANGE		5
3.1	Grant and Exercise of the Exchange Right	5
3.2	Legended Share Certificates	5
3.3	General Exercise of Exchange Right	6
3.4	Purchase Price	6
3.5	Exercise Instructions	6
3.6	Delivery of Lululemon Common Shares; Effect of Exercise	7
3.7	Exercise of Exchange Right Subsequent to Retraction	8
3.8	Stamp or Other Transfer Taxes	8
3.9	Notice of Insolvency Event	8
3.10	Qualification of Lululemon Common Shares	9
3.11	Lululemon Common Shares	9
3.12	Automatic Exchange on Liquidation of Lululemon	9
3.13	Withholding Rights	11

ARTICLE 4 CONCERNING THE TRUSTEE		12
4.1	Powers and Duties of the Trustee	12
4.2	No Conflict of Interest	13
4.3	Dealings with Transfer Agents, Registrars, etc.	13
4.4	Books and Records	13
4.5	Income Tax Returns and Reports	14
4.6	Indemnification Prior to Certain Actions by Trustee	14
4.7	Action of Beneficiaries	14
4.8	Reliance Upon Declarations	15
4.9	Evidence and Authority to Trustee	15
4.10	Experts, Advisers and Agents	16
4.11	Investment of Moneys Held by Trustee	16
4.12	Trustee Not Required to Give Security	17
4.13	Trustee Not Bound to Act on Request	17
4.14	Authority to Carry on Business	17
4.15	Conflicting Claims	17
4.16	Acceptance of Trust	18

ARTICLE 5 COMPENSATION		18
5.1	Fees and Expenses of the Trustee	18

ARTICLE 6 INDEMNIFICATION AND LIMITATION OF LIABILITY		18
6.1	Indemnification of the Trustee	18
6.2	Limitation of Liability	19



ARTICLE 7 CHANGE OF TRUSTEE		19
7.1	Resignation	19
7.2	Removal	20
7.3	Successor Trustee	20
7.4	Notice of Successor Trustee	20

ARTICLE 8 LULULEMON SUCCESSORS		20
8.1	Certain Requirements in Respect of Combination, etc.	20
8.2	Vesting of Powers in Successor	21
8.3	Wholly-Owned Subsidiaries	21

ARTICLE 9 AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS		21
9.1	Amendments, Modifications, etc.	21
9.2	Ministerial Amendments	22
9.3	Meeting to Consider Amendments	22
9.4	Changes in Capital of Lululemon and Exchangeco	22
9.5	Execution of Supplemental Trust Agreements	23

ARTICLE 10 TERMINATION		23
10.1	Term	23
10.2	Survival of Agreement	24

ARTICLE 11 GENERAL		24
11.1	Notices	24
11.2	Notice to Beneficiaries	25
11.3	Interpretation	25
11.4	Severability	25
11.5	Counterparts	26
11.6	Governing Law	26
11.7	Assignment	26
11.8	Enforcement	26
11.9	No Waiver	26
11.10	Expenses	27
11.11	Privacy	27
11.12	Trustee Not Bound to Act	27
11.13	Third Party Interests	28
11.14	Further Assurances	28

EXCHANGE TRUST AGREEMENT

MEMORANDUM OF AGREEMENT made as of the 26 ^th day of July, 2007.

AMONG:

LULULEMON ATHLETICA INC. , a corporation existing under the laws of the State of Delaware

(“ Lululemon ”),

AND:

LULU CANADIAN HOLDING INC. , a company existing under the laws of British Columbia

(“ Exchangeco ”),

AND:

COMPUTERSHARE TRUST COMPANY OF CANADA , a trust company incorporated under the laws of Canada

(“ Trustee ”).

WHEREAS in connection with an arrangement agreement (the “ Arrangement Agreement ”) dated as of April 26, 2007 among Lululemon, Lululemon Callco ULC (“ Callco ”), Exchangeco, LIPO Investments (USA), Inc. and LIPO Investments (Canada) Inc. (“ LIPO Canada ”), Exchangeco is to issue Exchangeable Shares to holders of common shares of LIPO Canada pursuant to the Arrangement contemplated in the Arrangement Agreement;

AND WHEREAS pursuant to the Arrangement Agreement, Lululemon, Exchangeco and Callco have agreed to execute an exchange trust agreement substantially in the form of this Agreement;

NOW THEREFORE in consideration of the respective covenants and agreements provided in this Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions

In this Agreement, the following terms shall have the following meanings:

“ Agreement ” means this Exchange Trust Agreement as it may be amended or supplemented from time to time;

“ Arrangement ” means an arrangement under Part 9, Division 5 of the BCA on the terms and subject to the conditions set out in the Plan of Arrangement, to which plan these share provisions are attached as Appendix 1, 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;

“ Arrangement Agreement ” means the arrangement agreement made as of the 26 ^th day of April, 2007 among Lululemon, Callco, Exchangeco, LIPO Investments (USA), Inc. and LIPO Investments (Canada), Inc., as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement;

“ Automatic Exchange Rights ” means the benefit of the obligation of Lululemon, to effect the automatic exchange of Exchangeable Shares for Lululemon Common Shares pursuant to Section 3.12;

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

“ Beneficiaries ” means the registered holders from time to time of Exchangeable Shares, other than Lululemon and its subsidiaries;

“ 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, 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;

“ Canadian Dollar Equivalent ” means, in respect of an amount expressed in a currency other than Canadian dollars (the “ Foreign Currency Amount ”) at any date, the product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose;

“ Court ” means the Supreme Court of British Columbia;

“ Current Market Price ” means, in respect of a Lululemon Common Share on any date, the Canadian Dollar Equivalent of the average of the closing bid and asked prices of the Lululemon Common Shares during a period of 20 consecutive trading days ending not more than three trading days before such date on the NASDAQ, or, if the Lululemon Common Shares are not then listed on the NASDAQ, on such other stock exchange or automated quotation system on which the Lululemon Common Shares are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided however, that if in the opinion of the Board of Directors the public distribution or trading activity of the Lululemon Common Shares during such period does not create a market which reflects the fair market value of a Lululemon Common Share, then the Current Market Price of a Lululemon Common Share shall be determined by the Board of Directors, in good faith and in its sole discretion, and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding;

“ Effective Date ” means the date following the grant of the Final Order on which the parties to the Arrangement Agreement that the conditions set forth in Article 5 of the Arrangement Agreement have been satisfied or waived (or on such other date as the parties may agree);

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

“ Exchange Right ” has the meaning assigned in Section 3.1;

“ Exchangeable Share ” means a share in the class of non-voting exchangeable shares in the capital of Exchangeco;

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

“ Final Order ” means the order of the Court approving the Plan of Arrangement, granted pursuant to section 291(4) of the BCA, 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;

“ Indemnified Parties ” has the meaning assigned in Section 6.1;

“ 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;

“ Liquidation Call Right ” has the meaning assigned in the Plan of Arrangement;

“ Liquidation Event ” has the meaning assigned in Section 3.12(b);

“ Liquidation Event Effective Date ” has the meaning assigned in Section 3.12(c);

“ Lululemon Common Share ” means a share of common stock, par value U.S. $0.01, in the capital of Lululemon and any other securities into which such share may be changed;

“ Lululemon Successor ” has the meaning assigned in Section 8.1(a);

“ NASDAQ ” means the NASDAQ Global Market;

“ Officer’s Certificate ” means, with respect to Lululemon or Exchangeco, as the case may be, a certificate signed by any officer or director of Lululemon or Exchangeco, as the case may be;

“ Person ” includes any individual, firm, partnership, joint venture, venture capital fund, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, company, unincorporated association or organization, government body, syndicate or other entity, whether or not having legal status;

“ 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 in the Final Order;

“ Redemption Call Right ” has the meaning assigned in the Plan of Arrangement;

“ Reorganization Agreement ” means the Agreement and Plan of Reorganization dated as of the 26 ^th day of April, 2007 by and among Lululemon, Lululemon Athletica USA, Inc., Lululemon Athletica Inc., LIPO Investments (USA), Inc., LIPO Investments (Canada), Inc., Callco, Exchangeco and certain other parties;

“ Retracted Shares ” has the meaning assigned in Section 3.7;

“ Retraction Call Right ” has the meaning assigned in the Exchangeable Share Provisions;

“ subsidiary ” means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary;

“ Support Agreement ” means the Support Agreement to be made among Lululemon, Callco and Exchangeco, which shall be substantially in the form and content of Exhibit D to the Reorganization Agreement, with such changes thereto as the parties thereto, acting reasonably, may approve, in accordance with the terms thereof;

“ Trust ” means the trust created by this Agreement;

“ Trust Estate ” means any securities, the Exchange Right, the Automatic Exchange Rights and any money or other property which may be held by the Trustee from time to time pursuant to this Agreement;

“ Trustee ” means Computershare Trust Company of Canada and, subject to the provisions of Article 7, includes any successor trustee.

ARTICLE 2

PURPOSE OF AGREEMENT

2.1 Establishment of Trust

The purpose of this Agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the Exchange Right and the Automatic Exchange Rights in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this Agreement.

ARTICLE 3

EXCHANGE RIGHT AND AUTOMATIC EXCHANGE

3.1 Grant and Exercise of the Exchange Right

Lululemon hereby grants to the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries the right (the “ Exchange Right ”), upon the occurrence and during the continuance of an Insolvency Event, to require Lululemon to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by the Beneficiary and the Automatic Exchange Rights, all in accordance with the provisions of this Agreement. Lululemon hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right and the Automatic Exchange Rights by Lululemon to the Trustee. During the term of the Trust and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with all rights in respect of the Exchange Right and the Automatic Exchange Rights and shall be entitled to exercise all of the rights and powers of an owner with respect to the Exchange Right and the Automatic Exchange Rights, provided that the Trustee shall:

(a)

hold the Exchange Right and the Automatic Exchange Rights and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and

(b)

except as specifically authorized by this Agreement, have no power or authority to exercise or otherwise deal in or with the Exchange Right or the Automatic Exchange Rights, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this Agreement.

3.2 Legended Share Certificates

Exchangeco will cause each certificate issued representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of:

(a)

their right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by a Beneficiary; and

(b)

the Automatic Exchange Rights.

3.3 General Exercise of Exchange Right

The Exchange Right shall be and remain vested in and exercisable by the Trustee. Subject to Section 4.15, the Trustee shall exercise the Exchange Right only on the basis of instructions received pursuant to this Article 3 from Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To the extent that no instructions are received from a Beneficiary with respect to the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Right.

3.4 Purchase Price

The purchase price payable by Lululemon for each Exchangeable Share to be purchased by Lululemon under the Exchange Right shall be an amount per Exchangeable Share equal to (a) the Current Market Price of a Lululemon Common Share on the last Business Day prior to the day of closing of the purchase and sale of such Exchangeable Share under the Exchange Right, which shall be satisfied in full by Lululemon causing to be sent to such holder one Lululemon Common Share, plus (b) to the extent not paid by Exchangeco on the designated payment date therefor, an additional amount equal to and in satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the closing of the purchase and sale. In connection with each exercise of the Exchange Right, Lululemon shall provide to the Trustee an Officer’s Certificate setting forth the calculation of the purchase price for each Exchangeable Share. The purchase price for each such Exchangeable Share so purchased may be satisfied only by Lululemon delivering or causing to be delivered to the Trustee, on behalf of the relevant Beneficiary, one Lululemon Common Share and on the applicable payment date a cheque for the balance, if any, of the purchase price without interest (but less any amounts withheld pursuant to Section 3.13). Upon payment by Lululemon of such purchase price, the relevant Beneficiary shall cease to have any right to be paid any amount in respect of declared and unpaid dividends on each such Exchangeable Share by Exchangeco.

3.5 Exercise Instructions

Subject to the terms and conditions herein set forth, a Beneficiary shall be entitled, upon the occurrence and during the continuance of an Insolvency Event, to instruct the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of such Beneficiary on the books of Exchangeco. To cause the exercise of the Exchange Right by the Trustee, the Beneficiary shall deliver to the Trustee, in person or by certified or registered mail, at its principal office in Calgary or at such other places in Canada as the Trustee may from time to time designate by written notice to the Beneficiaries, the certificates, if any, representing the Exchangeable Shares which such Beneficiary desires Lululemon to purchase, duly endorsed in blank for transfer, and accompanied by such other documents and instruments as may be required to effect a transfer of Exchangeable Shares and such additional documents and instruments as the Trustee, Exchangeco or Lululemon may reasonably require together with (a) a duly completed form of notice of exercise of the Exchange Right in form and substance satisfactory to the Trustee, Lululemon and Exchangeco, stating (i) that the Beneficiary thereby instructs the Trustee to exercise the Exchange Right so as to require Lululemon to purchase from the Beneficiary the number of Exchangeable Shares specified therein, (ii) that such Beneficiary

has good title to and owns all such Exchangeable Shares to be acquired by Lululemon, free and clear of all liens, claims and encumbrances, (iii) the names in which the Lululemon Common Shares issuable in connection with the exercise of the Exchange Right are to be issued and (iv) the names and addresses of the persons to whom such Lululemon Common Shares should be delivered and (b) payment (or evidence satisfactory to the Trustee, Exchangeco, and Lululemon of payment) of the taxes (if any) payable as contemplated by Section 3.8 of this Agreement. If only a part of the Exchangeable Shares are to be purchased by Lululemon under the Exchange Right, the balance of such Exchangeable Shares shall be issued to the holder at the expense of Exchangeco either by a new certificate or through the direct registration system.

3.6 Delivery of Lululemon Common Shares; Effect of Exercise

Promptly after the receipt of the notice of exercise of the Exchange Right, together with such documents and instruments of transfer required by Section 3.5 (and payment of taxes, if any payable as contemplated by Section 3.8 or evidence thereof), the Trustee shall notify Lululemon and Exchangeco of its receipt of the same, which notice to Lululemon and Exchangeco shall constitute exercise of the Exchange Right by the Trustee on behalf of the holder of such Exchangeable Shares, and Lululemon shall promptly thereafter deliver or cause to be delivered to the Trustee (which delivery may be in the form of a certificate or in book-entry form through the direct registration system), for delivery to the Beneficiary of such Exchangeable Shares (or to such other persons, if any, properly designated by such Beneficiary) the number of Lululemon Common Shares issuable in connection with the exercise of the Exchange Right, and on the applicable payment date cheques for the balance, if any, of the total purchase price therefor without interest (but less any amounts withheld pursuant to Section 3.13); provided, however, that no such delivery shall be made unless and until the Beneficiary requesting the same shall have paid (or provided evidence satisfactory to the Trustee, Exchangeco, and Lululemon of the payment of) the taxes (if any) payable as contemplated by Section 3.8 of this Agreement. Immediately upon the giving of notice by the Trustee to Lululemon and Exchangeco of the exercise of the Exchange Right as provided in this Section 3.6, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred and the holder of such Exchangeable Shares shall be deemed to have transferred to Lululemon, all of such holder’s right, title and interest in and to such Exchangeable Shares and the related interest in the Trust Estate and shall cease to be a holder of such Exchangeable Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total purchase price therefor, unless the requisite number of Lululemon Common Shares is not allotted, issued and delivered by Lululemon, to the Trustee within five Business Days of the date of the giving of such notice by the Trustee or the balance of the purchase price, if any, is not paid by Lululemon, on the applicable payment date therefor, in which case the rights of the Beneficiary shall remain unaffected until such Lululemon Common Shares are so allotted, issued and delivered, and the balance of the purchase price, if any, has been paid, by Lululemon. Upon delivery by Lululemon to the Trustee of such Lululemon Common Shares, and the balance of the purchase price, if any, the Trustee shall deliver such Lululemon Common Shares to such Beneficiary (or to such other persons, if any, properly designated by such Beneficiary), either in the form of a certificate or in book-entry form through the direct registration system. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Lululemon Common Shares delivered to it pursuant to the Exchange Right.

3.7 Exercise of Exchange Right Subsequent to Retraction

In the event that a Beneficiary has exercised its right under Article 6 of the Exchangeable Share Provisions to require Exchangeco to redeem any or all of the Exchangeable Shares held by the Beneficiary (the “ Retracted Shares ”) and is notified by Exchangeco pursuant to Section 6.6 of the Exchangeable Share Provisions that Exchangeco will not be permitted as a result of solvency requirements of applicable law to redeem all such Retracted Shares, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares and that the Beneficiary has not revoked the retraction request delivered by the Beneficiary to Exchangeco pursuant to Section 6.1 of the Exchangeable Share Provisions and provided further that the Trustee has received written notice of same from Exchangeco or Lululemon (which, in such circumstances, Lululemon covenants to provide or cause to be provided to the Trustee), the retraction request will constitute and will be deemed to constitute notice from the Beneficiary to the Trustee instructing the Trustee to exercise the Exchange Right with respect to those Retracted Shares that Exchangeco is unable to redeem. In any such event, Exchangeco hereby agrees with the Trustee and in favour of the Beneficiary promptly to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to Exchangeco or to the transfer agent of the Exchangeable Shares (including without limitation, a copy of the retraction request delivered pursuant to Section 6.1 of the Exchangeable Share Provisions) in connection with such proposed redemption of the Retracted Shares and the Trustee will thereupon exercise the Exchange Right with respect to the Retracted Shares that Exchangeco is not permitted to redeem and will require Lululemon to purchase such shares in accordance with the provisions of this Article 3.

3.8 Stamp or Other Transfer Taxes

Upon any sale of Exchangeable Shares to Lululemon pursuant to the Exchange Right or the Automatic Exchange Rights, the Lululemon Common Shares to be delivered in connection with the payment of the total purchase price therefor shall be issued in the name of the Beneficiary of the Exchangeable Shares so sold or in such names as such Beneficiary may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none of Lululemon, Exchangeco or the Trustee shall be required to pay) any documentary, stamp, transfer or other taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Beneficiary or (b) shall have evidenced to the satisfaction of the Trustee, Lululemon and Exchangeco that such taxes, if any, have been paid.

3.9 Notice of Insolvency Event

As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Exchangeco and Lululemon shall give written notice thereof to the Trustee. As soon as practicable following the receipt of notice from Exchangeco and Lululemon of the occurrence of an Insolvency Event, or upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail to each Beneficiary, at the expense of Lululemon (such funds to be received in advance), a notice of such Insolvency Event in the form provided by Lululemon, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Exchange Right.

3.10 Qualification of Lululemon Common Shares

Lululemon covenants that if any Lululemon Common Shares (or other shares or securities into which Lululemon Common Shares may be reclassified or changed as contemplated by section 2.7 of the Support Agreement) to be issued and delivered pursuant to the Exchange Right or the Automatic Exchange Rights require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document, or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any Canadian or United States federal, provincial or state law or regulation or pursuant to the rules and regulations of any regulatory authority or the fulfillment of any other Canadian or United States federal, provincial or state legal requirement before such shares may be issued and delivered by Lululemon, to the initial holder thereof or in order that such shares (or such other shares or securities) may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a “control person” for purposes of Canadian provincial securities law or an “affiliate” of Lululemon for purposes of United States federal or state securities law), Lululemon will in good faith expeditiously take all such actions and do all such things as are necessary or desirable to cause such Lululemon Common Shares (or such other shares or securities) to be and remain duly registered, qualified or approved under United States or Canadian law, as the case may be; provided, however, that Lululemon’s obligations in this Section 3.10 shall be limited to the obligations set forth in Section 6.4 of the Reorganization Agreement. Lululemon will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all Lululemon Common Shares (or such other shares or securities) to be delivered pursuant to the Exchange Right or the Automatic Exchange Rights to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Lululemon Common Shares (or such other shares or securities) have been listed by Lululemon and remain listed and are quoted or posted for trading at such time.

3.11 Lululemon Common Shares

Lululemon hereby represents, warrants and covenants that the Lululemon Common Shares issuable as described herein will be duly authorized and validly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance, other than those encumbrances placed by applicable securities law or otherwise contractually agreed to by the holder thereof.

3.12 Automatic Exchange on Liquidation of Lululemon

(a)

Lululemon will give the Trustee written notice of each of the following events at the time set forth below:

(i)

in the event of any determination by the board of directors of Lululemon to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Lululemon or to effect any other distribution of assets of Lululemon among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and

(ii)

as soon as practicable following the earlier of (A) receipt by Lululemon of notice of, and (B) Lululemon otherwise becoming aware of, any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Lululemon or to effect any other distribution of assets of Lululemon among its shareholders for the purpose of winding up its affairs, in each case where Lululemon has failed to contest in good faith any such proceeding commenced in respect of Lululemon within 30 days of becoming aware thereof.

(b)

As soon as practicable following receipt by the Trustee from Lululemon of notice of any event (a “ Liquidation Event ”) contemplated by Section 3.12(a)(i) or 3.12(a)(ii) above, the Trustee will give notice thereof to the Beneficiaries. Such notice shall be provided to the Trustee by Lululemon and shall include a brief description of the automatic exchange of Exchangeable Shares for Lululemon Common Shares provided for in Section 3.12(c).

