RETIREMENT, TRANSITION AND RELEASE AGREEMENT

RETIREMENT, TRANSITION AND RELEASE AGREEMENT

     THIS RETIREMENT, TRANSITION AND RELEASE AGREEMENT (this “ Release ”) is made on this 6th day of May, 2008 (the “ Effective Date ”) by and between ROBERT MEERS (the “ Executive ”) lululemon athletica canada inc. (formerly, Lululemon Athletica Inc.), a company incorporated under the laws of British Columbia (the “ Subsidiary ”), and lululemon athletica, inc., a company incorporated under the laws of Delaware (the “ Company ”).

     WHEREAS, the Executive has announced his intent to resign as a member of the Board of Directors of the Company, and as an officer and director of all the Company’s affiliates, immediately prior to the Company’s 2008 annual meeting of stockholders (presently scheduled for June 4, 2008) and to retire from employment with the Company on June 30, 2008 (the “ Termination Date ”) (the period beginning on the Effective Date and ending on the Termination Date is hereinafter referred to as the “ Transition Period ”); and

     WHEREAS, the Subsidiary and the Executive are parties to that certain employment agreement dated December 5, 2005, pursuant to which the Executive agreed to serve as the Chief Executive Officer of the Subsidiary in exchange for certain rights and benefits (the “ Employment Agreement ”) and the Executive is also employed as the Chief Executive Officer of the Company; and

     WHEREAS, the Company granted to the Executive two non-qualified stock options (each, an “ Option ,” and collectively, the “ Options ”), which Options apply with respect to an aggregate of 2,787,224 shares of the Company’s common stock; and

     WHEREAS, the Options are evidenced by a Non-Qualified Stock Option Agreement between the Company and the Executive dated November 28, 2007 with respect to 501,802 shares of the Company’s common stock and a Non-Qualified Stock Option Agreement between the Company and the Executive dated November 28, 2007 with respect 2,285,422 shares of the Company’s common stock (each, an “ Option Agreement ,” and collectively, the “ Option Agreements ”); and

     WHEREAS, the Executive has executed a Fixed Option Exercise Date Election dated December 24, 2007 with respect to each Option (each, a “ 409A Election ” and collection, the “ 409A Elections ”); and

     WHEREAS, the Executive is willing to assist the Company in the transition of his duties to other Company employees through the Termination Date; and

     WHEREAS, the Company has agreed to provide the Executive with certain additional rights, subject to the execution of and compliance with this Release and a Second Release (as described below).

     NOW THEREFORE, in consideration of these premises and the mutual promises contained herein, and intending to be legally bound hereby, the parties agree as follows:

     1.      Transition Period; Cessation of Service .

          1.1.     During the Transition Period, the Executive will continue to provide services to the Company as the Chief Executive Officer of the Company and will devote substantially all his business time and services to the Company. During the Transition Period, Executive will continue to be paid his base salary and participate in the Company’s group insurance programs, in the manner and to the extent provided in Sections 1.1 and 2.4 of the Employment Agreement.

          1.2.     The Executive hereby resigns from the Board of Directors of the Company (and as an officer and director of all the Company’s affiliates) effective immediately prior to the commencement of the Company’s 2008 annual meeting of stockholders (currently scheduled for June 4, 2008) or, if such annual meeting has not occurred prior the Termination Date, effective 12:01 a.m. (EST) on the Termination Date.

          1.3.     The Executive hereby resigns from employment with the Company and all the Company’s affiliates (and resigns his position as Chief Executive Officer of the Company) effective 12:01 a.m. (EST) on the Termination Date.

          1.4.     The Executive will execute such additional written confirmations of the resignations set out in Sections 1.2 and 1.3 as shall be reasonably requested by the Company.

          1.5.     The Company will reimburse the Executive for any life insurance and disability insurance premiums (pro rata through the Termination Date) and any reasonable business expenses as provided under Sections 2.6 and 3 of the Employment Agreement, within 30 days of submission of proper invoices.

          1.6.     As soon as administratively practicable following the Termination Date, but in any event no later than 30 days following the Termination Date, the Executive will vacate the Company-provided apartment currently used by him and return his Company-provided automobile.

          1.7.     Following the Termination Date, the Company, through its carrier, will provide the Executive with information and notice of his rights to elect to continue Executive’s group health care coverage under the Company’s health and welfare benefit plans, at his own expense, pursuant to the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985.