(c)

In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of Lululemon Common Shares in the distribution of assets of Lululemon in connection with a Liquidation Event, on the fifth Business Day prior to the effective date (the “ Liquidation Event Effective Date ”) of a Liquidation Event all of the then outstanding Exchangeable Shares shall be automatically exchanged for Lululemon Common Shares. To effect such automatic exchange, Lululemon shall purchase on the fifth Business Day prior to the Liquidation Event Effective Date each Exchangeable Share then outstanding and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, for a purchase price per share equal to (i) the Current Market Price of a Lululemon Common Share on the fifth Business Day prior to the Liquidation Event Effective Date, which shall be satisfied in full by Lululemon issuing to the Beneficiary one Lululemon Common Share, and (ii) to the extent not paid by Exchangeco, an additional amount equal to and in satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. Lululemon shall provide the Trustee with an Officer’s Certificate in connection with each automatic exchange setting forth the calculation of the purchase price for each Exchangeable Share.

(d)

On the fifth Business Day prior to the Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for Lululemon Common Shares shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to Lululemon, all of the Beneficiary’s right, title and interest in and to such Beneficiary’s Exchangeable Shares and the related interest in the Trust Estate, any right of each such Beneficiary to receive declared and unpaid dividends from Exchangeco shall be deemed to be satisfied and discharged and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and Lululemon shall deliver to the Beneficiary the Lululemon Common Shares

issuable upon the automatic exchange of Exchangeable Shares for Lululemon Common Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the total purchase price for such Exchangeable Shares without interest but less any amounts withheld pursuant to Section 3.13. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Lululemon Common Shares issued pursuant to the automatic exchange of Exchangeable Shares for Lululemon Common Shares and the certificates, if any, held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Lululemon pursuant to such automatic exchange shall thereafter be deemed to represent Lululemon Common Shares delivered to the Beneficiary by Lululemon pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates, if any, deemed to represent Lululemon Common Shares, duly endorsed in blank and accompanied by such instruments of transfer as Lululemon may reasonably require, Lululemon shall deliver or cause to be delivered to the Beneficiary the Lululemon Common Shares of which the Beneficiary is the holder (which delivery may be in the form of a certificate or, in whole or in part, in book entry form through the direct registration system).

3.13 Withholding Rights

Lululemon, Exchangeco and the Trustee shall be entitled to deduct and withhold from any dividend or any consideration otherwise payable under this Agreement to any holder of Exchangeable Shares or Lululemon Common Shares such amounts as Lululemon, Exchangeco or the Trustee is required or permitted to deduct and withhold with respect to such payment (i) under the Income Tax Act (Canada) (the “ ITA ”), the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded or (ii) required or permitted in order to comply with section 116 of the ITA or any corresponding provisions of provincial laws. The Trustee may act on the advice of counsel with respect to such matters. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Lululemon, Exchangeco and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Lululemon, Exchangeco or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and Lululemon, Exchangeco or the Trustee shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale. Lululemon represents and warrants that, based upon facts currently known to it, it has no current intention, as at the date of this Agreement, to deduct or withhold from any dividend paid to holders of Exchangeable Shares any amounts under the United States Internal Revenue Code of 1986.

ARTICLE 4

CONCERNING THE TRUSTEE

4.1 Powers and Duties of the Trustee

The rights, powers, duties and authorities of the Trustee under this Agreement, in its capacity as Trustee of the Trust, shall include:

(a)

receiving the grant of the Exchange Right and the Automatic Exchange Rights from Lululemon as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement;

(b)

exercising the Exchange Right and enforcing the benefit of the Automatic Exchange Rights, in each case in accordance with the provisions of this Agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries Lululemon Common Shares and cheques, if any, to which such Beneficiaries are entitled upon the exercise of the Exchange Right or pursuant to the Automatic Exchange Rights, as the case may be;

(c)

holding title to the Trust Estate;

(d)

investing any moneys forming, from time to time, a part of the Trust Estate as provided in this Agreement;

(e)

taking action on its own initiative or at the direction of a Beneficiary or Beneficiaries to enforce the obligations of Lululemon, and Exchangeco under this Agreement; and

(f)

taking such other actions and doing such other things as are specifically provided in this Agreement.

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 Agreement 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 Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee 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 it 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 Agreement 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 No Conflict of Interest

The Trustee represents to Lululemon and Exchangeco that at the date of execution and delivery of this Agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Article 7. If, notwithstanding the foregoing provisions of this Section 4.2, the Trustee has such a material conflict of interest, the validity and enforceability of this Agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this Section 4.2, any interested party may apply to a court of competent jurisdiction in British Columbia for an order that the Trustee be replaced as Trustee hereunder.

4.3 Dealings with Transfer Agents, Registrars, etc.

Lululemon and Exchangeco irrevocably authorize the Trustee, from time to time, to:

(a)

consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and Lululemon Common Shares; and

(b)

requisition, from time to time, (i) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this Agreement and (ii) from the transfer agent of Lululemon Common Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Exchange Right and pursuant to the Automatic Exchange Rights.

Lululemon and Exchangeco irrevocably authorize their respective registrars and transfer agents to comply with all such requests.

4.4 Books and Records

The Trustee shall keep available for inspection by Lululemon and Exchangeco at the Trustee’s principal office in Calgary correct and complete books and records of account relating to the Trust created by this Agreement, including without limitation, all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Exchange Right and the Automatic Exchange Rights. On or before February 15, 2008, and on or before February 15 ^th in every year thereafter the Trustee shall transmit to Lululemon and Exchangeco a brief report, dated as of January 31 ^st of that year, with respect to:

(a)

the property and funds comprising the Trust Estate as of that date;

(b)

the number of exercises of the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the delivery by Lululemon of Lululemon Common Shares in connection with the Exchange Right, during the fiscal year ended on such January 31 ^st ; and

(c)

any action taken by the Trustee in the performance of its duties under this Agreement which it had not previously reported and which, in the Trustee’s opinion, materially affects the Trust Estate.

4.5 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). If requested by the Trustee, Lululemon or Exchangeco shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance.

4.6 Indemnification Prior to Certain Actions by Trustee

The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this Agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Exchange Right pursuant to Article 3, subject to Section 4.15, and with respect to the Automatic Exchange Rights pursuant to Article 3.

None of the provisions contained in this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid.

4.7 Action of Beneficiaries

No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this Agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security or indemnity referred to in Section 4.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary 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 Beneficiaries 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 or the Exchange Rights or the Automatic Exchange Rights 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 Beneficiaries.

4.8 Reliance Upon Declarations

The Trustee shall not be considered to be in contravention of any of its 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 Section 4.9, if applicable, and with any other applicable provisions of this Agreement.

4.9 Evidence and Authority to Trustee

Lululemon and/or Exchangeco shall furnish to the Trustee evidence of compliance with the conditions provided for in this Agreement relating to any action or step required or permitted to be taken by Lululemon, and/or Exchangeco or the Trustee under this Agreement or as a result of any obligation imposed under this Agreement, including, without limitation, in respect of the Exchange Right or the Automatic Exchange Rights and the taking of any other action to be taken by the Trustee at the request of or on the application of Lululemon and/or Exchangeco promptly if and when:

(a)

such evidence is required by any other section of this Agreement to be furnished to the Trustee in accordance with the terms of this Section 4.9; or

(b)

the Trustee, in the exercise of its rights, powers, duties and authorities under this Agreement, gives Lululemon and/or Exchangeco written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.

Such evidence shall consist of an Officer’s Certificate of Lululemon and/or Exchangeco or a statutory declaration or a certificate made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this Agreement.

Whenever such evidence relates to a matter other than the Exchange Right or the Automatic Exchange Rights or the taking of any other action to be taken by the Trustee at the request or on the application of Lululemon and/or Exchangeco, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer, engineer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of Lululemon and/or Exchangeco it shall be in the form of an Officer’s Certificate or a statutory declaration.

Each statutory declaration, Officer’s Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this Agreement shall include a statement by the person giving the evidence:

(c)

declaring that he/she has read and understands the provisions of this Agreement relating to the condition in question;

(d)

describing the nature and scope of the examination or investigation upon which he/she based the statutory declaration, certificate, statement or opinion; and

(e)

declaring that he/she has made such examination or investigation as he/she believes is necessary to enable him to make the statements or give the opinions contained or expressed therein.

4.10 Experts, Advisers and Agents

The Trustee may:

(a)

in relation to this Agreement act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer, engineer or other expert, whether retained by the Trustee or by Lululemon and/or Exchangeco or otherwise, and may retain or employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; and

(b)

employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust.

4.11 Investment of Moneys Held by Trustee

Unless otherwise provided in this Agreement, any moneys held by or on behalf of the Trustee which under the terms of this Agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee may be invested and reinvested in the name or under the control of the Trustee, in trust for Exchangeco, in securities in which, under the laws of the Province of British Columbia, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee, and the Trustee shall so invest such moneys on the written direction of Exchangeco. Pending the investment of any moneys as hereinbefore provided, such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of

Exchangeco, in the deposit department of the Trustee or any other loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits. Any income earned in respect of the Trust Estate which is not used by the Trustee as provided in this Agreement shall be accumulated by the Trustee and added to the capital of the Trust Estate.

4.12 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 Agreement.

4.13 Trustee Not Bound to Act on Request

Except as in this Agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of Lululemon and/or Exchangeco or of the directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.

4.14 Authority to Carry on Business

The Trustee represents to Lululemon and Exchangeco that at the date of execution and delivery by it of this Agreement it is authorized to carry on the business of a trust company in each of the Provinces of Canada but if, notwithstanding the provisions of this Section 4.14, it ceases to be so authorized to carry on business, the validity and enforceability of this Agreement and the Exchange Right and the Automatic Exchange Rights shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any Province of Canada, either become so authorized or resign in the manner and with the effect specified in Article 7.

4.15 Conflicting Claims

If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary 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 Beneficiary 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 Exchange Rights or Automatic Exchange Rights 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 Exchange Right or Automatic Exchange 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 Exchange Right or Automatic Exchange 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.

4.16 Acceptance of Trust

The Trustee hereby accepts the Trust created and provided for by and in this Agreement 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 Beneficiaries, subject to all the terms and conditions herein set forth.

ARTICLE 5

COMPENSATION

5.1 Fees and Expenses of the Trustee

Lululemon and Exchangeco jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this Agreement and will reimburse the Trustee for all reasonable expenses (including, but not limited to, taxes other than taxes based on the net income of the Trustee, fees paid to legal counsel and other experts and advisors and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental agency reasonably incurred by the Trustee in connection with its duties under this Agreement; provided that Lululemon and Exchangeco shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation in which the Trustee is determined to have acted in bad faith or with negligence, recklessness or wilful misconduct.

ARTICLE 6

INDEMNIFICATION AND LIMITATION OF LIABILITY

6.1 Indemnification of the Trustee

Lululemon and Exchangeco jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this Agreement (collectively, the “ Indemnified Parties ”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this Agreement, or any written or oral instruction delivered to the Trustee by Lululemon or Exchangeco pursuant hereto.

In no case shall Lululemon or Exchangeco be liable under this indemnity for any claim against any of the Indemnified Parties unless Lululemon and Exchangeco shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to clause (ii) below, Lululemon and Exchangeco shall be entitled to participate at their own expense in the defence and, if Lululemon and Exchangeco so elect at any time after receipt of such notice, any of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by Lululemon or Exchangeco; or (ii) the named parties to any such suit include both the Trustee and Lululemon or Exchangeco and the Trustee shall have been advised by counsel acceptable to Lululemon or Exchangeco that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to Lululemon or Exchangeco and that, in the judgment of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case Lululemon and Exchangeco shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). This indemnity shall survive the termination of this Agreement and the resignation or removal of the Trustee.

6.2 Limitation of Liability

The Trustee shall not be held liable for 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 Agreement, except to the extent that such loss is attributable to the fraud, negligence, recklessness, wilful misconduct or bad faith on the part of the Trustee.

ARTICLE 7

CHANGE OF TRUSTEE

7.1 Resignation

The Trustee, or any Trustee hereafter appointed, may at any time resign by giving written notice of such resignation to Lululemon and Exchangeco specifying the date on which it desires to resign, provided that such notice shall not be given less than sixty (60) days before such desired resignation date unless Lululemon and Exchangeco otherwise agree and provided further 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. Upon receiving such notice of resignation, Lululemon and Exchangeco shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this Agreement. If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, Lululemon and Exchangeco shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same.

7.2 Removal

The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than 30 days’ prior notice by written instrument executed by Lululemon and Exchangeco, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee.

7.3 Successor Trustee

Any successor trustee appointed as provided under this Agreement shall execute, acknowledge and deliver to Lululemon and Exchangeco and to its predecessor trustee 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 Agreement, with the like effect as if originally named as trustee in this Agreement. However, on the written request of Lululemon and Exchangeco or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of this Agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, Lululemon and Exchangeco and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.

7.4 Notice of Successor Trustee

Upon acceptance of appointment by a successor trustee as provided herein, Lululemon and Exchangeco shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If Lululemon or Exchangeco shall fail to cause such notice to be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of Lululemon and Exchangeco.

ARTICLE 8

LULULEMON SUCCESSORS

8.1 Certain Requirements in Respect of Combination, etc.

Lululemon shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if:

(a)

such other person or continuing corporation (herein called the “Lululemon Successor ”), by operation of law, becomes, without more, bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or

contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are satisfactory to the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee are reasonably necessary or advisable to evidence the assumption by the Lululemon Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Lululemon Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Lululemon under this Agreement; and

(b)

such transaction shall, to the satisfaction of the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee, be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder.

8.2 Vesting of Powers in Successor

Whenever the conditions of Section 8.1 have been duly observed and performed, the Trustee, Lululemon Successor and Exchangeco shall, if required by Section 8.1, execute and deliver the supplemental trust agreement provided for in Article 9 and thereupon Lululemon Successor shall possess and from time to time may exercise each and every right and power of Lululemon under this Agreement in the name of Lululemon or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of Lululemon or any officers of Lululemon may be done and performed with like force and effect by the directors or officers of such Lululemon Successor.

8.3 Wholly-Owned Subsidiaries

Subject to section 2.13 of the Support Agreement, nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Lululemon with or into Lululemon or the winding-up, liquidation or dissolution of any wholly-owned subsidiary of Lululemon provided that all of the assets of such subsidiary are transferred to Lululemon or another wholly-owned direct or indirect subsidiary of Lululemon and any such transactions are expressly permitted by this Article 8.

ARTICLE 9

AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS

9.1 Amendments, Modifications, etc.

This Agreement may not be amended or modified except by an agreement in writing executed by Lululemon, Exchangeco and the Trustee and approved by the Beneficiaries in accordance with Section 11.2 of the Exchangeable Share Provisions.

9.2 Ministerial Amendments

Notwithstanding the provisions of Section 9.1, the parties to this Agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this Agreement for the purposes of:

(a)

adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Exchangeco and Lululemon shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the Beneficiaries;

(b)

making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of Lululemon and Exchangeco and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries it may be expedient to make, provided that such boards of directors and the Trustee, acting on the advice of counsel, shall be of the opinion that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or

(c)

making such changes or corrections which, on the advice of counsel to Lululemon, Exchangeco and 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, and the board of directors of each of Lululemon and Exchangeco shall be of the opinion, acting in good faith, that such changes or corrections will not be prejudicial to the rights and interests of the Beneficiaries.

9.3 Meeting to Consider Amendments

Exchangeco, at the request of Lululemon, shall call a meeting or meetings of the Beneficiaries 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.

9.4 Changes in Capital of Lululemon and Exchangeco

At all times after the occurrence of any event contemplated pursuant to section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which the rights, privileges, restrictions or conditions of either Lululemon Common Shares or the Exchangeable Shares or both are in any way changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis , to all new securities into which Lululemon Common Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications.

9.5 Execution of Supplemental Trust Agreements

No amendment to or modification or waiver of any of the provisions of this Agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. From time to time, Lululemon and Exchangeco (when authorized by a resolution of their respective board of directors) and the Trustee may, subject to the provisions of this Agreement, and they shall, when so directed by the provisions of this Agreement, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes:

(a)

evidencing the succession of Lululemon Successors and the covenants of and obligations assumed by each such Lululemon Successor in accordance with the provisions of Article 8 and the successors of any successor trustee in accordance with the provisions of Article 7;

(b)

making any additions to, deletions from or alterations of the provisions of this Agreement or the Exchange Right or the Automatic Exchange Rights which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries 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 Agreement; and

(c)

for any other purposes not inconsistent with the provisions of this Agreement, including without limitation, to make or evidence any amendment or modification to this Agreement as contemplated hereby, provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby.

ARTICLE 10

TERMINATION

10.1 Term

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

(a)

no outstanding Exchangeable Shares are held by a Beneficiary;

(b)

each of Lululemon and Exchangeco elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 11.2 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.

10.2 Survival of Agreement

This Agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Article 5 and Article 6 shall survive any such termination of this Agreement.

ARTICLE 11

GENERAL

11.1 Notices

All notices, requests, claims, demands, waivers and other communications under this Agreement 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 Lululemon or Exchangeco, to:

2285 Clark Drive

Vancouver, British Columbia

V5N 3G9

Fax: (604) 847-6124

Attention: Corporate Secretary

with a copy to:

McCarthy Tétrault LLP

1300-777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

Fax: (604) 622-5615

Attention: Richard Balfour

If to the Trustee, to:

Suite 710, 530-8 ^th Avenue SW

Calgary, Alberta

T2P 3S8

Fax: (403) 267-6598

Attention: Manager, Corporate Trust

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 11.1.

11.2 Notice to Beneficiaries

Any and all notices to be given and documents to be sent to any Beneficiaries may be sent to the address of such Beneficiary shown on the register of holders of Exchangeable Shares in any manner permitted by the by-laws of Exchangeco from time to time in force in respect of notice to shareholders and shall be deemed to be received (if given or sent in such manner) at the time specified in such by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices or documents as aforesaid sent to Beneficiaries.

11.3 Interpretation

When a reference is made in this Agreement to an Article or a section, such reference shall be to an Article or a section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words ‘include’, ‘includes’ or ‘including’ are used in this Agreement, they shall be deemed to be followed by the words ‘without limitation’. The terms ‘this Agreement’, ‘hereof’, ‘herein’ and ‘hereunder’ and similar expressions refer to this Agreement 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 Agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.

11.4 Severability

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement 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 Agreement 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.

11.5 Counterparts

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

11.6 Governing Law

This Agreement 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.

11.7 Assignment

Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties hereto without the prior written consent of the other parties. Any purported assignment without such consent shall be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.

11.8 Enforcement

The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement 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 Agreement and to enforce specifically the terms and provisions of this Agreement 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 Agreement, (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 Agreement 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 Agreement.

11.9 No Waiver

No provisions of this Agreement 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.

11.10 Expenses

Except as expressly set forth in this Agreement, all costs and expenses and third party fees, paid or incurred in connection with this Agreement shall be paid in accordance with section 11.2 of the Reorganization Agreement.

11.11 Privacy

The parties acknowledge that federal and/or provincial legislation that addresses the protection of individuals’ personal information (collectively, “ Privacy Laws ”) applies to obligations and activities under this Agreement. Despite any other provision of this Agreement, no party shall take or direct any action that would contravene, or cause any other party to contravene, applicable Privacy Laws. Lululemon and Exchangeco shall, prior to transferring or causing to be transferred personal information to the Trustee, obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have previously been given and upon which the parties can rely or are not required under the Privacy Laws. The Trustee shall use commercially reasonable efforts to ensure that its services hereunder comply with Privacy Laws. Specifically, the Trustee agrees:

(a)

to have a designated chief privacy officer;

(b)

to maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or inquiry;

(c)

to use personal information solely for the purposes of providing the Trustee’s services under or ancillary to this Agreement and not to use it for any other purpose except with the consent of or direction from Lululemon, Exchangeco or the individual whose personal information is involved;

(d)

not to sell or otherwise improperly disclose personal information to any third party; and

(e)

to employ administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft, or unauthorized access, use or modification.

11.12 Trustee Not Bound to Act

The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, determine at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days written notice to Lululemon and Exchangeco, provided that (i) the Trustee’s written notice shall describe the circumstances of such non-compliance; and (ii) if such circumstances are rectified to the Trustee’s satisfaction within such 10 day period, then such resignation shall not be effective.

11.13 Third Party Interests

Lululemon and Exchangeco hereby represent to the Trustee that any account to be opened by, or interest to held by, the Trustee in connection with this Agreement, for or to the credit of Lululemon or Exchangeco, is not intended to be used by or on behalf of any third party other than the Beneficiaries, as expressly provided in this Agreement.

11.14 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 Agreement.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as of the date first above written.


LULULEMON ATHLETICA INC.

By:		/s/ John Currie
		Chief Financial Officer

LULU CANADIAN HOLDING INC.

By:		/s/ John Currie
		Chief Financial Officer

COMPUTERSHARE TRUST COMPANY OF CANADA

By:		/s/ Cristian Couchot
		Professional, Corporate Trust

By:		/s/ Dan Sander
		Professional, Corporate Trust

Exhibit 2.3

EXCHANGEABLE SHARE SUPPORT AGREEMENT

Between

LULULEMON ATHLETICA INC.

- and -

LULULEMON CALLCO ULC

- and -

LULU CANADIAN HOLDING INC.