          1.8.     For the period beginning on the Termination Date and ending on January 31, 2009, the Executive agrees that, during normal business hours, he will remain available via telephone and, with reasonable advance notice, for limited in-person meetings, to assist in an orderly transition of his duties to other employees of the Company. The Executive further agrees that during the two-year period following the Termination Date, he will cooperate with the Company, its affiliates and their counsel with respect to the Company’s defense of any litigation, investigations, or governmental proceedings that relates in any way to the Executive’s period of service with the Company or its affiliates. The Company will promptly reimburse the Executive for all reasonable and documented expenses incurred in connection with providing his cooperation under this Section 1.8.

     2.      Consideration; Acknowledgements .

          2.1.     The Executive will be entitled to receive a special cash bonus from the Company in respect of the Company’s 2008 fiscal year of up to US$ 219,113, based on the Company’s and the Executive’s performance for such fiscal year under the Company’s 2008 Executive Bonus Plan (assuming the Executive achieved the highest possible rating under such plan during such period and assuming the same level of financial goal achievement as applies to other executives under the 2008 Executive Bonus Plan). Such bonus payable under this Section 2.1 will be paid on April 1, 2009 and will be subject to withholding by the Company for all applicable taxes.

          2.2.     The Executive acknowledges that, other than the Options, he does not hold any options to acquire capital stock of the Company or its affiliates.

          2.3.     The Options are presently vested and exercisable with respect to 70% of the shares subject thereto (351,261 shares and 1,599,795 shares, respectively), including those portions of the Options described in Section 5(a)(iii) of each Option Agreement. The Executive acknowledges that the post-termination exercise of the portions of the Options discussed in this paragraph continue to be governed by Section 7 of the Company’s 2007 Equity Incentive Plan (the “ Plan ”). Therefore, assuming the cessation of his employment occurs at the time and in the manner described above in Section 1 , those portions of the Options discussed in this paragraph will expire on the 90 ^th day following the Termination Date, to the extent not exercised on or prior to that date.

          2.4.     The Company agrees that the Options will become vested with respect to an additional 7.5% of the shares subject thereto (37,635 shares and 171,407 shares, respectively) on the Effective Date. However, in compliance with Treas. Reg. § 1.409A-3(i)(2), the portions of the Options discussed in this paragraph will be exercisable only during the period beginning six months after the Termination Date and ending March 15, 2009 and, to the extent not exercised during that period, will then expire. The preceding sentence amends and supersedes Section 3(c) of each 409A Election.

          2.5.     The portions of the Options not discussed in the preceding two paragraphs (with respect to 112,906 shares and 514,220 shares, respectively) are hereby terminated.

          2.6.     The Executive hereby acknowledges and agrees that the payment and rights described in Sections 2.1 and 2.4 above are contingent on (i) his execution and delivery of, and compliance with, this Release, (ii) his execution and delivery of a release agreement substantially in the form attached hereto as Exhibit A (the “ Second Release ”) within 21 days following the Termination Date, and (iii) his compliance in all material respects with that Second Release and the restrictive covenants contained in Section 6 of the Employment Agreement (the “ Restrictive Covenants ”). For avoidance of doubt, if Executive revokes this Release or the Second Release, or breaches any of the Restrictive Covenants in any material respects, he will have no right (x) to receive the payment described above in Section 2.1 , or (y) to exercise those portions of the Options described above in Section 2.4 , and those portions of the Options will instead expire immediately.

          2.7.     The Executive acknowledges that except as otherwise specifically provided herein: (i) he has no further entitlement under the Employment Agreement (including, without limitation, Sections 2 and 5 of the Employment Agreement), other than rights to indemnification under Section 4 of the Employment Agreement, (ii) the cessation of his employment by the Company and its affiliates will not entitle him to any severance pay or benefits under the Employment Agreement or under any other severance or similar arrangement maintained by the Company or any of its affiliates, and (iii) neither the Company nor any of its affiliates have or will have any liability or obligation to him. The Executive further acknowledges that, in the absence of his execution of this Release and the Second Release, the payment and rights specified above in Sections 2.1 and 2.4 would not otherwise be due to him.

          2.8.     The Company hereby consents to the termination of the Non-Discretionary Option Exercise and Sale Plan adopted by him on December 24, 2007 (the “ 10b5-1 Plan ”) effective as of 12:01 a.m. on June 18, 2008 and, following such termination, to the sale by the Executive of any shares of Company common stock obtained through the exercise of stock options, subject to compliance during the Transition Period with the Company’s Policy Statement on Dealing with Company Information, Including Inside Information and Securities Insider Trading for Directors, Executive Officers, Senior Managers and Finance Department (the “ Policy ”), which consent shall be deemed to satisfy the pre-clearance procedures of the Policy. The Executive agrees not to sell any shares of the Company&rsqu