July 26, 2007

TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS		1
1.1	Defined Terms	1

ARTICLE 2 COVENANTS OF LULULEMON, CALLCO AND EXCHANGECO		2
2.1	Covenants Regarding Exchangeable Shares	2
2.2	Segregation of Funds	3
2.3	Reservation of Lululemon Common Shares	3
2.4	Notification of Certain Events	3
2.5	Delivery of Lululemon Common Shares to Exchangeco and Callco	4
2.6	Qualification of Lululemon Common Shares	4
2.7	Economic Equivalence	5
2.8	Tender Offers	8
2.9	Ownership of Outstanding Shares	8
2.10	Lululemon and Subsidiaries Not to Vote Exchangeable Shares	8
2.11	Rule 10b-18 Purchases	9
2.12	Restriction on Voluntary Dissolution and Continuance	9
2.13	Mailings to Registered Holders of Exchangeable Shares	9
2.14	Other Materials	9
2.15	Distribution of Written Materials	9

ARTICLE 3 LULU SUCCESSORS		10
3.1	Certain Requirements in Respect of Combination, etc.	10
3.2	Vesting of Powers in Successor	10
3.3	Wholly-Owned Subsidiaries	10

ARTICLE 4 GENERAL		11
4.1	Term	11
4.2	Changes in Capital of Lululemon and Exchangeco	11
4.3	Severability	11
4.4	Amendments, Modifications	11
4.5	Ministerial Amendments	11
4.6	Meeting to Consider Amendments	12
4.7	Amendments Only in Writing	12
4.8	Notices	13
4.9	Interpretation	14
4.10	Counterparts	14
4.11	Governing Law	15
4.12	Assignment	15
4.13	Enforcement	15
4.14	No Waiver	15
4.15	Expenses	15
4.16	Assurances	16

SUPPORT AGREEMENT

MEMORANDUM OF AGREEMENT made as of the 26 ^th day of July, 2007.

AMONG:

LULULEMON ATHLETICA INC. , a corporation existing under the laws of the State of Delaware corporation

(“ Lululemon ”)

AND:

LULULEMON CALLCO ULC , an unlimited liability company existing under the laws of the Province of Alberta

(“ Callco ”)

AND:

LULU CANADIAN HOLDING, INC. , a company existing under the laws of the Province of British Columbia

(“ Exchangeco ”)

WHEREAS in connection with an arrangement agreement (the “ Arrangement Agreement ”) dated as of April 26, 2007 among Lululemon, Callco, Exchangeco, LIPO Investments (USA), Inc. and LIPO Investments (Canada) Inc. (“ LIPO Canada ”), Exchangeco is to issue exchangeable shares (the “ Exchangeable Shares ”) to holders of common shares of LIPO Canada pursuant to the plan of arrangement (the “ Arrangement ”) contemplated by the Arrangement Agreement;

AND WHEREAS , pursuant to the Arrangement Agreement, Lululemon, Callco and Exchangeco have agreed to execute a support agreement substantially in the form of this Agreement;

ARTICLE 1

DEFINITIONS

1.1 Defined Terms

Each term denoted herein by initial capital letters and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “ Exchangeable Share Provisions ”) attaching to the Exchangeable Shares attached as Appendix 1 to the Plan of Arrangement as set out in the Articles of Arrangement of Exchangeco, unless the context requires otherwise.

ARTICLE 2

COVENANTS OF LULULEMON, CALLCO AND EXCHANGECO

2.1 Covenants Regarding Exchangeable Shares

So long as any Exchangeable Shares not owned by Lululemon or its subsidiaries are outstanding, Lululemon will:

(a)

not declare or pay any dividend on the Lululemon Common Shares unless (i) in the case of a cash dividend on Lululemon Common Shares, (A) Exchangeco shall simultaneously declare or pay, as the case may be, an equivalent dividend as provided for in the Exchangeable Share Provisions on the Exchangeable Shares, and (B) Exchangeco shall have sufficient money or other assets available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such dividend on the Exchangeable Shares or (ii) in the case of a stock dividend on Lululemon Common Shares, (A) Exchangeco shall subdivide the Exchangeable Shares in lieu of a stock dividend thereon as provided for in the Exchangeable Share Provisions and (B) Exchangeco shall have sufficient authorized but unissued securities available to enable such subdivision;

(b)

advise Exchangeco sufficiently in advance of the declaration by Lululemon of any dividend on the Lululemon Common Shares and take all such other actions as are reasonably necessary, in co-operation with Exchangeco, to ensure that (i) the respective declaration date, record date and payment date for a dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on the Lululemon Common Shares or (ii) the record date and effective date for the subdivision of Exchangeable Shares shall be the same as the record date and payment date for the stock dividend on the Lululemon Common Shares;

(c)

ensure that the record date for any dividend declared on the Lululemon Common Shares is not less than 10 Business Days after the declaration date of such dividend;

(d)

take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Exchangeco, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price in respect of each issued and outstanding Exchangeable Share (other than Exchangeable Shares owned by Lululemon or its subsidiaries) upon the liquidation, dissolution or winding-up of Exchangeco, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by Exchangeco, as the case may be, including without limitation all such actions and all such things as are necessary or desirable to enable and permit Exchangeco to cause to be delivered Lululemon Common Shares to the holders of Exchangeable Shares in accordance with the provisions of Article 5, Article 6, or Article 7, as the case may be, of the Exchangeable Share Provisions; and

(e)

take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Callco, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including without limitation all such actions and all such things as are necessary or desirable to enable and permit Callco to cause to be delivered Lululemon Common Shares to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be.

2.2 Segregation of Funds

Lululemon and Callco will cause Exchangeco to deposit a sufficient amount of funds in a separate account of Exchangeco and segregate a sufficient amount of such other assets and property as is necessary to enable Exchangeco to pay dividends when due and to pay or otherwise satisfy its respective obligations under Article 5, Article 6, or Article 7 of the Exchangeable Share Provisions, as applicable.

2.3 Reservation of Lululemon Common Shares

Lululemon hereby represents, warrants and covenants in favour of Callco and Exchangeco that Lululemon has reserved for issuance and will, at all times while any Exchangeable Shares (other than Exchangeable Shares held by Lululemon or its subsidiaries) are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of Lululemon Common Shares (or other shares or securities into which the Lululemon Common Shares may be reclassified or changed as contemplated by Section 2.7 hereof) (a) as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time (other than Exchangeable Shares held by Lululemon or its subsidiaries), and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time; and (b) as are now and may hereafter be required to enable and permit Lululemon and Callco to meet their obligations under the Exchange Trust Agreement and under any other security or commitment pursuant to which Callco may now or hereafter be required to deliver Lululemon Common Shares, to enable and permit Callco to meet its obligations under each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right and to enable and permit Exchangeco to meet its respective obligations hereunder and under the Exchangeable Share Provisions.

2.4 Notification of Certain Events

In order to assist Lululemon and Callco to comply with its obligations hereunder and to permit Callco to exercise the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, Exchangeco will notify Lululemon and Callco of each of the following events at the time set forth below:

(a)

in the event of any determination by the board of directors of Exchangeco to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Exchangeco or to effect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution;

(b)

promptly, upon the earlier of receipt by Exchangeco of notice and Exchangeco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Exchangeco or to effect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding up its affairs;

(c)

promptly, upon receipt by Exchangeco of a Retraction Request;

(d)

on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Exchangeable Share Provisions; and

(e)

as soon as practicable upon the issuance by Exchangeco of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares in exchange for outstanding LIPO Canada common shares pursuant to the Arrangement).

2.5 Delivery of Lululemon Common Shares to Exchangeco and Callco

In furtherance of its obligations under Sections 2.1(d) and 2.1(e) hereof, upon notice from Exchangeco or Callco of any event that requires Exchangeco or Callco, to cause to be delivered Lululemon Common Shares to any registered holder of Exchangeable Shares, Lululemon shall, in any manner deemed appropriate by it, provide or cause to be provided to Exchangeco or Callco, either in the form of a share certificate or in book entry form through the direct registration system, the requisite number of Lululemon Common Shares to be received by, and issued to or to the order of, the former holder of the surrendered Exchangeable Shares, as Exchangeco or Callco shall direct. All such Lululemon Common Shares shall be duly authorized and validly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance.

2.6 Qualification of Lululemon Common Shares

Lululemon covenants that if any Lululemon Common Shares (or other shares or securities into which Lululemon Common Shares may be reclassified or Changed as contemplated by Section 2.7 hereof) to be issued and delivered hereunder (including for greater certainty, pursuant to the Exchangeable Share Provisions or pursuant to the Exchange Right or the Automatic Exchange Rights) require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document, or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any Canadian or United States federal, provincial or state securities or other law

or regulation or pursuant to the rules and regulations of any securities or other regulatory authority or the fulfillment of any other United States or Canadian legal requirement before such shares (or such other shares or securities) may be issued by Lululemon and delivered by Callco or Exchangeco, as the case may be, to the registered holder of Exchangeable Shares thereof or in order that such shares (or such other shares or securities) may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a “control person” for purposes of Canadian provincial securities law or an “affiliate” of Lululemon for purposes of United States federal or state securities law), Lululemon will in good faith expeditiously take all such actions and do all such things as are necessary or desirable to cause such Lululemon Common Shares (or such other shares or securities) to be and remain duly registered, qualified or approved under United States and/or Canadian law, as the case may be; provided, however, that Lululemon’s obligations in this Section 2.6 shall be limited to the obligations set forth in Section 6.4 of the Reorganization Agreement. Lululemon will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all Lululemon Common Shares (or such other shares or securities) to be delivered hereunder to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Lululemon Common Shares (or such other shares or securities) have been listed by Lululemon and remain listed and are quoted or posted for trading at such time.

2.7 Economic Equivalence

So long as any Exchangeable Shares not owned by Lululemon or its subsidiaries are outstanding:

(a)

Other than as permitted in Section 2.1, Lululemon will not without the prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of the Exchangeable Share Provisions:

(i)

issue or distribute Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) to the holders of all or substantially all of the then outstanding Lululemon Common Shares by way of a stock dividend or other distribution, other than an issue of Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) to holders of Lululemon Common Shares who (A) exercise an option to receive dividends in Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) in lieu of receiving cash dividends, or (B) pursuant to any dividend reinvestment plan; or

(ii)

issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Lululemon Common Shares entitling them to subscribe for or to purchase Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares); or

(iii)

issue or distribute to the holders of all or substantially all of the then outstanding Lululemon Common Shares (A) shares or securities of Lululemon of any class other than Lululemon Common Shares (other than shares convertible into or exchangeable for or carrying rights to acquire Lululemon Common Shares), (B) rights, options or warrants other than those referred to in Section 2.7(a)(ii) above, (C) evidences of indebtedness of Lululemon, or (D) assets of Lululemon,

unless the same or the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares.

(b)

Lululemon will not without the prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of the Exchangeable Share Provisions:

(i)

subdivide, redivide or change the then outstanding Lululemon Common Shares into a greater number of Lululemon Common Shares; or

(ii)

reduce, combine, consolidate or change the then outstanding Lululemon Common Shares into a lesser number of Lululemon Common Shares; or

(iii)

reclassify or otherwise change the Lululemon Common Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Lululemon Common Shares,

unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares.

(c)

Lululemon will ensure that the record date for any event referred to in Section 2.7(a) or 2.7(b) above, or (if no record date is applicable for such event) the effective date for any such event, is not less than five Business Days after the date on which such event is declared or announced by Lululemon (with contemporaneous notification thereof by Lululemon to Exchangeco).

(d)

The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in Section 2.7(a) or 2.7(b) above and each such determination shall be conclusive and binding on Lululemon and its shareholders. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors:

(i)

in the case of any stock dividend or other distribution payable in Lululemon Common Shares, the number of such shares issued in proportion to the number of Lululemon Common Shares previously outstanding;

(ii)

in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price;

(iii)

in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of Lululemon of any class other than Lululemon Common Shares, any rights, options or warrants other than those referred to in Section 2.7(d)(ii) above, any evidences of indebtedness of Lululemon or any assets of Lululemon), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Lululemon Common Share and the Current Market Price;

(iv)

in the case of any subdivision, redivision or change of the then outstanding Lululemon Common Shares into a greater number of Lululemon Common Shares or the reduction, combination, consolidation or change of the then outstanding Lululemon Common Shares into a lesser number of Lululemon Common Shares or any amalgamation, merger, reorganization or other transaction affecting Lululemon Common Shares, the effect thereof upon the then outstanding Lululemon Common Shares; and

(v)

in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the general taxation consequences to holders of Lululemon Common Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).

(e)

Exchangeco agrees that, to the extent required, upon due notice from Lululemon, Exchangeco will use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other Distributions are made by Exchangeco, or subdivisions, redivisions or Changes are made to the Exchangeable Shares, in order to implement the required economic equivalent with respect to the Lululemon Common Shares and Exchangeable Shares as provided for in this Section 2.7. Without limiting the generality of the foregoing, the Board of Directors of Exchangeco may, acting in good faith, adjust the number of Lululemon Common Shares into which an Exchangeable Share is exchangeable (which initially is one) to reflect the economic equivalent of the relationship between the Lululemon Common Shares and the Exchangeable Shares.

(f)

Nothing in this Agreement shall affect the rights of Exchangeco to redeem (or Callco to purchase pursuant to the Redemption Call Right) Exchangeable Shares, as applicable in the event of a Lululemon Extraordinary Distribution.

2.8 Tender Offers

In the event that a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to Lululemon Common Shares (an “ Offer ”) is proposed by Lululemon or is proposed to Lululemon or its shareholders and is recommended by the board of directors of Lululemon, or is otherwise effected or to be effected with the consent or approval of the board of directors of Lululemon, and the Exchangeable Shares are not redeemed by Exchangeco or purchased by Callco pursuant to the Redemption Call Right, Lululemon will use its reasonable efforts expeditiously and in good faith to take all such actions and do all such things as are necessary or desirable to enable and permit holders of Exchangeable Shares (other than Lululemon and its subsidiaries) to participate in such Offer to the same extent or on an economically equivalent basis as the holders of Lululemon Common Shares, without discrimination. Without limiting the generality of the foregoing, Lululemon will use its reasonable efforts expeditiously and in good faith to ensure that holders of Exchangeable Shares may participate in each such Offer without being required to retract Exchangeable Shares as against Exchangeco (or, if so required, to ensure that any such retraction shall be effective only upon, and shall be conditional upon, the closing of such Offer and only to the extent necessary to tender or deposit to the Offer). Nothing herein shall affect the rights of Exchangeco to redeem (or Callco to purchase pursuant to the Redemption Call Right) Exchangeable Shares, as applicable, in the event of a Lululemon Control Transaction.

2.9 Ownership of Outstanding Shares

Without the prior approval of Exchangeco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of the Exchangeable Share Provisions, Lululemon covenants and agrees in favour of Exchangeco that, as long as any outstanding Exchangeable Shares are owned by any person other than Lululemon or any of its subsidiaries, Lululemon will be and remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of Exchangeco and Callco.

2.10 Lululemon and Subsidiaries Not to Vote Exchangeable Shares

Lululemon covenants and agrees that it will appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its subsidiaries for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. Lululemon further covenants and agrees that it will not, and will cause its subsidiaries not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Exchangeable Share Provisions or pursuant to the provisions of the Act (or any successor or other corporate statute by which Exchangeco may in the future be governed) with respect to any Exchangeable Shares held by it or by its subsidiaries in respect of any matter considered at any meeting of holders of Exchangeable Shares.

2.11 Rule 10b-18 Purchases

Nothing contained in this Agreement, including without limitation the obligations of Lululemon contained in Section 2.8, shall limit the ability of Lululemon, Callco or Exchangeco to make a “Rule 10b-18 Purchase” of Lululemon Common Shares pursuant to Rule 10b-18 of the United States Securities Exchange Act of 1934, as amended.

2.12 Restriction on Voluntary Dissolution and Continuance

Lululemon shall not, and agrees to cause Callco to not, take any action relating to (a) a voluntary liquidation, dissolution or winding-up of Exchangeco or its successors or Callco or its successors, as the case may be, prior to the Redemption Date or (b) the continuance or other transfer of the corporate existence of Exchangeco to any jurisdiction outside of Canada prior to the Redemption Date.

2.13 Mailings to Registered Holders of Exchangeable Shares

With respect to each meeting of shareholders of Lululemon at which holders of Lululemon Common Shares are entitled to vote and with respect to all written consents sought by Lululemon from its shareholders including the holders of Lululemon Common Shares, Lululemon will mail or cause to be mailed (or otherwise communicate in the same manner as Lululemon utilizes in communications to holders of Lululemon Common Shares subject to applicable regulatory requirements) to each registered holder of Exchangeable Shares, such mailing or communication to commence on the same day as the mailing or notice (or other communication) with respect thereto is commenced by Lululemon to its shareholders a copy of such notice, together with any related materials, including, without limitation, any proxy or information statement, to be provided to shareholders of Lululemon, to the extent that such materials have not already been provided to holders of Special Voting Shares.

2.14 Other Materials

As soon as reasonably practicable after receipt by Lululemon or holders of Lululemon Common Shares (if such receipt is known by Lululemon) of any material sent or given by or on behalf of a third party to holders of Lululemon Common Shares generally, including without limitation, dissident proxy and information circulars (and related information and material) and tender and exchange offer circulars (and related information and material), Lululemon shall use its reasonable efforts to obtain and deliver a copy thereof (unless the same has been provided directly to registered holders of Exchangeable Shares by such third party) to each holder of Exchangeable Share as soon as possible thereafter, to the extent that such materials have not already been provided to holders of Special Voting Shares. Lululemon will also make available for inspection by any registered holder of Exchangeable Shares at its principal executive offices in the City of Vancouver copies of all such materials.

2.15 Distribution of Written Materials

Any written materials distributed by Lululemon pursuant to this Agreement shall be sent by mail (or otherwise communicated in the same manner as Lululemon utilizes in communications to holders of Lululemon Common Shares subject to applicable regulatory requirements) to each

holder of Exchangeable Share at its address as shown on the books of Exchangeco. Lululemon agrees not to communicate with holders of Lululemon Common Shares with respect to such written materials otherwise than by mail unless such method of communication is also used by it for communication with the registered holders of Exchangeable Shares. Exchangeco shall provide or cause to be provided to Lululemon for purposes of communication, on a timely basis and without charge or other expense a current list of registered holders of Exchangeable Shares.

ARTICLE 3

LULU SUCCESSORS

3.1 Certain Requirements in Respect of Combination, etc.

(a)

such other person or continuing corporation (the “ Lululemon Successor ”) by operation of law, becomes bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are reasonably necessary or advisable to evidence the assumption by the Lululemon Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Lululemon Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Lululemon under this Agreement; and

(b)

such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder.

3.2 Vesting of Powers in Successor

Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Section 3.1(a) and thereupon the Lululemon Successor shall possess and from time to time may exercise each and every right and power of Lululemon under this Agreement in the name of Lululemon or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of Lululemon or any officers of Lululemon may be done and performed with like force and effect by the directors or officers of such Lululemon Successor.

3.3 Wholly-Owned Subsidiaries

Nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Lululemon with or into Lululemon or, subject to

Section 2.12 hereof, the winding-up, liquidation or dissolution of any wholly-owned subsidiary of Lululemon provided that all of the assets of such subsidiary are transferred to Lululemon or another wholly-owned direct or indirect subsidiary of Lululemon and any such transactions are expressly permitted by this Article 3.

ARTICLE 4

GENERAL

4.1 Term

This Agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any person other than Lululemon and any of its subsidiaries.

4.2 Changes in Capital of Lululemon and Exchangeco

At all times after the occurrence of any event contemplated pursuant to Sections 2.7 and 2.8 hereof or otherwise, as a result of which either Lululemon Common Shares or the Exchangeable Shares or both are in any way Changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis , to all new securities into which Lululemon Common Shares or the Exchangeable Shares or both are so Changed and the parties hereto shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications.

4.3 Severability

4.4 Amendments, Modifications

This Agreement may not be amended or modified except by an agreement in writing executed by Exchangeco, Callco and Lululemon and approved by the holders of the Exchangeable Shares in accordance with Section 11.2 of the Exchangeable Share Provisions.

4.5 Ministerial Amendments

Notwithstanding the provisions of Section 4.4, the parties to this Agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this Agreement for the purposes of:

(a)

adding to the covenants of any or all parties provided that the board of directors of each of Exchangeco, Callco and Lululemon shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares;

(b)

making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of Exchangeco, Callco and Lululemon, it may be expedient to make, provided that each such board of directors shall be of the good faith opinion that such amendments or modifications will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; or

(c)

making such Changes or corrections which, on the advice of counsel to Exchangeco, Callco and Lululemon, 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 boards of directors of each of Exchangeco, Callco and Lululemon shall be of the good faith opinion that such Changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares.

4.6 Meeting to Consider Amendments

Exchangeco, at the request of Lululemon, shall call a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4 hereof. 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.

4.7 Amendments Only in Writing

No amendment to or modification or waiver of any of the provisions of this Agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto.

4.8 Notices

All notices, requests, claims, demands, waivers and other communications under this Agreement 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:

(a)

If to Lululemon, to:

2285 Clark Drive

Vancouver, British Columbia

V5N 3G9

Fax: (604) 847-6124

Attention: Corporate Secretary

with a copy to:

McCarthy Tetrault LLP

1300-777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

Fax: (604) 622-5615

Attention: Richard Balfour

(b)

If to Exchangeco, to:

2285 Clark Drive

Vancouver, British Columbia

V5N 3G9

Fax: (604) 847-6124

Attention: Corporate Secretary

with a copy to:

McCarthy Tetrault LLP

1300-777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

Fax: (604) 622-5615

Attention: Richard Balfour

(c)

If to Callco, to:

2285 Clark Drive

Vancouver, British Columbia

V5N 3G9

Fax: (604) 847-6124

Attention: Corporate Secretary

with a copy to:

McCarthy Tetrault LLP

1300-777 Dunsmuir Street

Vancouver, British Columbia

V7Y 1K2

Fax: (604) 622-5615

Attention: Richard Balfour

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 4.8.

4.9 Interpretation

When a reference is made in this Agreement to an Article or a section, such reference shall be to an Article or a section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement 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 Agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day. For the purposes of this Agreement, a “Business Day” means any day on which commercial banks are generally open for business in Vancouver, British Columbia, 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.

4.10 Counterparts

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

4.11 Governing Law

4.12 Assignment

4.13 Enforcement

The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement 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 this Agreement and to enforce specifically the terms and provisions of this Agreement 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 Agreement, (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 Agreement 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 Agreement.

4.14 No Waiver

4.15 Expenses

4.16 Assurances

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed as of the date first above written.


LULULEMON ATHLETICA INC.

By:		/s/ John Currie
		Chief Financial Officer

LULULEMON CALLCO ULC

By:		/s/ John Currie
		Chief Financial Officer

LULU CANADIAN HOLDING INC.

By:		/s/ John Currie
		Chief Financial Officer

Exhibit 2.4

AMENDED AND RESTATED

DECLARATION OF TRUST

Forfeitable Exchangeable Shares

July 26th, 2007

TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS		1
1.1	Definitions	1

ARTICLE 2 PURPOSE OF TRUST DECLARATION		4
2.1	Continuance of Trust	4

ARTICLE 3 PROVISIONS APPLICABLE TO FORFEITABLE SHARES		4
3.1	Forfeitable Shares	4
3.2	Trustee Agreements Related to Forfeitable Shares	4
3.3	Voting Rights	5
3.4	Forfeiture of Shares	5
3.5	Ceasing to be Forfeitable Shares	5

ARTICLE 4 CONCERNING THE TRUSTEE		5
4.1	Powers and Duties of the Trustee	5
4.2	Income Tax Returns and Reports	6
4.3	Action of Beneficial Holders	7
4.4	Reliance Upon Declarations	7
4.5	Trustee Not Required to Give Security	7
4.6	Conflicting Claims	7
4.7	Acceptance of Trust	8

ARTICLE 5 LIMITATION OF LIABILITY		8
5.1	Limitation of Liability	8

ARTICLE 6 CHANGE OF TRUSTEE		8
6.1	Resignation	8
6.2	Successor Trustee	9
6.3	Declaration of Trustee	9
6.4	Notice of Successor Trustee	9

ARTICLE 7 AMENDMENTS AND SUPPLEMENTAL TRUST DECLARATIONS		9
7.1	Amendments, Modifications, etc.	9
7.2	Ministerial Amendments	9
7.3	Meeting to Consider Amendments	10
7.4	Execution of Supplemental Trust Declarations	10

ARTICLE 8 TERMINATION		10
8.1	Term	10
8.2	Survival of Trust Declaration	11

ARTICLE 9 GENERAL		11
9.1	Notices	11
9.2	Interpretation	11
9.3	Severability	12
9.4	Counterparts	12


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

AMENDED AND RESTATED DECLARATION OF TRUST

Forfeitable Exchangeable Shares

THIS DECLARATION OF TRUST is made as of the 26th day of July, 2007, by Dennis Wilson (the “ Trustee ”).

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

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

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

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

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

ARTICLE 1

DEFINITIONS

1.1 Definitions

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

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

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

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

“ 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 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.

“ 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 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

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.

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)

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

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


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

APPENDIX A

RELEASE CONDITIONS ATTACHED TO FORFEITABLE SHARES

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


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

Exhibit 2.5

AMENDED AND RESTATED

ARRANGEMENT AGREEMENT

MEMORANDUM OF AGREEMENT made as of the 26 ^th day of April, 2007, as amended and restated as of the 18th day of

June, 2007.

AMONG:

LULULEMON ATHLETICA INC. , a corporation existing under the laws of the State of Delaware

(“ Lululemon ”)

AND:

LIPO INVESTMENTS (CANADA) INC. , a company existing under the laws of the Province of British Columbia

(“ LIPO Canada ”)

AND:

LIPO INVESTMENTS (USA) INC. , a company existing under the laws of the Province of British Columbia

(“ LIPO USA ”)

AND:

LULULEMON CALLCO ULC , an unlimited liability company existing under the laws of the Province of Alberta

(“ Callco ”)

AND:

LULU CANADIAN HOLDING INC. , a company existing under the laws of the Province of British Columbia

(“ Exchangeco ”)

WHEREAS on April 26, 2007 the parties hereto entered into a memorandum of agreement (the “Original Agreement”);

AND WHEREAS on June 12, 2007, Lululemon Corp. change its name to lululemon athletica inc.;

AND WHEREAS the parties hereto now wish to amend and restate the Original Agreement to provide for such name change and to make certain additional changes to the Original Agreement and the appendices thereto, including the Plan of Arrangement (as defined herein);

THIS AGREEMENT WITNESSETH THAT in consideration of the respective covenants and agreements herein contained and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each party), the parties hereby covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions.

In this Agreement, unless there is something in the subject matter or context inconsistent therewith and the following terms shall have the following meanings respectively:

“ Ancillary Agreements ” means the Support Agreement and the Exchange Trust Agreement, collectively;

“ Arrangement ” means an 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 hereof or Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order;

“Arrangement Resolutions” means the LIPO Canada Arrangement Resolutions and the LIPO USA Arrangement Resolutions;

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

“Business Day” means any day on which commercial banks are open for business in Vancouver, British Columbia, 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;

“ Callco ” means Lululemon Callco ULC, an unlimited liability company existing under the laws of the Province of Alberta, and a direct wholly-owned subsidiary of Lululemon;

“Circular” means the notice of the Meetings and accompanying circular to be sent to holders of LIPO Canada Securities and LIPO USA Securities in connection with the Meetings;

“Court” means the Supreme Court of British Columbia;

“ Dissent Rights ” means the rights of dissent in respect of the Arrangement described in Section 3.1 of the Plan of Arrangement;

“ Effective Date ” means the date following the grant of the Final Order on which the parties to this Agreement agree that the conditions set forth in Article 5 of this Agreement have been satisfied or waived (or on such other date as the parties may agree);

“Exchange Trust Agreement” means the Exchange Trust Agreement among Lululemon, Exchangeco and the Trustee, to be entered into in connection with the Plan of Arrangement, substantially in the form and content of Exhibit C to the Reorganization Agreement, with such changes thereto as the parties thereto, acting reasonably, may approve, in accordance with the terms thereof;

“Exchangeable Share” means a share in the class of non-voting exchangeable shares in the capital of Exchangeco;

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“Final Order” means the final order of the Court approving the Arrangement, granted pursuant to section 291(4) of the BCA, 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 Share Trust Declaration” means the declaration of trust pursuant to which Dennis Wilson will hold the Exchangeable shares issued in exchange for the Forfeitable Shares (as defined in the Plan of Arrangement), together with the associated Special Voting Shares as trustee on behalf of the beneficial holders thereof, substantially in the form and content of Exhibit C hereto, with such changes thereto as may be made, from time to time, in accordance with its terms;

“Interim Order” means the interim order of the Court made in connection with the process for obtaining securityholder approval of the Arrangement and related matters;

“ITA” means the Income Tax Act (Canada);

“ LIPO Canada ” means LIPO Investments (Canada) Inc., a company existing under the laws of the Province of British Columbia;

“LIPO Canada Arrangement Resolutions” means the special resolutions passed by the holders of the LIPO Canada Shares and LIPO Canada Options at the LIPO Canada Meeting;

“ LIPO Canada Meeting ” means the extraordinary general meeting of the holders of LIPO Canada Shares and LIPO Canada Options (including any adjournment thereof) that is to be convened as provided by the Interim Order to consider and, if deemed advisable, approve the Arrangement;

“ LIPO Canada Option ” means a Class B option to purchase LIPO Canada Shares granted under the LIPO Canada Option Plan and being outstanding and unexercised on the Effective Date;

“ LIPO Canada Option Plan ” means the LIPO Canada stock option plan approved by the board of directors of LIPO Canada on December 1, 2005;

“ LIPO Canada Securities ” means the LIPO Canada Shares and the LIPO Canada Options, collectively;

“ LIPO Canada Shares ” means the outstanding Common Shares without par value in the authorized share structure of LIPO Canada;

“ LIPO Entities ” means LIPO Canada and LIPO USA;

“ LIPO USA ” means LIPO Investments (USA) Inc., a company existing under the laws of the Province of British Columbia;

“LIPO USA Arrangement Resolutions” means the special resolutions passed by the holders of the LIPO USA Shares and LIPO USA Options at the LIPO USA Meeting;

“ LIPO USA Meeting ” means the extraordinary general meeting of the holders of LIPO USA Shares and LIPO USA Options (including any adjournment thereof) that is to be convened as provided by the Interim Order to consider and, if deemed advisable, approve the Arrangement;

“ LIPO USA Option ” means a Class B option to purchase LIPO USA Shares granted under the LIPO USA Option Plan and being outstanding and unexercised on the Effective Date;

“ LIPO USA Option Plan ” means the LIPO USA stock option plan approved by the board of directors of LIPO USA on December 1, 2005;

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“ LIPO USA Securities ” means the LIPO USA Shares and the LIPO USA Options, collectively;

“ LIPO USA Shares ” means the outstanding Common Shares without par value in the authorized share structure of LIPO USA;

“Lululemon Common Share” means a share of common stock, par value U.S. $0.01, in the capital of Lululemon and any other securities into which such share may be changed;

“ Lululemon Entities ” means Lululemon, Callco and Exchangeco, collectively;

“Meetings” means the LIPO Canada Meeting and the LIPO USA Meeting;

“ Plan of Arrangement ” means the plan of arrangement substantially in the form and content of Exhibit B hereto and any amendments or variations thereto made in accordance with Article 6 hereof or Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order;

“Registrar” means the registrar of companies appointed under the BCA;

“ Reorganization Agreement ” means the Agreement and Plan of Reorganization dated April 26, 2007 by and among Lululemon, Exchangeco, the LIPO Entities and certain other parties, as amended, supplemented, and/or restated in accordance therewith prior to the Effective Date;

“ Trustee ” means Computershare Trust Company of Canada, in its capacity as trustee under the Exchange Trust Agreement, and includes any successor trustee appointed thereunder.

1.2 Interpretation Not Affected by Headings, etc.

The division of this Agreement into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references in this Agreement to a “section” followed by a number and/or a letter refer to the specified section of this Agreement, and all references in this Agreement to an Exhibit followed by a letter refer to the specified Exhibit to this Agreement. Unless otherwise indicated, the terms “this Agreement”, “hereof”, “herein”, “hereunder” and “hereby” and similar expressions refer to this Agreement (including the Exhibits hereto), as amended or supplemented from time to time pursuant to the applicable provisions hereof, and not to any particular section or other portion hereof.

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1.3 Date For Any Action.

In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day.

1.4 Entire Agreement.

This Agreement and the agreements and other documents referred to herein constitute the entire agreement between the parties with respect to the Arrangement and other transactions contemplated hereby and supersede all other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties with respect thereto, other than the Reorganization Agreement.

1.5 Construction.

In this Agreement, unless otherwise indicated:

(a)

the words “include”, “including” or “in particular”, when following any general term or statement, shall not be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as permitting the general term or statement to refer to all other items or matters that could reasonably fall within the broadest possible scope of the general term or statement;

(b)

a reference to a statute means that statute, as amended and in effect as of the date of this Agreement, and includes each and every regulation and rule made thereunder and in effect as of the date hereof;

(c)

where a word, term or phrase is defined, its derivatives or other grammatical forms have a corresponding meaning;

(d)

time is of the essence; and

(e)

references to a “party” or “parties” are references to a party or parties to this Agreement.

1.6 Exhibits.

The following Exhibits are annexed to this Agreement and are hereby incorporated by reference into this Agreement and form an integral part hereof:


Exhibit A	—	Arrangement Resolutions

Exhibit B	—	Plan of Arrangement

Exhibit C	—	Forfeitable Trust Declaration

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ARTICLE 2

THE ARRANGEMENT

2.1 Implementation Steps by LIPO Entities.

The LIPO Entities covenant in favour of the Lululemon Entities that the LIPO Entities shall:

(a)

subject to the terms of this Agreement, as soon as reasonably practicable, apply in a manner acceptable to the Lululemon Entities, acting reasonably, under Section 291(2) of the BCA for the Interim Order, and thereafter proceed with and diligently pursue the obtaining of the Interim Order;

(b)

subject to the terms of this Agreement and in accordance with the Interim Order, convene and hold the Meetings as promptly as practicable for the purpose of considering and, if deemed advisable, approving the Arrangement and the transactions contemplated thereby by way of the Arrangement Resolutions (and for any other proper purpose as may be set out in the notice for such meetings); and

(c)

subject to obtaining the approval(s) as are required by the Interim Order, proceed with and diligently pursue the application to the Court for the Final Order.

2.2 Implementation Steps by Lululemon Entities.

The Lululemon Entities covenant in favour of the LIPO Entities that, on or prior to the Effective Date and subject to the satisfaction or waiver of the other conditions herein contained in favour of each such party:

(a)

Lululemon, Callco and Exchangeco shall execute and deliver the Support Agreement; and

(b)

Lululemon and Exchangeco shall execute and deliver the Exchange Trust Agreement.

2.3 Interim Order.

The notice of motion for the application referred to in Section 2.1(a) shall include a request that the Interim Order provide:

(a)

for the class of persons to whom notice is to be provided in respect of the Arrangement and the Meetings and for the manner in which such notice is to be provided;

(b)

that the requisite approval for the LIPO Canada Arrangement Resolutions shall be two-thirds of the votes cast on the LIPO Canada Arrangement Resolutions by the LIPO Canada Shareholders and the LIPO Canada Optionholders present in person or by proxy at the LIPO Canada Meeting, voting as separate classes, such that each holder of the LIPO Canada Shares is entitled to one vote for each LIPO Canada

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Share held and each holder of the LIPO Canada Options is entitled to one vote for each LIPO Canada Share such holder would have received on a valid exercise of such LIPO Canada Options, determined as if such options were fully vested and exercisable on such date;

(c)

that the requisite approval for the LIPO USA Arrangement Resolutions shall be two-thirds of the votes cast on the LIPO USA Arrangement Resolutions by the LIPO USA Shareholders and the LIPO USA Optionholders present in person or by proxy at the LIPO USA Meeting, voting as separate classes, such that each holder of the LIPO USA Shares is entitled to one vote for each LIPO USA Share held and each holder of the LIPO USA Options is entitled to one vote for each LIPO USA Share such holder would have received on a valid exercise of such LIPO USA Options, determined as if such options were fully vested and exercisable on such date;

(d)

that, in all other respects, the terms, restrictions and conditions of the articles of the respective LIPO Entities, including quorum requirements and all other matters, shall apply in respect of the Meetings;

(e)

for the grant of the Dissent Rights; and

(f)

for the notice requirements with respect to the presentation of the application to the Court for the Final Order.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the LIPO Entities.

The LIPO Entities hereby represent and warrant, on a joint and several basis, to and in favour of the Lululemon Entities as follows and acknowledge that the Lululemon Entities are relying on such representations and warranties in connection with the transactions herein contemplated:

(a)

Each of the LIPO Entities is a corporation duly incorporated under the BCA, is validly subsisting, has full corporate and legal power and authority to own, lease and operate the properties currently owned, leased and operated by it and is in good standing with the office of the Registrar with respect to the filing of annual reports.

(b)

Each of the LIPO Entities has all requisite corporate power and authority to enter into this Agreement and the documents required to be executed by the LIPO Entities in connection with the transactions contemplated herein, to perform its obligations hereunder and, subject to obtaining the requisite approvals contemplated by the Interim Order, to consummate the Arrangement and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement and such other documents by each of the LIPO Entities and the consummation by each of the LIPO Entities of the transactions contemplated by this Agreement (including the transfer of the LIPO Canada Shares to Exchangeco) and such other documents have been duly authorized by the board of directors of the requisite LIPO Entities and no other corporate proceedings on the part of either of the LIPO Entities are necessary to authorize this Agreement or the transactions contemplated hereby or thereby, other than:

(i)

with respect to the Circular and other matters relating solely thereto, including the implementation of the Arrangement, the approval of the board of directors of each of the LIPO Entities; and

(ii)

with respect to the completion of the Arrangement, the approval of the requisite securityholders and such other corporate proceedings of the LIPO Entities as may be required by the Interim Order.

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(c)

This Agreement has been duly executed and delivered by each of the LIPO Entities and constitutes a legal, valid and binding obligation, enforceable against each of the LIPO Entities in accordance with its terms, subject to bankruptcy, insolvency and other similar laws affecting creditors’ rights generally, and to general principles of equity.

(d)

No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental entity or other person is required to be obtained by the LIPO Entities in connection with the execution and delivery of this Agreement or any of the other documents contemplated hereby, or the consummation by the LIPO Entities of the transactions contemplated hereby or thereby, other than:

(i)

any approvals required by the Interim Order; and

(ii)

the Final Order.

3.2 Representations and Warranties of Lululemon

Lululemon represents and warrants to and in favour of the LIPO Entities as follows and acknowledges that the LIPO Entities are relying upon such representations and warranties in connection with the matters contemplated by this Agreement:

(a)

Each of the Lululemon Entities has been duly incorporated or formed under the laws of its jurisdiction of incorporation, is validly subsisting, has full corporate or legal power and authority to own, lease and operate the properties currently owned, leased and operated by it and is in good standing with the appropriate governmental entity in its jurisdiction of incorporation with respect to the filing of annual returns or equivalent documents.

(b)

Each of the Lululemon Entities has all requisite corporate power and authority to enter into this Agreement and each of the Ancillary Agreements, as applicable, to perform its obligations hereunder and thereunder, and to consummate the Arrangement and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement and each of the Ancillary Agreements, as applicable, by each of the Lululemon Entities and the consummation by each of the Lululemon Entities of the transactions contemplated by this Agreement and each of the Ancillary Agreements, as applicable, have been duly authorized by its respective board of directors and no other corporate proceedings on its part are necessary to authorize this Agreement and each of the Ancillary Agreements, as applicable, or the transactions contemplated hereby or thereby other than the approval by its board of

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directors of, in the case of Exchangeco, the amendment of its notice of articles and articles to create the Exchangeable Shares (which amendment must also be approved by the shareholders of Exchangeco) and, in the case of Lululemon, other matters (if any) relating solely to the implementation of the Arrangement.

(c)

This Agreement has been duly executed and delivered by each of the Lululemon Entities and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other similar laws affecting creditors’ rights generally, and to general principles of equity. Each of the Ancillary Agreements, as applicable, will be duly executed and delivered by each of the Lululemon Entities, as applicable, and, when so executed and delivered, will constitute a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other similar laws affecting creditors’ rights generally, and to general principles of equity.

(d)

No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental entity or other person is required to be obtained by any of the Lululemon Entities in connection with the execution and delivery of this Agreement or any of the Ancillary Agreements, as applicable, or the consummation by any of the Lululemon Entities of the transactions contemplated hereby or thereby other than:

(i)

any approval required in connection with the amendment of the notice of articles or articles of Exchangeco to create the Exchangeable Shares;

(ii)

the consent of the Toronto Stock Exchange and the Nasdaq Global Market to the listing thereon of the Lululemon Common Shares issuable in exchange for LIPO Canada Common Shares under the Plan of Arrangement or upon the exchange, from time to time, of Exchangeable Shares; and

(iii)

any other consents, approvals, orders, authorizations, declarations or filings of or with a governmental entity which, if not obtained, would not in the aggregate have a material adverse effect on the Lululemon Entities as a whole.

(e)

All of the outstanding shares of capital stock of each of Exchangeco and Callco are validly issued, fully paid and non-assessable and all such shares and other ownership interests are owned directly or indirectly by Lululemon, free and clear of all material liens, claims or encumbrances, and there are no outstanding options, rights, entitlements, understandings or commitments (pre-emptive, contingent or otherwise) regarding the right to acquire any such shares of capital stock or other ownership interests in Exchangeco or Callco.

(f)

The Exchangeable Shares to be issued in connection with the Arrangement will be duly and validly issued by Exchangeco as fully paid and non-assessable shares on the Effective Date, and will not be issued in violation of the terms of any agreement or other understanding binding upon Exchangeco at the time that such shares are issued and will be issued in compliance with the notice of articles and articles of Exchangeco and all applicable laws. There are, and will at the Effective Time be, no preemptive or other rights relating to the allotment or issuance of Exchangeable Shares in connection with the Arrangement and the transactions contemplated herein.

(g)

The Lululemon Common Shares to be issued pursuant to the Arrangement or upon the exchange from time to time of the Exchangeable Shares will, when issued and delivered in accordance with the terms of this Agreement, be duly and validly issued by Lululemon on their respective dates of issue as fully paid and non-assessable shares and will not be issued in violation of the terms of any agreement or other understanding binding upon Lululemon at the time that such shares are issued and will be issued in compliance with the constating documents of Lululemon and all applicable laws.

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ARTICLE 4

COVENANTS

4.1 Covenants of the LIPO Entities.

Each of the LIPO Entities hereby jointly and severally agrees to perform all obligations required or desirable to be performed by them under this Agreement and shall do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing, each of the LIPO Entities shall:

(a)

use all reasonable efforts to obtain the approvals of its respective shareholders and optionholders to the Arrangement at the appropriate Meeting, as provided for in Section 2.3 and in the Interim Order;

(b)

apply for and use all reasonable efforts to obtain the Interim Order and the Final Order; and

(c)

carry out the terms of the Interim Order and Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable laws may impose on such LIPO Entity with respect to the transactions contemplated hereby and by the Arrangement.

4.2 Covenants of the Lululemon Entities

Each of the Lululemon Entities hereby jointly and severally covenants and agrees to perform all obligations required or desirable to be performed by it under this Agreement and to do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, each of the Lululemon Entities shall:

(a)

cause Lululemon to reserve a sufficient number of Lululemon Common Shares for issuance upon the completion of the Arrangement and the exchange from time to time of Exchangeable Shares; and

(b)

carry out the terms of the Interim Order and Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable laws may impose on Lululemon or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement.

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4.3 Tax Deferred Status.

None of the parties shall knowingly, except as contemplated by this Agreement, or required by applicable law, take any action which would jeopardize the exchange of the LIPO Canada Shares for Exchangeable Shares pursuant to the Arrangement by holders of the LIPO Canada Shares resident in Canada for the purposes of the ITA from being treated on a tax deferred basis under the ITA for holders who are otherwise eligible for such treatment.

4.4 Section 85 Elections.

Exchangeco will execute and jointly file with each LIPO Canada Shareholder who elects to receive Exchangeable Shares pursuant to the Plan of Arrangement and who so requests an election pursuant to Section 85 of the ITA and any applicable provincial legislation in which election such LIPO Canada Shareholder will be entitled to elect the amount which shall be such LIPO Canada Shareholder’s proceeds of disposition and Exchangeco’s cost of the LIPO Canada Shares exchanged for Exchangeable Shares, provided that (i) such amount is within the limits prescribed by Section 85 of the ITA and any applicable provincial legislation, (ii) such LIPO Canada Shareholder provides two completed copies of the appropriate tax election form to Lululemon no later than 90 days after the Effective Date, and (iii) such LIPO Canada Shareholder provides Exchangeco with a letter representing to Exchangeco that such LIPO Canada Shareholder is a resident of Canada for purposes of the ITA and is not exempt from Tax. Upon any LIPO Canada Shareholder complying with the foregoing conditions, Exchangeco will execute the completed election form received from such shareholder and return such form by mail to such shareholder within 30 days of its receipt thereof. The LIPO Canada Shareholders will be solely responsible for the preparation of the foregoing election forms, and for the filing of such forms with the appropriate tax authority. Exchangeco shall not be responsible or liable in any manner whatsoever for the proper completion and timely filing of any such forms with the appropriate tax authority, but will cooperate reasonably with the LIPO Canada Shareholders in completing and filing such forms in a timely manner, including providing such information within Lululemon’s possession as is reasonably required by the LIPO Canada Shareholders to complete such forms.

4.5 Section 116 Certificates

The parties will take such action as may be required to comply with Section 116 of the ITA in respect of the transactions contemplated herein and to facilitate compliance with such provisions by the holders of LIPO Canada Securities and LIPO USA Securities in respect of the transactions contemplated herein.

ARTICLE 5

CONDITIONS

5.1 Mutual Conditions Precedent.

The respective obligations of the parties to complete the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may only be waived by the mutual consent of Lululemon and the LIPO Entities:

(a)

the Arrangement shall have been approved at the Meetings in accordance with any conditions (including securityholder approval) which may be imposed by the BCA or the Interim Order;

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(b)

the Interim Order and the Final Order shall each have been obtained in form and terms satisfactory to each of the LIPO Entities and Lululemon, acting reasonably, and shall not have been set aside or modified in a manner unacceptable to such parties, acting reasonably, on appeal or otherwise;

(c)

the steps contemplated in the Reorganization Agreement to be consummated prior to the consummation of the Arrangement shall have been consummated;

(d)

holders of no more than 2.5% of the aggregate number of LIPO Canada Shares and LIPO USA Shares issued and outstanding as of the date hereof shall have exercised their Dissent Rights (and shall not have lost or withdrawn such rights) in respect of the Arrangement;

(e)

there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement and there shall be no proceeding (other than an appeal made in connection with the Arrangement), of a judicial or administrative nature or otherwise, in progress or threatened that relates to or results from the transactions contemplated by this Agreement that would, if successful, result in an order or ruling that would preclude completion of the transactions contemplated by this Agreement in accordance with the terms hereof;

(f)

this Agreement shall not have been terminated pursuant to Section 6.3;

(g)

the Reorganization Agreement shall not have been terminated in accordance with its terms; and

(h)

the Lululemon Common Shares issuable pursuant to the Arrangement and on exchange of the Exchangeable Shares from time to time shall have been authorized for listing on the Nasdaq Global Market and the Toronto Stock Exchange, subject to official notice of issuance.

5.2 Additional Conditions Precedent to the Obligations of the Lululemon Entities.

The obligations of the Lululemon Entities to complete the transactions contemplated by this Agreement shall also be subject to the fulfilment of each of the following conditions precedent (each of which is for the Lululemon Entities’ exclusive benefit and may be waived by the Lululemon Entities and any one or more of which, if not satisfied or waived, will relieve the Lululemon Entities of any obligation under this Agreement):

(a)

all covenants and agreements of each of the LIPO Entities under this Agreement and the Reorganization Agreement to be performed or observed on or before the Effective Date shall have been duly performed and observed by the applicable LIPO Entities in all material respects; and

(b)

the representations and warranties of the LIPO Entities contained in this Agreement and in the Reorganization Agreement shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of a specified date which is earlier than the date of this Agreement, in which event such representations and warranties shall be true and correct in all material respects as of such earlier specified date, or except as affected by transactions contemplated or permitted by this Agreement or otherwise consented to by Lululemon).

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The Lululemon Entities may not rely on the failure to satisfy any of the above conditions precedent as a basis for a non-compliance by them with their obligations under this Agreement if the condition precedent would have been satisfied but for a material default by the Lululemon Entities in complying with their obligations hereunder.

5.3 Additional Conditions Precedent to the Obligations of LIPO Entities.

The obligations of the LIPO Entities to complete the transactions contemplated by this Agreement shall also be subject to the following conditions precedent (each of which is for the exclusive benefit of the LIPO Entities and may be waived by the LIPO Entities and any one or more of which, if not satisfied or waived, will relieve the LIPO Entities of any obligation under this Agreement):

(a)

all covenants and agreements of each of the Lululemon Entities under this Agreement and the Reorganization Agreement to be performed on or before the Effective Date shall have been duly performed and observed by the applicable Lululemon Entities in all material respects;

(b)

all representations and warranties of each of the Lululemon Entities contained in this Agreement and in the Reorganization Agreement shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of a specified date which is earlier than the date of this Agreement, in which event such representations and warranties shall be true and correct in all material respects as of such earlier specified date, or except as affected by transactions contemplated or permitted by this Agreement or otherwise consented to by the LIPO Entities); and

(c)

the board of directors of each of the Lululemon Entities shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by the Lululemon Entities to permit the consummation of the Arrangement and the issue of the Lululemon Common Shares, Exchangeable Shares and other securities contemplated thereby and the issue of Lululemon upon the exchange from time to time of the Exchangeable Shares.

The LIPO Entities may not rely on the failure to satisfy any of the above conditions precedent as a basis for noncompliance by the LIPO Entities with their respective obligations under this Agreement if the condition precedent would have been satisfied but for a material default by one or more of the LIPO Entities in complying with their obligations hereunder.

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5.4 Satisfaction of Conditions.

The conditions precedent set out in Sections 5.1, 5.2 and 5.3 shall be conclusively deemed to have been satisfied, waived or released when, Lululemon, on behalf of the Lululemon Entities, and the LIPO Entities have executed a joint notice that the conditions precedent set out in Sections 5.1, 5.2 and 5.3 have been satisfied, waived or released and setting out the Effective Date.

ARTICLE 6

AMENDMENT AND TERMINATION

6.1 Amendment.

This Agreement may, at any time and from time to time before or after the holding of the Meetings but not later than the Effective Date, be amended by mutual written agreement of the parties hereto provided, however, that any such change, waiver or modification does not invalidate any required approval of the securityholders of the LIPO Entities to the Arrangement.

6.2 Mutual Understanding Regarding Amendments

(a)

The parties will continue, from and after the date hereof and through and including the Effective Date, to use their respective reasonable efforts to maximize present and future financial and tax planning opportunities for the holders of LIPO Canada Securities and LIPO USA Securities and for Lululemon and for the LIPO Entities, as and to the extent that the same shall not prejudice any party or its security holders. The parties will ensure that such planning activities do not impede the progress or timing of the Arrangement in any material way.

(b)

The parties agree that if the Lululemon Entities or LIPO Entities, as the case may be, propose any amendment or amendments to this Agreement or to the Plan of Arrangement, the other will act reasonably in considering such amendment and if the other and its security holders are not prejudiced by reason of any such amendment the other will co-operate in a reasonable fashion with the Lululemon Entities or LIPO Entities, as the case may be, so that such amendment can be effected subject to applicable laws and the rights of the security holders.

6.3 Termination.

(a)

If any condition contained in Sections 5.1 or 5.2 is not satisfied on or before the Effective Date, to the satisfaction of the Lululemon Entities, then Lululemon on behalf of the Lululemon Entities may by notice to the LIPO Entities terminate this Agreement and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of the Lululemon Entities arising from any breach by the LIPO Entities but for which the condition would have been satisfied.

(b)

If any condition contained in Sections 5.1 or 5.3 is not satisfied on or before the Effective Date to the satisfaction of the LIPO Entities, then the LIPO Entities may by notice to Lululemon on behalf of the Lululemon Entities terminate this Agreement

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and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of the LIPO Entities arising from any breach by the Lululemon Entities but for which the condition would have been satisfied.

(c)

This Agreement will automatically terminate without further act or formality by any part in the event that the Reorganization Agreement is terminated.

(d)

If this Agreement is terminated in accordance with the foregoing provisions of this Section 6.3, no party shall have any further liability to perform its obligations hereunder.

ARTICLE 7

GENERAL

7.1 Notices.

All notices and other communications which may or are required to be given pursuant to any provision of this Agreement shall be given or made in the manner and to the addresses set out in the Reorganization Agreement.

7.2 Assignment.

No party hereto may assign its rights or obligations under this Agreement or the Arrangement.

7.3 Binding Effect.

This Agreement and the Arrangement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors.

7.4 Waiver and Modification.

The parties hereto may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to them hereunder or in any document to be delivered pursuant hereto and may waive or consent to the modification of any of the covenants herein contained for their respective benefit or waiver or consent to the modification of any of the obligations of the other parties hereto. Any waiver or consent to the modification of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting such waiver or consent.

7.5 Further Assurances.

Each party hereto shall, from time to time, and at all times hereafter, at the request of the other parties hereto, but without further consideration, do all such further acts and things and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof.

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7.6 Expenses.

All out-of-pocket expenses of the parties relating to the Arrangement and the transactions contemplated hereby, shall be paid by Lululemon.

7.7 Governing Laws.

This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and shall be treated in all respects as a British Columbia contract.

7.8 Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.


LULULEMON ATHLETICA INC

By:		/s/ John Currie

LIPO INVESTMENTS (CANADA) INC.

By:		/s/ Dennis Wilson

LIPO INVESTMENTS (USA) INC.

By:		/s/ Dennis Wilson

LULULEMON CALLCO ULC

By:		/s/ Robert Meers

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LULULEMON CANADIAN HOLDING INC.

By:		/s/ Dennis Wilson

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EXHIBIT A

ARRANGEMENT RESOLUTIONS

SPECIAL RESOLUTION OF

THE SHAREHOLDERS AND OPTIONHOLDERS

(EACH VOTING SEPARATELY AS A CLASS)

OF LIPO INVESTMENTS (CANADA) INC.

BE IT RESOLVED THAT:

1. The arrangement (the “ Arrangement ”) under Part 9, Division 5 of the Business Corporations Act (British Columbia) involving LIPO Investments (Canada) Inc. (“ the Company ”), as more particularly described and set forth in the Information Circular of the Company accompanying the notice of this meeting (as the Arrangement may be modified or amended), is hereby authorized, approved and adopted.

2. The Plan of Arrangement (the “ Plan of Arrangement ”) involving the Company, the full text of which is set out as Exhibit B to the Arrangement Agreement made as of April 26, 2007 among Lululemon Corp., the Company, LIPO Investments (USA) Inc. and certain others (the “ Arrangement Agreement ”) (as the Plan of Arrangement may be or may have been amended), is hereby approved and adopted.

3. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the shareholders and optionholders of the Company or that the Arrangement has been approved by the Supreme Court of British Columbia, the directors of the Company are hereby authorized and empowered (i) to amend the Arrangement Agreement, or the Plan of Arrangement to the extent permitted by the Arrangement Agreement, and (ii) not to proceed with the Arrangement without further approval of the shareholders and optionholders of the Company, but only if the Arrangement Agreement is terminated in accordance with Article 6 thereof.

4. Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed, under the seal of the Company or otherwise, and to deliver or cause to be delivered, all such other documents and instruments and to perform or cause to be performed all such other acts and things as in such person’s opinion may be necessary or desirable to give full effect to the foregoing resolution and the matters authorized thereby, such termination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

SPECIAL RESOLUTION OF

THE SHAREHOLDERS AND OPTIONHOLDERS

(EACH VOTING SEPARATELY AS A CLASS)

OF LIPO INVESTMENTS (USA) INC.

BE IT RESOLVED THAT:

1. The arrangement (the “ Arrangement ”) under Part 9, Division 5 of the Business Corporations Act (British Columbia) involving LIPO Investments (USA) Inc. (“ the Company ”), as more particularly described and set forth in the Information Circular of the Company accompanying the notice of this meeting (as the Arrangement may be modified or amended), is hereby authorized, approved and adopted.

2. The Plan of Arrangement (the “ Plan of Arrangement ”) involving the Company, the full text of which is set out as Exhibit B to the Arrangement Agreement made as of April 26, 2007 among Lululemon Corp., the Company, LIPO Investments (Canada) Inc. and certain others (the “ Arrangement Agreement ”) (as the Plan of Arrangement may be or may have been amended), is hereby approved and adopted.

Exhibit 2.6

SCHEDULE A

PLAN OF ARRANGEMENT UNDER THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)

ARTICLE 1

INTERPRETATION

1.1 Definitions . In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

“Affiliate” has the meaning set out in Section 2 of the BCA;

“Ancillary Rights” has the meaning set out in Section 2.3(j);

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

“Arrangement Agreement” means the amended and restated arrangement agreement made as of June 18, 2007 among Lululemon, Exchangeco, Callco, LIPO Canada and LIPO USA, as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement;

“Arrangement Resolutions” means the special resolutions passed by the holders of the LIPO Canada Shares and LIPO Canada Options at the LIPO Canada Meeting and the special resolutions passed by the holders of the LIPO USA Shares and LIPO USA Options at the LIPO USA Meeting;

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

“Canadian Resident” means a person who is not a non-resident of Canada for purposes of the ITA;

“Callco” means Lululemon Callco ULC, an unlimited liability company existing under the laws of the Province of Alberta and a direct wholly owned subsidiary of Lululemon;

“Circular” means the notice of the Meetings and accompanying circular to be sent to holders of LIPO Canada Securities and LIPO USA Securities in connection with the Meetings;

“Court” means the Supreme Court of British Columbia;

“Current Market Price” has the meaning assigned in the Exchangeable Share Provisions;

“Dissent Procedures” has the meaning assigned in Section 3.1;

“Dissenting Shareholder” means a registered holder of LIPO Canada Shares or LIPO USA Shares who dissents in respect of the Arrangement in strict compliance with the Dissent Procedures;

“Dividend Amount” has the meaning assigned in Section 5.1(a);

“Effective Date” means the date following the grant of the Final Order on which the parties to the Arrangement Agreement agree that the conditions set forth in Article 5 of the Arrangement Agreement have been satisfied or waived (or on such other date as the parties may agree);

“Effective Time” means the time on the Effective Date as specified in writing executed by each of the parties to the Arrangement Agreement;

“Election Deadline” means 5:00 p.m. (Pacific time) on the date which is one Business Day before the Meeting Date;

“Exchangeco” means Lulu Canadian Holding, Inc., a company existing under the laws of the Province of British Columbia, which is a wholly owned subsidiary of Lululemon;

“Exchange Ratio” means the number of Exchangeable Shares or Lululemon Common Shares issuable in exchange for one LIPO Canada Share, which number shall be equal to the LIPO Canada Amount divided by the number of LIPO Canada Shares issued and outstanding, after giving effect to the steps contemplated in Sections 2.3(a) to (c);

“Exchange Trust Agreement” means the Exchange Trust Agreement among Lululemon, Exchangeco and the Trustee, to be entered into in connection with this Plan of Arrangement, substantially in the form and content of Exhibit C annexed to the Reorganization Agreement, with such changes thereto as the parties, thereto acting reasonably, may agree, in accordance with the terms thereof;

“Exchangeable Elected Share” means any LIPO Canada Share that the holder shall have elected, by written notice to Exchangeco no later than the Election Deadline, to transfer to LIPO Canada under the Arrangement for Exchangeable Shares, or that is deemed to be an Exchangeable Elected Share pursuant to Section 2.3(k);

“Exchangeable Share” means a share in the class of non-voting exchangeable shares in the capital of Exchangeco;

“Exchangeable Share Provisions” means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, which rights, privileges, restrictions and conditions shall be substantially in the form and content of Appendix 1 hereto;

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“Fair Market Value” (i) of a LIPO Canada Share, means the quotient obtained by dividing (A) an amount equal to the LIPO Canada Amount multiplied by the IPO Price and divided by the total number of LIPO Canada Shares issued and outstanding on the applicable date (without giving effect to the exercise of any LIPO Canada Options), and (ii) of a LIPO USA Share means an amount equal to the IPO Price multiplied by the number of Lululemon Common Shares to be received by LIPO USA pursuant to the Reorganization Agreement and divided by the total number of LIPO USA Shares issued and outstanding of the applicable date;

“Final Order” means the final order of the Court approving the Arrangement, granted pursuant to Section 291(4) of the BCA, 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 LIPO Canada Shares which are designated as “forfeitable” in accordance with the terms of the LIPO Canada Option Plan and the terms of the options with respect to which such shares were initially issued;

“Forfeitable Share Trust Declaration” means the declaration of trust pursuant to which Dennis Wilson will hold the Exchangeable Shares issued in exchange for Forfeitable Shares, together with the associated Special Voting Shares as trustee on behalf of the beneficial holders thereof, substantially in the form and content of Exhibit C annexed to the Arrangement Agreement, with such changes thereto as may be made, from time to time, in accordance with its terms;

“ holder ” means, when used with reference to any LIPO Canada Securities or LIPO USA Securities, the holder of such securities shown from time to time on the applicable securities register maintained by or on behalf of LIPO Canada or LIPO USA, as the case may be in respect of such securities and, when used with reference to any Exchangeable Shares, means the holder of such Exchangeable Shares shown from time to time on the securities register maintained by or on behalf of Exchangeco in respect of such Exchangeable Shares;

“Interim Order” means the interim order of the Court made in connection with the process for obtaining securityholder approval of the Arrangement and related matters;

“IPO Price” means the price per share at which Lululemon Common Shares are sold to the public pursuant to Lululemon’s initial public offering, provided that if such price is expressed in United States dollars, “IPO Price” shall mean the Canadian dollar equivalent of the price at which Lululemon Common Shares are sold to the public pursuant to Lululemon’s initial public offering, determined based on the noon spot exchange rate on the Effective Date for Canadian dollars as reported by the Federal Reserve Bank of New York;

“ITA” means the Income Tax Act (Canada);

“LIPO Canada” means LIPO Investments (Canada) Inc., a company existing under the laws of the Province of British Columbia;

“LIPO CANADA Amount” means the aggregate number of Lululemon Common Shares and Exchangeable Shares issuable in exchange for the LIPO CANADA SHARES hereunder, determined in accordance with the Reorganization Agreement;

“LIPO Canada Meeting” means the extraordinary general meeting of the holders of LIPO Canada Shares and LIPO Canada Options (including any adjournment thereof) that is to be convened as provided by the Interim Order to consider and, if deemed advisable, approve the Arrangement;

“LIPO Canada Option” means a Class B option to purchase LIPO Canada Shares granted under the LIPO Canada Option Plan and being outstanding and unexercised on the Effective Date;

“LIPO Canada Option Plan” means the LIPO Canada stock option plan approved by the board of directors of LIPO Canada on December 1, 2005;

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“LIPO Canada Securities” means the LIPO Canada Shares and the LIPO Canada Options, collectively;

“LIPO Canada Shares” means the outstanding Common Shares without par value in the authorized share structure of LIPO Canada;

“LIPO USA” means LIPO Investments (USA) Inc., a company existing under the laws of the Province of British Columbia;

“LIPO USA Meeting” means the extraordinary general meeting of the holders of LIPO USA Shares and LIPO USA Options (including any adjournment thereof) that is to be convened as provided by the Interim Order to consider and, if deemed advisable, approve the Arrangement;

“LIPO USA Option” means a Class B option to purchase LIPO USA Shares granted under the LIPO USA Option Plan and being outstanding and unexercised on the Effective Date;

“LIPO USA Option Plan” means the LIPO USA stock option plan approved by the board of directors of LIPO USA on December 1, 2005;

“LIPO USA Securities” means the LIPO USA Shares and the LIPO USA Options, collectively;

“LIPO USA Shares” means the outstanding Common Shares without par value in the authorized share structure of LIPO USA;

“Liquidation Call Purchase Price” has the meaning assigned in Section 5.1(a);

“Liquidation Call Right” has the meaning assigned in Section 5.1(a);

“Liquidation Date” has the meaning assigned in the Exchangeable Share Provisions;

“Lululemon” means lululemon athletica inc., a corporation existing under the laws of the State of Delaware;

“Lululemon Common Share” means a share of common stock, par value U.S. $0.01, in the capital of Lululemon and any other securities into which such share may be changed;

“Lululemon Control Transaction” has the meaning assigned in the Exchangeable Share Provisions;

“Lululemon Elected Share” means any LIPO Canada Share that the holder shall have elected, by written notice to Exchangeco no later than the Election Deadline, to transfer to Lululemon under the Arrangement for Lululemon Common Shares

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“Meeting Date” means the date of the Meetings;

“Meetings” means the LIPO Canada Meeting and the LIPO USA Meeting;

“Non-Forfeitable Shares” means all LIPO Canada Shares not designated as Forfeitable Shares;

“Person” includes any individual, firm, partnership, joint venture, venture capital fund, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, company, unincorporated association or organization, government body, syndicate or other entity, whether or not having legal status;

“Redemption Call Purchase Price” has the meaning assigned in Section 5.2(a);

“Redemption Call Right” has the meaning assigned in Section 5.2(a);

“Redemption Date” has the meaning assigned in the Exchangeable Share Provisions;

“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, as amended, supplemented and/or restated in accordance there with prior to effective date;

“Replacement Option” has the meaning assigned in Section 2.3(b);

“Special Voting Shares” means the shares of special voting stock, with a par value of $0.00001, in the capital of Lululemon and other securities into which such shares may be changed;

“Transfer Agent” means Computershare Investor Services Inc. or such other Person as may from time to time be appointed by Exchangeco as the registrar and transfer agent for the Exchangeable Shares;

“ Trustee ” means Computershare Trust Company of Canada, in its capacity as trustee under the Exchange Trust Agreement, and includes any successor trustee appointed thereunder; and

“Vested LIPO Canada Option” means that part of a LIPO Canada Option which is exercisable, as of the Effective Date, in accordance with the terms of such option and the LIPO Canada Option Plan.

1.2 Sections and Headings .

The division of this Plan of Arrangement into sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of this Plan of Arrangement. Unless otherwise indicated, any reference in this Plan of Arrangement to a section or an exhibit refers to the specified section of or exhibit to this Plan of Arrangement.

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1.3 Number, Gender and Persons .

In this Plan of Arrangement, unless the context otherwise requires, words importing the singular number include the plural and vice versa and words importing any gender include all genders.

1.4 Date for any Action .

If any date on which any action is required to be taken under this Plan of Arrangement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.

ARTICLE 2

ARRANGEMENT

2.1 Arrangement Agreement .

This Plan of Arrangement is made pursuant to, is subject to the provisions of and forms a part of the Arrangement Agreement.

2.2 Binding Effect .

This Plan of Arrangement will become effective at, and be binding at and after, the Effective Time on (i) LIPO Canada and LIPO USA, (ii) Lululemon, Callco and Exchangeco, (iii) all holders of LIPO Canada Shares and LIPO USA Shares, (iv) all holders and all beneficial holders of Exchangeable Shares, and (v) all holders of LIPO Canada Options and LIPO USA Options.

2.3 Arrangement .

Commencing at the Effective Time, the following shall occur and shall be deemed to occur in the following order and be effective at the time stated, in each case without any further act or formality:

(a)

at the Effective Time, the terms of the LIPO Canada Option Plan and the LIPO USA Option Plan shall be amended to read as set forth in the respective amended and restated option plans attached as Appendices 2 and 3 hereto, respectively;

(b)

five minutes following the step contemplated in Section 2.3(a), each Vested LIPO Canada Option will be exchanged by the holder thereof for an option (a “ Replacement Option ”) to purchase such number of LIPO Canada Shares as is equal to the quotient obtained by dividing (i) the difference of the aggregate Fair Market Value of the LIPO Canada Shares subject thereto, less the aggregate exercise price thereof, by (ii) the aggregate Fair Market Value of one LIPO Canada Share. Such Replacement Option will provide for an exercise price equal to $0.0001 per share, rounded up to the nearest whole $0.01. The term to expiry, conditions to and manner of exercise, vesting schedule and other terms and conditions of each of the Replacement Options shall be the same as the terms and conditions of the original LIPO Canada Option for which it is exchanged;

(c)

at the time of the step contemplated in Section 2.3(b), each Replacement Option will be immediately exercised for the number of LIPO Canada Shares set out therein and the exercise price in respect thereof shall be released to LIPO Canada;

(d)

at the time of the step contemplated in Section 2.3(b), each LIPO Canada Option or part thereof which is not a Vested LIPO Canada Option will be exchanged by the holder thereof with LIPO USA for an option to purchase such number of LIPO USA Shares as is equal to the

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quotient obtained by dividing (i) the difference of the aggregate Fair Market Value of the LIPO Canada Shares subject thereto less the aggregate exercise price thereof, by (ii) the difference of the Fair Market Value of one LIPO USA Share less $0.01. Such option will provide for an exercise price per LIPO USA Share equal to $0.01 per share. The term to expiry, conditions to and manner of exercise, vesting schedule and other terms and conditions of each such option shall be the same as the terms and conditions of the LIPO Canada Option for which it is exchanged;

(e)

five minutes following the step contemplated in Section 2.3(c), all LIPO Canada Options described in Section 2.3(d) will be cancelled for no consideration;

(f)

five minutes following the step contemplated in Section 2.3(e), each Non-Forfeitable Share will be transferred from the registered owner thereof to the beneficial owner thereof as identified in the securities register of LIPO Canada, and the name of such registered holder will be removed from the register of holders of LIPO Canada and such beneficial holders will be recorded as the sole registered holders thereof;

(g)

five minutes following the step contemplated in Section 2.3(f), the LIPO Canada Shares and the LIPO USA Shares held by Dissenting Shareholders in respect of which such Dissenting Shareholders have exercised rights of dissent pursuant to the Dissent Procedures and have not withdrawn their notice of dissent will be deemed to have been transferred to LIPO Canada or LIPO USA, as applicable, and such holders will cease to have any rights as shareholders other than the right to be paid the fair value of their LIPO Canada Shares and their LIPO USA Shares as set out in Section 3.1;

(h)

five minutes following the step contemplated in Section 2.3(g), each Lululemon Elected Share will be transferred by the holder thereof to Lululemon in exchange for that number of fully paid and non-assessable Lululemon Common Shares equal to the Exchange Ratio and the name of each such holder will be removed from the register of holders of LIPO Canada Shares and added to the register of holders of Lululemon Common Shares, and Lululemon will be recorded as the registered holder of such LIPO Canada Shares so exchanged and will be deemed to be the legal and beneficial owner thereof;

(i)

at the time contemplated in Section 2.3(h), each Exchangeable Elected Share will be transferred by the holder thereof to Exchangeco in exchange for (i) that number of fully paid and non-assessable Exchangeable Shares equal to the Exchange Ratio and the name of each such holder will be removed from the register of holders of LIPO Canada Shares and added to the register of holders of Exchangeable Shares and Exchangeco will be recorded as the registered holder of such LIPO Canada Shares so exchanged and will be deemed to be the legal and beneficial owner thereof and all such Exchangeable Shares issued in exchange for Forfeitable Shares will be issued subject to, and will be governed by, the Forfeitable Share Trust Declaration;

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(j)

at the time contemplated in Section 2.3(h), the rights under the Exchange Trust Agreement (the “Ancillary Rights”) corresponding to the Exchangeable Shares issued pursuant to Section 2.3(i) will be transferred to the holders described in Section 2.3(i) and the holders described in Section 2.3(i) will subscribe for and will be issued that number of fully paid and non-assessable Special Voting Shares as is equivalent to the number of Exchangeable Shares issued to such holders pursuant to Section 2.3(i), and the subscription price for such Special Voting Shares and the consideration for the Ancillary Rights will be released to Lululemon, and the name of each holder will be added to the register of holders of Special Voting Shares and all such Special Voting Shares issued to holders of Forfeitable Shares will be issued subject to, and will be governed by, the Forfeitable Share Trust Declaration;

(k)

at the time contemplated in Section 2.3(h), each LIPO Canada Share in respect of which no election has been made by the holder thereof, or in respect of which an effective election has not been made (other than LIPO Canada Shares held by Dissenting Shareholders who are ultimately entitled to be paid the fair value of the LIPO Canada Shares held by them) will be deemed to be an Exchangeable Elected Share and will be transferred by the holder thereof to Exchangeco in exchange for that number of fully paid and non-assessable Exchangeable Shares equal to the Exchange Ratio and the name of each such holder will be removed from the register of holders of LIPO Canada Shares and added to the register of holders of Exchangeable Shares, and Exchangeco will be recorded as the registered holder of such LIPO Canada Shares so exchanged and will be deemed to be the legal and beneficial owner thereof and all such Exchangeable Shares issued in exchange for Forfeitable Shares will be issued subject to, and will be governed by, the Forfeitable Share Trust Declaration; and

(l);

at the time contemplated in Section 2.3(h), the Ancillary Rights corresponding to the Exchangeable shares issued pursuant to Section 2.3(k) will be transferred to the holders described in Section 2.3(k) and the holders described in Section 2.3(k) will subscribe for and will be issued that number of fully paid and non-assessable Special Voting Shares as is equivalent to the number of Exchangeable Shares issued to such holders pursuant to Section 2.3(k), and the subscription price for such Special Voting Shares and the consideration for the Ancillary Rights will be released to Lululemon, and the name of each such holder will be added to the register of holders of Special Voting Shares and all such Special Voting Shares issued to holders of Forfeitable Shares will be issued subject to, and will be governed by, the Forfeitable Share Trust Declaration.

2.4 Elections

(a)

Each Person who, at or prior to the Election Deadline, is a holder of record of LIPO Canada Shares, will be entitled, with respect to all or a portion of such shares, to make an election at or prior to the Election Deadline to receive Exchangeable Shares or Lululemon Common Shares, or a combination thereof, in exchange for such holder’s LIPO Canada Shares, on the basis set forth herein.

(b)

Holders of LIPO Canada Shares who are Canadian Residents, other than any such holder who is exempt from tax under the ITA, and who have elected to receive Exchangeable Shares shall be entitled to make an income tax election pursuant to subsection 85(1) of the ITA or, if the holder is a partnership, subsection 85(2) of the ITA (and in each case, where applicable, the analogous provisions of provincial income tax law) with respect to the transfer of their LIPO Canada Shares to Exchangeco by providing two signed copies of the necessary election forms to Exchangeco within 90 days following the Effective Date, duly completed with the details of the number of shares transferred and the applicable agreed amounts for the purposes of such elections. Thereafter, subject to the election forms complying with the provisions of the ITA (or applicable provincial income tax law), the forms will be signed by Exchangeco and returned to such former holders of LIPO Canada Shares within 30 days after the receipt thereof by Exchangeco for filing with the Canada Revenue Agency (or the applicable provincial taxing authority). Exchangeco will not be responsible for the proper completion of any election form and, except for Exchangeco’s obligation to sign and return duly completed election forms which are received by Exchangeco within 90 days of the Effective Date, within 30 days after the receipt thereof by Exchangeco, Exchangeco will not be responsible for any taxes,

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interest or penalties resulting from the failure by a holder of LIPO Canada Shares to properly complete or file the election forms in the form and manner and within the time prescribed by the ITA (or any applicable provincial legislation). In its sole discretion, Exchangeco may choose to sign and return an election form received by Exchangeco more than 90 days following the Effective Date, but Exchangeco will have no obligation to do so.

2.5 Adjustments to Exchange Ratio .

The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Lululemon Common Shares or LIPO Canada Shares), reorganization, recapitalization or other like change with respect to Lululemon Common Shares or LIPO Canada Shares occurring after the date of the Arrangement Agreement and prior to the Effective Time.

ARTICLE 3

RIGHTS OF DISSENT

3.1 Rights of Dissent .

Holders of LIPO Canada Shares or LIPO USA Shares may exercise rights of dissent with respect to such shares pursuant to and in the manner set forth in Sections 237 to 247 of the BCA and this Section 3.1 (the “ Dissent Procedures ”) in connection with the Arrangement; provided that, notwithstanding subsection 242(a) of the BCA, the written objection to the Arrangement Resolution referred to in subsection 242(a) of the BCA must be received by LIPO Canada or LIPO USA (as applicable) not later than 5:00 p.m. (Vancouver time) on the last Business Day preceding the Meeting Date. Holders of LIPO Canada Shares or LIPO USA Shares who duly exercise such rights of dissent and who:

(a)

are ultimately entitled to be paid fair value for such shares in respect of which they have exercised rights of dissent shall be deemed to have irrevocably transferred such shares to LIPO Canada or LIPO USA, as applicable, pursuant to Section 2.3(g); or

(b)

are ultimately not entitled, for any reason, to be paid fair value for their LIPO Canada Shares or LIPO USA Shares shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of LIPO Canada Shares or LIPO USA Shares, as applicable and shall, in the case of a holder of LIPO Canada shares, receive Exchangeable Shares on the basis determined in accordance with Section 2.3(i),

but in no case shall Lululemon, Exchangeco, Callco, LIPO Canada, LIPO USA or any other Person be required to recognize such holders as holders of LIPO Canada Shares or LIPO USA Shares after the Effective Time, and the names of such holders of LIPO Canada Shares or LIPO USA Shares shall be deleted from the applicable registers of holders at the Effective Time.

ARTICLE 4

CERTIFICATES AND FRACTIONAL SHARES

4.1 Issuance of Certificates Representing Exchangeable Shares .

Where a holder has elected in accordance with Article 2 to receive Exchangeable Shares in exchange for such holder’s LIPO Canada Shares, Exchangeco shall, as soon as practicable following the later of the Effective Date and the surrender to LIPO Canada for cancellation of certificates representing such holder’s LIPO Canada Shares, together with such other documents and instruments as would have been

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required to effect the transfer of the shares formerly represented by such certificates under the BCA and the articles of LIPO Canada and such additional documents and instruments as Exchangeco may reasonably require including all such documents or certificates as Exchangeco may reasonably require to ensure compliance with applicable US securities laws, deliver to such holder a certificate representing that number (rounded down to the nearest whole number) of Exchangeable Shares which such holder has the right to receive (together with any dividends or distributions with respect thereto pursuant to Section 4.3) and the certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of LIPO Canada Shares that are or are deemed to be Exchangeable Elected Shares which is not registered in the transfer records of LIPO Canada, a certificate representing the proper number of Exchangeable Shares may be issued to the transferee if the certificate representing such LIPO Canada Shares is presented to Exchangeco, accompanied by all documents required to evidence and effect such transfer to the transferee. Until surrendered as contemplated by this Section 4.1, each certificate which immediately prior to the Effective Time represented LIPO Canada Shares that are or are deemed to be Exchangeable Elected Shares shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) the certificate representing Exchangeable Shares as contemplated by this Section 4.1; (ii) the Ancillary Rights; and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to Exchangeable Shares as contemplated by Section 4.3.

4.2 Exchange of Certificates for Lululemon Common Shares .

Where a holder has elected or is deemed to have elected in accordance with Article 2 to receive Lululemon Common Shares in exchange for such holder’s LIPO Canada Shares, Lululemon shall, as soon as practicable following the later of the Effective Date and the surrender to LIPO Canada for cancellation of certificates representing such holder’s LIPO Canada Shares, together with such other documents and instruments as would have been required to effect the transfer of the shares formerly represented by such certificates under the BCA and the articles of LIPO Canada and such additional documents and instruments as Lululemon may reasonably require (including all such documents or certificates as Lululemon may reasonably require to ensure compliance with applicable US securities laws), deliver to such holder that number (rounded down to the nearest whole number) of Lululemon Common Shares (which delivery may be in the form of certificates or in book-entry form through the direct registration system) which such holder has the right to receive (together with any dividends or distributions with respect thereto pursuant to Section 4.3) and the certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of LIPO Canada Shares that are or are deemed to be Lululemon Elected Shares which is not registered in the transfer records of LIPO Canada, a certificate representing the proper number of Lululemon Common Shares may be issued to the transferee if the certificate representing such LIPO Canada Shares is presented to Lululemon, accompanied by all documents required to evidence and effect such transfer to the transferee. Until surrendered as contemplated by this Section 4.2, each certificate which immediately prior to the Effective Time represented one or more outstanding LIPO Canada Shares that are Lululemon Elected Shares shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) the certificate representing Lululemon Common Shares as contemplated by this Section 4.2, and (ii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to Lululemon Common Shares as contemplated by Section 4.3.

4.3 Distributions with Respect to Unsurrendered Certificates .

No dividends or other distributions declared or made after the Effective Time with respect to Exchangeable Shares or Lululemon Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding LIPO Canada Shares that were exchanged pursuant to Section 2.3, unless and until the holder of record of such certificate shall surrender such certificate in accordance with Section 4.1 or 4.2.

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Subject to applicable law, at the time of such surrender of any such certificate (or in the case of clause (ii) below, at the appropriate payment date), there shall be paid to the holder of record of the certificates representing whole LIPO Canada Shares, without interest, (i) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Exchangeable Share or Lululemon Common Share, as the case may be, and (ii) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole Exchangeable Share or Lululemon Common Share, as the case may be.

4.4 No Fractional Shares .

No certificates or scrip representing fractional Exchangeable Shares or fractional Lululemon Common Shares shall be issued upon the surrender for exchange of certificates pursuant to Section 4.1 and 4.2 and no dividend, stock split or other change in the capital structure of Exchangeco or Lululemon shall relate to any such fractional security and such fractional interests shall not entitle the owner thereof to exercise any rights as a security holder of Exchangeco or Lululemon, as the case may be. The aggregate number of Exchangeable Shares and the aggregate number of Lululemon Common Shares for which no certificates are issued as a result of the foregoing provisions of this Section 4.4 shall be deemed to have been surrendered by the owners thereof to Exchangeco for no additional consideration at the Effective Time.

4.5 Lost Certificates .

In the event any certificate which immediately prior to the Effective Time represented one or more outstanding LIPO Canada Shares that were exchanged pursuant to Section 2.3 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, Exchangeco or Lululemon as the case may be will issue in exchange for such lost, stolen or destroyed certificate, cash and/or one or more certificates representing one or more Exchangeable Shares or Lululemon Common Shares (and any dividends or distributions with respect thereto) deliverable in respect thereof. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom certificates representing Exchangeable Shares or Lululemon Common Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to Exchangeco or Lululemon, as the case may be, and their respective transfer agents in such sum as Exchangeco or Lululemon, as the case may be, may direct or otherwise indemnify Exchangeco or Lululemon, as the case may be, in a manner satisfactory to Exchangeco or Lululemon, as the case may be, against any claim that may be made against Exchangeco or Lululemon, as the case may be, with respect to the certificate alleged to have been lost, stolen or destroyed.

4.6 Extinction of Rights .

Any certificate which immediately prior to the Effective Time represented outstanding LIPO Canada Shares that were exchanged pursuant to Section 2.3 and not deposited, with all other instruments required by Section 4.1 or 4.2, on or prior to the third anniversary of the Effective Date shall cease to represent a claim or interest of any kind or nature as a shareholder of Exchangeco or Lululemon. On such date, the Exchangeable Shares or Lululemon Common Shares to which the former registered holder of the certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered to Exchangeco or Lululemon, as the case may be, together with all entitlements to dividends, distributions and interest thereon held for such former registered holder. None of Lululemon, Exchangeco, Callco or LIPO Canada shall be liable to any person in respect of any Lululemon Common Shares or Exchangeable Shares (or dividends, distributions and interest in respect thereof) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

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4.7 Withholding and Sale Rights .

Each of Exchangeco, Callco, Lululemon and LIPO USA shall be entitled to deduct and withhold from (i) any Lululemon Common Shares, Exchangeable Shares, LIPO USA Options or other consideration otherwise issuable or payable pursuant to this Plan of Arrangement to any holder of LIPO Canada Shares who is not a Canadian Resident, or (ii) any dividend or consideration otherwise payable to any holder of LIPO Canada Shares, Lululemon Common Shares or Exchangeable Shares, such amounts as Exchangeco, Callco, Lululemon or LIPO USA, respectively, is required to deduct and withhold with respect to such issuance or payment, as the case may be, under the ITA, the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case as amended. To the extent that the amount so required to be deducted or withheld from the Lululemon Common Shares, dividends or consideration otherwise issuable or payable to a holder exceeds the cash portion of the consideration otherwise payable to such holder, each of Exchangeco, Callco, Lululemon and LIPO USA is hereby authorized to sell or otherwise dispose of, at such times and at such prices as it determines, in its sole discretion, such portion of the Lululemon Common Shares, Exchangeable Shares, LIPO USA Options or other non-cash consideration otherwise issuable or payable to such holder as is necessary to provide sufficient funds to Exchangeco, Callco, Lululemon or LIPO USA, as the case may be, to enable it to comply with such deduction or withholding requirement, and shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale or disposition (after deducting applicable sale commissions and any other reasonable expenses relating thereto) in lieu of the Lululemon Common Shares or other consideration so sold or disposed of. To the extent that amounts are so withheld or Lululemon Common Shares , Exchangeable Shares, LIPO USA Options or other consideration are so sold or disposed of, such withheld amounts, or shares or other consideration so sold or disposed of, shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction, withholding, sale or disposition was made, provided that such withheld amounts, or the net proceeds of such sale or disposition, as the case may be, are actually remitted to the appropriate taxing authority. None of Exchangeco, Callco, Lululemon or LIPO USA shall be obligated to seek or obtain a minimum price for any of the Lululemon Common Shares or other consideration sold or disposed of by it hereunder, nor shall any of them be liable for any loss arising out of any such sale or disposition.

ARTICLE 5

CERTAIN RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES

5.1 Callco Liquidation Call Right

(a)

Callco shall have the overriding right (the “ Liquidation Call Right ”), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Exchangeco pursuant to Article 5 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is an Affiliate of Lululemon) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco of an amount per share (the “ Liquidation Call Purchase Price ”) equal to the Current Market Price of a Lululemon Common Share on the last Business Day prior to the Liquidation Date, which, if such right is exercised, shall be satisfied in full by Callco causing to be delivered to such holder one Lululemon Common Share, plus, to the extent not paid by Exchangeco, an additional amount equivalent to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of purchase by Callco (the “ Dividend Amount ”).

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(b)

To exercise the Liquidation Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Exchangeco of Callco’s intention to exercise such right at least 45 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of Exchangeco and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of Exchangeco. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not Callco has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Liquidation Call Right, then on the Liquidation Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price.

(c)

For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, Callco shall deposit with the Transfer Agent, on or before the Liquidation Date, the aggregate number of Lululemon Common Shares deliverable by Callco (which delivery may be in the form of certificates or in book-entry form through the direct registration system) and a cheque or cheques of Callco payable upon presentation at any branch of the bankers of Callco representing the aggregate Dividend Amount in payment of the total Liquidation Call Purchase Price, less any amounts withheld pursuant to Section 4.7 hereof. Provided that Callco has complied with the immediately preceding sentence, on and after the Liquidation Date the rights of each holder of Exchangeable Shares will be limited to receiving the Liquidation Call Purchase Price in respect of each Exchangeable Share held by such holder, payable by Callco upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Liquidation Date be considered and deemed for all purposes to be the holder of the Lululemon Common Shares to which it is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the BCA and the articles of Exchangeco and such additional documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall deliver to such holder, the Lululemon Common Shares to which the holder is entitled (which delivery may be in the form of certificates or in book-entry form through the direct registration system) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco in payment of the remaining portion, if any, of the total Liquidation Call Purchase Price, less any amounts withheld pursuant to Section 4.7 hereof. If Callco does not exercise the Liquidation Call Right in the manner described above or if Callco exercises the Liquidation Call Right but fails to complete such transaction in accordance with the requirements set out in this Section 5.1, on the Liquidation Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the liquidation price otherwise payable by Exchangeco in connection with the liquidation, dissolution or winding-up of Exchangeco pursuant to Article 5 of the Exchangeable Share Provisions.

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5.2 Callco Redemption Call Right .

Callco shall have the rights contained in the Exchangeable Share Provisions, including, without limitation, the Retraction Call Right (as defined in the Exchangeable Share Provisions). In addition, Callco shall have the following rights in respect of the Exchangeable Shares:

(a)

Callco shall have the overriding right (the “ Redemption Call Right ”), notwithstanding the proposed redemption of the Exchangeable Shares by Exchangeco pursuant to Article 7 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is an Affiliate of Lululemon) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco to each holder of an amount per Exchangeable Share (the “ Redemption Call Purchase Price ”) equal to the Current Market Price of a Lululemon Common Share on the last Business Day prior to the Redemption Date, which shall be satisfied in full by Callco causing to be delivered to such holder one Lululemon Common Share, plus the Dividend Amount. In the event of the exercise of the Redemption Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Redemption Date on payment by Callco to the holder of the Redemption Call Purchase Price for each such share, and Exchangeco shall have no obligation to redeem, or to pay any Dividend Amount in respect of, such shares so purchased by Callco.

(b)

To exercise the Redemption Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Exchangeco of Callco’s intention to exercise such right at least 60 days before the Redemption Date, except in the case of a redemption occurring as a result of a Lululemon Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, in which case Callco shall so notify the Transfer Agent and Exchangeco on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not Callco has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Redemption Call Right, on the Redemption Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price.

(c)

For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, Callco shall deposit with the Transfer Agent, on or before the Redemption Date, the aggregate number of Lululemon Common Shares deliverable by Callco (which delivery may be in the form of certificates or in book-entry form through the direct registration system) and a cheque or cheques of Callco payable upon presentation at any branch of the bankers of Callco representing the aggregate Dividend Amount in payment of the total Redemption Call Purchase Price, less any amounts withheld pursuant to Section 4.7 hereof. Provided that Callco has complied with the immediately preceding sentence, on and after the Redemption Date the rights of each holder of Exchangeable Shares will be limited to receiving the Redemption Call Purchase Price in respect of each Exchangeable Share held by such holder, payable by Callco upon presentation and surrender by the holder of

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certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Redemption Date be considered and deemed for all purposes to be the holder of the Lululemon Common Shares to which it is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the BCA and the articles of Exchangeco and such additional documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall deliver to such holder, the Lululemon Common Shares to which the holder is entitled (which may be in the form of certificates or in book-entry form through the direct registration system) less any amounts withheld pursuant to Section 4.7 hereof. If Callco does not exercise the Redemption Call Right in the manner described above or if Callco exercises the Redemption Call Right but fails to complete such transaction in accordance with the requirements set out in this Section 5.2, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the redemption price otherwise payable by Exchangeco in connection with the redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions.

ARTICLE 6

AMENDMENTS

6.1 LIPO Canada and LIPO USA may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that each such amendment, modification and/ or supplement must be (i) set out in writing, (ii) approved by Lululemon, (iii) filed with the Court and, if made following the Meetings, approved by the Court, and (iv) communicated to holders of LIPO Canada Securities and LIPO USA Securities if and as required by the Court.

6.2 Any amendment, modification or supplement to this Plan of Arrangement may be proposed by LIPO Canada or LIPO USA at any time prior to the Meetings (provided that each such company and Lululemon shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Meetings (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.

6.3 Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Meetings shall be effective only if (i) it is consented to by each of LIPO Canada, LIPO USA and Lululemon, and (ii) if required by the Court, it is consented to by holders of the LIPO Canada Securities and LIPO USA Securities voting in the manner directed by the Court.

6.4 Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date unilaterally by Lululemon, provided that it concerns a matter which, in the reasonable opinion of Lululemon, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any holder of LIPO Canada Securities or LIPO USA Securities.

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ARTICLE 7

FURTHER ASSURANCES

7.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done or executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order to further document or evidence any of the transactions or events set out herein.

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APPENDIX 1

PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES OF

LULU CANADIAN HOLDING, INC.

The Exchangeable Shares shall have the following rights, privileges, restrictions and conditions:

ARTICLE 1

INTERPRETATION

For the purposes of these share provisions:

“ Arrangement Agreement ” means the arrangement agreement made as of the 26th day of April, 2007 among Lululemon, Callco, Exchangeco, LIPO Investments (USA), Inc. and LIPO Investments (Canada), Inc., as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement;

“ Board of Directors ” means the board of directors of the Company;

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

“ Canadian Dollar Equivalent ” means in respect of an amount expressed in a currency other than Canadian dollars (the “ Foreign Currency Amount ”) at any date the product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose;

“ Callco ” means Lululemon Callco ULC, an unlimited liability company existing under the laws of the Province of Alberta and an indirect wholly-owned subsidiary of Lululemon;

“ Callco Call Notice ” has the meaning assigned in Section 6.3 of these share provisions;

“ Common Shares ” means the common shares in the capital of the Company;

“ Company ” means Lulu Canadian Holding, Inc., a company existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of Lululemon;

“ Court ” means the Supreme Court of British Columbia;

“ Current Market Price ” means, in respect of a Lululemon Common Share on any date, the Canadian Dollar Equivalent of the average of the closing bid and asked prices of Lululemon Common Shares during a period of 20 consecutive trading days ending not more than three trading days before such date on the NASDAQ, or, if the Lululemon Common Shares are not then listed on the NASDAQ, on such other stock exchange or automated quotation system on which the Lululemon Common Shares are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if in the opinion of the Board of Directors the public distribution or trading activity of Lululemon Common Shares during such period does not create a market which reflects the fair market value of a Lululemon Common Share, then the Current Market Price of a Lululemon Common Share shall be determined by the Board of Directors, in good faith and in its sole discretion, and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding;

“ Dividend Amount ” means an amount equal to and in satisfaction of all declared and unpaid dividends on each Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase of such shares by Callco or the Company, as the case may be, from such holder;

“ Exchangeable Share Voting Event ” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Company, other than an Exempt Exchangeable Share Voting Event;

“ Exchangeable Shares ” means the non-voting exchangeable shares in the capital of the Company, having the rights, privileges, restrictions and conditions set forth herein;

“ Exchange Trust Agreement ” means the Exchange Trust Agreement made among Lululemon, the Company and the Trustee, to be entered into in connection with the Plan of Arrangement, substantially in the form and content of Exhibit C to the Reorganization Agreement, with such changes thereto as the parties thereto, acting reasonably, may approve, in accordance with the terms thereof;

“ Exempt Exchangeable Share Voting Event ” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Company in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the economic equivalence of the Exchangeable Shares and the Lululemon Common Shares;

“ Liquidation Amount ” has the meaning assigned in Section 5.1 of these share provisions;

“ Liquidation Call Right ” has the meaning assigned in the Plan of Arrangement;

“ Liquidation Date ” has the meaning assigned in Section 5.1 of these share provisions;

“ Lululemon ” means Lululemon Corp., a Delaware corporation;

“ Lululemon Common Share ” means a share of common stock, par value U.S. $0.01, in the capital of Lululemon and any other securities into which such share may be changed;

“ Lululemon Control Transaction ” means any merger, amalgamation, tender offer, material sale of shares or rights or interests therein or thereto or similar transactions involving Lululemon, or any proposal to do so;

“ Lululemon Dividend Declaration Date ” means the date on which the board of directors of Lululemon declares any dividend on the Lululemon Common Shares;

“ Lululemon Extraordinary Distribution ” means any issue or distribution to the holders of all or substantially all of the outstanding Lululemon Common Shares of (a) shares or other securities of Lululemon of any class or type other than Lululemon Common Shares, (b) evidences of indebtedness of Lululemon or property or assets (other than cash) of Lululemon, or (c) shares or other securities or evidences of indebtedness or property or assets of any Person, or any proposal to carry out the same;

“ NASDAQ ” means the NASDAQ Global Market;

“ Purchase Price ” has the meaning assigned in Section 6.3 of these share provisions;

“ Redemption Call Purchase Price ” has the meaning assigned in the Plan of Arrangement;

“ Redemption Call Right ” has the meaning assigned in the Plan of Arrangement;

“ Redemption Date ” means the date, if any, established by the Board of Directors for the redemption by the Company of all but not less than all of the outstanding Exchangeable Shares pursuant to Section 7.1 of these share provisions, which date shall be no earlier than the date 40 years after the Effective Date, unless:

(a)

there are outstanding less than 10% of actual number of Exchangeable Shares to be issued pursuant to the Plan of Arrangement as determined at the Effective Date (other than Exchangeable Shares held by Lululemon and its subsidiaries) as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares) in respect of the Exchangeable Shares pursuant to these provisions), in which case the Board of Directors may accelerate such redemption date to such date prior to the date 40 years after the Effective Date as it may determine, upon at least 60 days’ prior written notice to the registered holders of the Exchangeable Shares and the Trustee;

(b)

a Lululemon Control Transaction or Lululemon Extraordinary distribution occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Lululemon Control Transaction or Lululemon Extraordinary Distribution and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Lululemon Control Transaction or Lululemon Extraordinary Distribution in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to the date 40 years after the Effective Date as it may determine, upon such number of days’ prior written notice to the registered holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances;

(c)

an Exchangeable Share Voting Event is proposed, in which case, provided that the Board of Directors has determined, in good faith and in its sole discretion, that it is not reasonably practicable to accomplish the business purpose intended by the Exchangeable Share Voting Event, which business purpose must be bona fide and not for the primary purpose of causing the occurrence of a Redemption Date, in any other commercially reasonable manner that does not result in an Exchangeable Share Voting Event, the redemption date shall be the Business Day prior to the record date for any meeting or vote of the holders of the Exchangeable Shares to consider the Exchangeable Share Voting Event and the Board of Directors shall give such number of days’ prior written notice of such redemption to the registered holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances; or

(d)

an Exempt Exchangeable Share Voting Event is proposed and the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event, in which case the redemption date shall be the Business Day following the day on which the holders of the Exchangeable Shares failed to take such action,

provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a)(b), (c) or (d) above to less than 10% of such holders of Exchangeable Shares shall not affect the validity of any such redemption;

“ Redemption Price ” has the meaning assigned in Section 7.1 of these share provisions;

“ Reorganization Agreement ” means the Agreement and Plan of Reorganization dated as of the 26th day of April, 2007 by and among Lululemon, Lululemon Athletica USA, Inc., Lululemon Athletica Inc., LIPO Investments (USA), Inc., LIPO Investments (Canada), Inc., Callco, the Company and certain other parties;

“ Retracted Shares ” has the meaning assigned in Section 6.1(a) of these share provisions;

“ Retraction Call Right ” has the meaning assigned in Section 6.1(c) of these share provisions;

“ Retraction Date ” has the meaning assigned in Section 6.1(b) of these share provisions;

“ Retraction Price ” has the meaning assigned in Section 6.1 of these share provisions;

“ Retraction Request ” has the meaning assigned in Section 6.1 of these share provisions;

“ Special Voting Shares ” means the shares of special voting stock, without par value, in the capital of Lululemon and any other securities into which such shares may be changed;

“ Support Agreement ” means the Support Agreement to be made among Lululemon, Callco and the Company, which shall be substantially in the form and content of Exhibit D to the Reorganization Agreement, with such changes thereto as the parties thereto, acting reasonably, may approve, in accordance with the terms thereof;

“ Transfer Agent ” means Computershare Investor Services Inc. or such other Person as may from time to time be appointed by Exchangeco as the registrar and transfer agent for the Exchangeable Shares; and

“ Trustee ” means Computershare Trust Company of Canada, in its capacity as trustee under the Exchange Trust Agreement, and includes any successor trustee appointed thereunder.

ARTICLE 2

RANKING OF EXCHANGEABLE SHARES

2.1

The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company, among its shareholders for the purpose of winding up its affairs.

ARTICLE 3

DIVIDENDS

3.1	A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each Lululemon Dividend Declaration Date, declare a dividend on each Exchangeable Share:

(a)

in the case of a cash dividend declared on the Lululemon Common Shares, in an amount in cash for each Exchangeable Share in U.S. dollars, or the Canadian Dollar Equivalent thereof on the Lululemon Dividend Declaration Date, in each case, corresponding to the cash dividend declared on each Lululemon Common Share;

(b)

in the case of a stock dividend declared on the Lululemon Common Shares to be paid in Lululemon Common Shares by the issue or transfer by the Company of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Lululemon Common Shares to be paid on each Lululemon Common Share; or

(c)

in the case of a dividend declared on the Lululemon Common Shares in property other than cash or Lululemon Common Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent to (to be determined by the Board of Directors as contemplated by Section 3.5 hereof) the type and amount of property declared as a dividend on each Lululemon Common Share.

Such dividends shall be paid out of money, assets or property of the Company properly applicable to the payment of dividends, or out of authorized but unissued shares of the Company, as applicable.

3.2

In the case of a stock dividend declared on the Lululemon Common Shares to be paid in Lululemon Common Shares, in lieu of declaring the stock dividend contemplated by section 3.1(b) on the Exchangeable Shares, the Board of Directors may, in good faith and in its sole discretion and subject to applicable law and to obtaining all required regulatory approvals, subdivide, redivide or change (the “ Subdivision ”) each issued and unissued

Exchangeable Share on the basis that each Exchangeable Share before the Subdivision becomes a number of Exchangeable Shares equal to the sum of (A) one Lululemon Common Share and (B) the number of Lululemon Common Shares to be paid as a share dividend on each Lululemon Common Share. In making such Subdivision, the Board of Directors shall consider the effect thereof upon the then outstanding Exchangeable Shares and the general taxation consequences of the Subdivision to the holders of the Exchangeable Shares. In such instance, and notwithstanding any other provision hereof, such Subdivision shall become effective on the effective date specified in Section 3.4 without any further act or formality on the part of Lululemon, the Board of Directors or of the holders of Exchangeable Shares.

3.3

Cheques of the Company payable at par at any branch of the bankers of the Company shall be issued in respect of any cash dividends contemplated by Section 3.1(a) hereof and the sending of such a cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates representing the Exchangeable Shares paid as a stock dividend pursuant to Section 3.1(b) or any Subdivision contemplated by Section 3.2 registered in the name of the registered holder of Exchangeable Shares may be issued or transferred in respect of any stock dividends contemplated by Section 3.1(b) or any Subdivision contemplated by Section 3.2 hereof and the delivery of such a certificate (or the delivery of such Exchangeable Shares in book-entry form through the direct registration system) to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by Section 3.1(c) hereof shall be issued, distributed or transferred by the Company in such manner as it shall determine and the issuance, distribution or transfer thereof by the Company to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Company any dividend that is represented by a cheque that has not been duly presented to the Company’s bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable.

3.4

The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the Lululemon Common Shares. The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any Subdivision of the Exchangeable Shares under Section 3.2 and the effective date of such Subdivision shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the Lululemon Common Shares.

3.5

If on any payment date for any dividends declared on the Exchangeable Shares under Section 3.1 hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Company shall have sufficient moneys, assets or property properly applicable to the payment of such dividends.

3.6	The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of Sections 3.1 and 3.2, and each such determination shall be conclusive and binding on the Company and its shareholders.

In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors:

(a)

in the case of any stock dividend or distribution payable in Lululemon Common Shares, the number of such shares issued in proportion to the number of Lululemon Common Shares previously outstanding;

(b)

(c)

in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of Lululemon of any class other than Lululemon Common Shares, any rights, options or warrants other than those referred to in Section 3.6(b) above, any evidences of indebtedness of Lululemon or any assets of Lululemon), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Lululemon Common Share and the Current Market Price;

(d)

(e)

in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the general taxation consequences to holders of Lululemon Common Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates without regard to the individual circumstances of holders of Exchangeable Shares).

3.7	Except as provided in this Article 3, the holders of Exchangeable Shares shall not be entitled to receive dividends in respect thereof. Notwithstanding any provisions of this Article 3 to the contrary, if the Purchase Price is paid to a holder of Exchangeable Shares

by Callco pursuant to the Retraction Call Right, the Redemption Call Purchase Price is paid to a holder of Exchangeable Shares pursuant to the Redemption Call Right, the Liquidation Amount is paid to a holder of Exchangeable Shares pursuant to the Liquidation Call Right, or if the purchase price is paid to a holder of an Exchangeable Shares by Lululemon pursuant to the Automatic Exchange Rights or the Exchange Right, the holder of the Exchangeable Share shall cease to have any right to be paid any amount by the Company in respect of any unpaid dividends on such Exchangeable Shares.

ARTICLE 4

CERTAIN RESTRICTIONS

4.1	So long as any of the Exchangeable Shares are outstanding, the Company shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Section 11.2 of these share provisions:

(a)

pay any dividends on the Common Shares or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in Common Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be;

(b)

redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares;

(c)

redeem or purchase any other shares of the Company ranking equally with the Exchangeable Shares with respect to the payment of dividends or on any liquidation distribution; or

(d)

issue any Exchangeable Shares or any other shares of the Company ranking equally with, or superior to, the Exchangeable Shares other than by way of stock dividends to the holders of such Exchangeable Shares.

The restrictions in Sections 4.1(a), (b), (c) and (d) above shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the Lululemon Common Shares shall have been declared and paid on the Exchangeable Shares.

ARTICLE 5

DISTRIBUTION ON LIQUIDATION

5.1

In the event of the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Company in respect of each Exchangeable Share held by such holder on the effective date (the “ Liquidation Date ”) of such liquidation, dissolution or winding-up, before any distribution of any part of the assets of the Company among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per Exchangeable Share (the “ Liquidation Amount ”) equal to the Current Market Price of a Lululemon Common

Share on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by the Company causing to be delivered to such holder, for each such Exchangeable Share, one Lululemon Common Share plus an amount equal to all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Liquidation Date.

5.2

On or promptly after the Liquidation Date, and subject to the exercise by Callco of the Liquidation Call Right, the Company shall cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of such Exchangeable Shares and such additional documents and instruments as the Transfer Agent and the Company may reasonably require, at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares. Payment of the total Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Company for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, on behalf of the Company, of the Lululemon Common Shares to which the holder is entitled (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance), either in the form of certificates representing the Lululemon Common Shares or, in whole or in part, in book-entry form through the direct registration system and, if applicable, a cheque of the Company payable at par at any branch of the bankers of the Company in respect of the remaining portion, if any, of the total Liquidation Amount (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom). On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of the documents and instruments required in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Liquidation Amount has been paid in the manner hereinbefore provided. The Company shall have the right at any time after the Liquidation Date to deposit or cause to be deposited the total Liquidation Amount in a custodial account with any chartered bank or trust company in Canada. Upon such deposit being made, the rights of the holders of Exchangeable Shares after such deposit shall be limited to receiving their proportionate part of the total Liquidation Amount (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) for such Exchangeable Shares so deposited, against presentation and surrender of the required documents and instruments in accordance with the foregoing provisions. Upon such payment or deposit of the total Liquidation Amount, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the Lululemon Common Shares delivered to them or the custodian on their behalf.

5.3	After the Company has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to Section 5.1 of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of the Company.

ARTICLE 6

RETRACTION OF EXCHANGEABLE SHARES BY HOLDER

6.1

A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Callco of the Retraction Call Right and otherwise upon compliance with the provisions of this Article 6, to require the Company to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per Exchangeable Share equal to the Current Market Price of a Lululemon Common Share on the last Business Day prior to the Retraction Date (the “ Retraction Price ”), which shall be satisfied in full by the Company causing to be delivered to such holder, for each Exchangeable Share presented and surrendered by the holder, one Lululemon Common Share and any Dividend Amount. To effect such redemption, the holder shall present and surrender at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Company redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares and such additional documents and instruments as the Transfer Agent and the Company may reasonably require, and together with a duly executed statement (the “ Retraction Request ”) in the form of Schedule A hereto or in such other form as may be acceptable to the Company:

(a)

specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the “ Retracted Shares ”) redeemed by the Company;

(b)

stating the Business Day on which the holder desires to have the Company redeem the Retracted Shares (the “ Retraction Date ”), provided that the Retraction Date shall be not less than 5 Business Days nor more than 15 Business Days after the date on which the Retraction Request is received by the Company and further provided that, in the event that no such Business Day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the 5th Business Day after the date on which the Retraction Request is received by the Company; and

(c)

acknowledging the overriding right (the “ Retraction Call Right ”) of Callco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the terms and conditions set out in Section 6.3 below.

6.2	Subject to the exercise by Callco of the Retraction Call Right, upon receipt by the Company or the Transfer Agent in the manner specified in Section 6.1 of a certificate or

certificates, if any, representing the number of Retracted Shares, together with a Retraction Request and the other documents and instruments required in accordance with Section 6.1, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.7, the Company shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall cause to be delivered to such holder the total Retraction Price and any Dividend Amount thereon. If only a part of the Exchangeable Shares is redeemed (or purchased by Callco pursuant to the Retraction Call Right), the holder thereof shall receive at the expense of the Company (either in the form of a certificate, or in book-entry form through the direct registration system) the balance of such Exchangeable Shares.

6.3

Upon receipt by the Company of a Retraction Request, the Company shall immediately notify Callco thereof and shall provide to Callco a copy of the Retraction Request. In order to exercise the Retraction Call Right, Callco must notify the Company of its determination to do so (the “ Callco Call Notice ”) within three Business Days of notification to Callco by the Company of the receipt by the Company of the Retraction Request. If Callco does not so notify the Company within such three Business Day period, the Company will notify the holder as soon as possible thereafter that Callco will not exercise the Retraction Call Right. If Callco delivers the Callco Call Notice within such three Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.7, the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right. In such event, the Company shall not redeem the Retracted Shares and Callco shall purchase from such holder and such holder shall sell to Callco on the Retraction Date the Retracted Shares for a purchase price (the “ Purchase Price ”) per share equal to the Retraction Price per share, plus on the designated payment date therefor, to the extent not paid by the Company on the designated payment date therefor, any Dividend Amount. To the extent that Callco pays the Dividend Amount in respect of the Retracted Shares, the Company shall no longer be obligated to pay any declared and unpaid dividends on such Retracted Shares. Provided that Callco has complied with Section 6.4, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Company of such Retracted Shares shall take place on the Retraction Date. In the event that Callco does not deliver a Callco Call Notice within such three Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.7), the Company shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Article 6.

6.4

The Company or Callco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder, at the address of the holder recorded in the securities register of the Company for the Exchangeable Shares or at the address specified in the holder’s Retraction Request or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, the Lululemon Common Shares to which the holder is entitled (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance), either in

the form of certificates representing the Lululemon Common Shares registered in the name of the holder or in such other name as the holder may request or, in whole or in part, in book-entry form through the direct registration system, and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of the Company or Callco, as applicable, representing the aggregate Dividend Amount, in payment of the total Retraction Price or the total Purchase Price, as the case may be, in each case, less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such Lululemon Common Shares and cheques on behalf of the Company or by Callco, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the total Retraction Price or total Purchase Price, as the case may be, to the extent that the same is represented by such Lululemon Common Shares and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority).

6.5

On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total Retraction Price or total Purchase Price, as the case may be, unless upon presentation and surrender of the documents and instruments in accordance with the foregoing provisions, payment of the total Retraction Price or the total Purchase Price, as the case may be, shall not be made as provided in Section 6.4, in which case the rights of such holder shall remain unaffected until the total Retraction Price or the total Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of the documents and instruments in accordance with the foregoing provisions and payment of the total Retraction Price or the total Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Company or purchased by Callco shall thereafter be considered and deemed for all purposes to be a holder of the Lululemon Common Shares delivered to it.

6.6

Notwithstanding any other provision of this Article 6, the Company shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If the Company believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares, the Company shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Company. In any case in which the redemption by the Company of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, the Company shall redeem Retracted Shares in accordance with Section 6.2 of these share provisions on a pro rata basis and the holder of Retracted Shares shall receive at the Company’s expense (either in the form

of a certificate or in book-entry form through the direct registration system) the Retracted Shares not redeemed by the Company pursuant to Section 6.2. Provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.7, the holder of any such Retracted Shares not redeemed by the Company pursuant to Section 6.2 of these share provisions as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to require Callco, to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by Callco as the case may be, to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided in the Exchange Trust Agreement.

6.7

A holder of Retracted Shares may, by notice in writing given by the holder to the Company before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Callco shall be deemed to have been revoked.

ARTICLE 7

REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY

7.1

Subject to applicable law, and provided Callco has not exercised the Redemption Call Right, the Company shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per Exchangeable Share equal to the Current Market Price of a Lululemon Common Share on the last Business Day prior to the Redemption Date (the “ Redemption Price ”), which shall be satisfied in full by the Company causing to be delivered to each holder of Exchangeable Shares, for each Exchangeable Share held by such holder, one Lululemon Common Share, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date.

7.2

In any case of a redemption of Exchangeable Shares under this Article 7, the Company shall, at least 60 days before the Redemption Date (other than a Redemption Date established in connection with a Lululemon Control Transaction, a Lululemon Extraordinary Distribution, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Company or the purchase by Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with a Lululemon Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, the written notice of redemption by the Company or the purchase by Callco under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors of the Company to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right.

7.3

On or after the Redemption Date and subject to the exercise by Callco of the Redemption Call Right, the Company shall cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, if any, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date, upon presentation and surrender at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company in such notice of the certificates representing such Exchangeable Shares, if any, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares and such additional documents and instruments as the Transfer Agent and the Company may reasonably require. Payment of the total Redemption Price for such Exchangeable Shares, together with payment of such dividends, shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Company or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company in such notice, on behalf of the Company, of the Lululemon Common Shares to which the holder is entitled (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance), either in the form of certificates representing the Lululemon Common Shares or, in whole or in part, in book-entry form through the direct registration system, and, if applicable, a cheque of the Company payable at par at any branch of the bankers of the Company in payment of any such dividends, in each case, less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Redemption Price and any such dividends, unless payment of the total Redemption Price and any such dividends for such Exchangeable Shares shall not be made upon presentation and surrender of the documents and instruments required in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Redemption Price and any such dividends have been paid in the manner hereinbefore provided. The Company shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the total Redemption Price for and the full amount of such dividends on (except as otherwise provided in this Section 7.3) the Exchangeable Shares so called for redemption, in a custodial account with any chartered bank or trust company in Canada named in such notice, less any amounts withheld on account of tax required to be deducted and withheld therefrom. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the total Redemption Price and such dividends for such Exchangeable Shares so called for redemption, against presentation and surrender of the documents and instruments required in accordance with the foregoing provisions. Upon such payment or

deposit of the total Redemption Price and the full amount of such dividends, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the Lululemon Common Shares delivered to them or the custodian on their behalf.

ARTICLE 8

PURCHASE FOR CANCELLATION

8.1	Subject to applicable law and notwithstanding Section 8.2, the Company may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares by private agreement with any holder of Exchangeable Shares for consideration consisting of Lululemon Common Shares.

8.2

Subject to applicable law, the Company may at any time and from time to time purchase for cancellation all or any part of the outstanding Exchangeable Shares at any price by tender to all the holders of record of Exchangeable Shares then outstanding or through the facilities of any stock exchange on which the Exchangeable Shares are listed or quoted at any price per share. If in response to an invitation for tenders under the provisions of this Section 8.2 more Exchangeable Shares are tendered at a price or prices acceptable to the Company than the Company is prepared to purchase, the Exchangeable Shares to be purchased by the Company shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Company, provided that when shares are tendered at different prices, the pro rating shall be effected (disregarding fractions) only with respect to the shares tendered at the price at which more shares were tendered than the Company is prepared to purchase after the Company has purchased all the shares tendered at lower prices. If part only of the Exchangeable Shares shall be purchased, the holder thereof shall receive at the expense of the Company (either in the form of a certificate or in book-entry form through the direct registration system) the balance of such shares.

ARTICLE 9

TRANSFERABILITY

9.1

A holder of Exchangeable Shares may transfer its Exchangeable Shares only if the holder transfers the same number of Special Voting Shares to the same transferee. The Company shall not recognize any transfer of Exchangeable Shares if the same number of Special Voting Shares is not transferred to the same transferee of the transferred Exchangeable Shares.

ARTICLE 10

VOTING RIGHTS

10.1	Except as required by applicable law and by Article 11 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Company or to vote at any such meeting.

ARTICLE 11

AMENDMENT AND APPROVAL

11.1

The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed but only with the approval of the holders of the Exchangeable Shares given as hereinafter specified, provided that any adjustment to the number of Lululemon Common Shares into which an Exchangeable Share is exchangeable (which initially is one) made by the Board of Directors, acting in good faith, in accordance with section 2.7 of the Support Agreement to reflect the effect of any event in order to implement the required economic equivalent with respect to the Lululemon Common Shares and the Exchangeable Shares shall not require the approval of the holders of the Exchangeable Shares.

11.2

Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law subject to a minimum requirement that such approval be evidenced by a resolution consented to in writing by the holders of not less than two-thirds of the then outstanding Exchangeable Shares or passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 25% of the outstanding Exchangeable Shares at that time are present or represented by proxy.

ARTICLE 12

RECIPROCAL CHANGES, ETC. IN RESPECT OF

LULULEMON COMMON SHARES

12.1

Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that so long as any Exchangeable Shares not owned by Lululemon or its subsidiaries are outstanding, and other than as provided in the Support Agreement, Lululemon will not without the prior approval of the Company and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12.2 of these share provisions:

(a)

issue or distribute Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) to the holders of all or substantially all of the then outstanding Lululemon Common Shares by way of stock dividend or other distribution, other than an issue of Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) to holders of Lululemon Common Shares who (i) exercise an option to receive dividends in Lululemon Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Lululemon Common Shares) in lieu of receiving cash dividend, or (ii) pursuant to any dividend reinvestment plan; or

(b)

(c)

issue or distribute to the holders of all or substantially all of the then outstanding Lululemon Common Shares:

(i)

shares or securities of Lululemon of any class other than Lululemon Common Shares (other than shares convertible into or exchangeable for or carrying rights to acquire Lululemon Common Shares);

(ii)

rights, options or warrants other than those referred to in Section 12.1(b) above;

(iii)

evidences of indebtedness of Lululemon; or

(iv)

assets of Lululemon,

12.2	Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that Lululemon will not without the prior approval of the Company and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of these share provisions:

(a)

subdivide, redivide or change the then outstanding Lululemon Common Shares into a greater number of Lululemon Common Shares;

(b)

reduce, combine, consolidate or change the then outstanding Lululemon Common Shares into a lesser number of Lululemon Common Shares; or

(c)

reclassify or otherwise change the Lululemon Common Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Lululemon Common Shares,

unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares. The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of these share provisions.

ARTICLE 13

ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT

13.1

The Company will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by Lululemon, Callco and the Company with all provisions of the Support Agreement applicable to Lululemon, Callco and the Company, respectively, in accordance with the terms thereof including, without limitation, taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Company all rights and benefits in favour of the Company under or pursuant to such agreement.

13.2

The Company shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of:

(a)

adding to the covenants of any or all parties to such agreement provided that the Board of Directors shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares;

(b)

making such amendments or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion that such amendments and modifications will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; or

(c)

making such changes in or corrections to such agreement which, on the advice of counsel to the Company, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such changes or corrections will not be prejudicial to the interests of the holders of the Exchangeable Shares.

ARTICLE 14

LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS

14.1

Any certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Plan of Arrangement relating to the Liquidation Call Right and the Redemption Call Right, and the Exchange Trust Agreement (including the provisions with respect to the exchange right and automatic exchange thereunder).

14.2

Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of Callco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Company or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Callco as therein provided.

14.3

The Company and Callco shall be entitled, and may instruct the Transfer Agent, to deduct and withhold from any dividend or consideration otherwise payable to any holder of Exchangeable Shares such amounts as the Company or Callco is required or permitted to deduct and withhold with respect to such payments (i) under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case, as amended or succeeded, or (ii) required or permitted in order to comply with Section 116 of the Income Tax Act (Canada) or any corresponding provisions of provincial law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the persons otherwise entitled thereto, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required or permitted to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, the Company, Callco and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to the Company, Callco or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and the Company, Callco or the Transfer Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale.

ARTICLE 15

NOTICES

15.1

Any notice, request or other communication to be given to the Company by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by facsimile or by delivery to the registered office of the Company and addressed to the attention of the President of the Company. Any such notice, request or other communication, if given by mail, facsimile or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Company.

15.2

Any presentation and surrender by a holder of Exchangeable Shares to the Company or the Transfer Agent of certificates, if any, representing Exchangeable Shares and the other documents and instruments required to be delivered by a holder of Exchangeable Shares in accordance with these share provisions in connection with the liquidation, dissolution or winding-up of the Company or the retraction or redemption of Exchangeable Shares shall be made by registered mail (postage prepaid) or by delivery to the registered office of the Company or to such office of the Transfer Agent as may be specified by the Company, in each case, addressed to the attention of the President of the Company. Any such presentation and surrender of certificates, if any, and such other documents and

instruments shall only be deemed to have been made and to be effective upon actual receipt thereof by the Company or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates, if any, and such other documents and instruments made by registered mail shall be at the sole risk of the holder mailing the same.

15.3

Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Company shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by delivery to the address of the holder recorded in the securities register of the Company or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Company pursuant thereto.

15.4

If the Company determines that mail service is or is threatened to be interrupted at the time when the Company is required or elects to give any notice to the holders of Exchangeable Shares hereunder, the Company shall, notwithstanding the provisions hereof, give such notice by means of courier or electronic transmission to such holders.

ARTICLE 16

FRACTIONAL SHARES

16.1

As soon as practicable after any exchange of Exchangeable Shares pursuant to these share provisions, the Company shall direct the Transfer Agent (i) to determine the number of, if any, whole and fractional Lululemon Common Shares allocable to the holder of Exchangeable Shares exchanged hereunder, (ii) to aggregate all such fractional shares and sell the whole shares obtained thereby at the direction of the Company either in open market transactions or otherwise, in each case at then prevailing trading prices, and (iii) to cause to be distributed to such holder in lieu of any fractional share, such holder’s rateable share of the proceeds of such sale, after making appropriate deductions of the amount required to be withheld for tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale.

Exhibit 4.1

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EXHIBIT 5.1

DLA Piper LLP (US)

701 Fifth Avenue, Suite 7000

Seattle, Washington 98104-7044

www.dlapiper.com

T 206.839.4800

F 206.839.4801

January 4, 2013

lululemon athletica inc.

400 – 1818 Cornwall Avenue

Vancouver, British Columbia

Canada V6J 1C7

Re:

lululemon athletica inc.

Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to lululemon athletica inc., a Delaware corporation (the “ Company ”), in connection with the preparation of the Registration Statement on Form S-3 (the “ Registration Statement ”) to be filed on the date hereof by the Company with the Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ Act ”), relating to the registration of 32,378,680 shares of the Company’s common stock, par value $0.005 per share, which shares (the “ Company Shares ”) may be issued from time to time pursuant to Rule 415 under the Act upon the exchange, redemption or purchase of the exchangeable shares (the “ Exchangeable Shares ”) of Lulu Canadian Holding, Inc. (“ Lulu Canada ”), or upon the liquidation, dissolution or winding up of Lulu Canada, described in the Registration Statement.

In connection with this opinion we have examined and relied upon (i) the Registration Statement, (ii) the Company’s Amended and Restated Certificate of Incorporation, as amended, and Third Amended and Restated Bylaws, each as currently in effect, (iii) certain resolutions adopted by the Board of Directors of the Company relating to the registration and issuance of the Company Shares, (iv) the Agreement and Plan of Reorganization dated as of April 26, 2007, by and among the parties named therein (the “ Reorganization Agreement ”), the Exchange Trust Agreement, dated July 26, 2007, between the Company, Lulu Canada and Computershare Trust Company of Canada (the “ Trust Agreement ”), the Exchangeable Share Support Agreement, dated July 26, 2007, between the Company, Lululemon Callco ULC and Lulu Canada (the “ Support Agreement ”), the Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares, dated July 26, 2007, by and among the parties named therein (the “ Declaration of Trust ”), the Amended and Restated Arrangement Agreement dated as of June 18, 2007, by and among the parties named therein (the “ Arrangement Agreement ”), and the Plan of Arrangement and Exchangeable Share Provisions dated as of June 18, 2007, by and among the parties named therein (the “ Plan of Arrangement ,” and together with the Reorganization Agreement, the Trust Agreement, the Support Agreement, the Declaration of Trust, and the Arrangement Agreement, collectively, the “ Exchangeable Shares Documents ”), each as included as an exhibit to the Registration Statement, and (v) such other instruments, documents and records that we have deemed relevant and necessary or appropriate for the basis of our opinion hereinafter expressed. In such examination, we have assumed (a) the authenticity of

original documents and the genuineness of all signatures, (b) the conformity to the originals of all documents submitted to us as copies, (c) the truth, accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed, and (d) the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof.

We are opining herein as to the effect on the subject transactions only of the corporate laws of the State of Delaware, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Delaware, any other laws, or as to any matters of municipal law or the laws of any local agencies within any state.

Based on the foregoing, and in reliance thereon, we are of the opinion that the Company Shares have been duly authorized and, when issued in accordance with the Exchangeable Shares Documents, will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the Commission in connection with the Registration Statement and further consent to the use of our name under the heading “Legal Matters” in the prospectus forming part of the Registration Statement. In giving such consent, we do not believe we are “experts” within the meaning of such term as used in the Act, or the rules promulgated thereunder, with respect to any part of the Registration Statement, including the opinion as an exhibit or otherwise. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

Respectfully submitted,

/s/ DLA Piper LLP (US)

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EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated March 22, 2012 relating to the consolidated financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in lululemon athletica inc.’s Annual Report on Form 10-K for the year ended January 29, 2012. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

signed “PricewaterhouseCoopers LLP”

Chartered Accountants

Vancouver, BC

January 4, 2013

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