WHEREAS, the Executive is an individual qualified by education and experience to serve the
Company in positions of substantial authority and responsibility; and
WHEREAS, the Company wishes to employ Executive pursuant to the terms and conditions set forth
in this Agreement; and
WHEREAS, the Executive desires to be so employed by the Company; and
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:
1.1. Term. This Agreement shall automatically become effective immediately upon the
Closing Date, as defined in the Stock Purchase Agreement dated December 5, 2005, by and between
Lulu Holding, Inc., Advent International GPE V Limited Liability Partnership and certain other
parties, and will continue for a period of four years after that Closing Date, unless terminated
sooner in accordance with Section 5 of this Agreement.
1.2. Positions and Duties. The Executive will serve as the Chief Executive Officer of
the Company, reporting directly to the Companys Board of Directors (the Board). The
Executive shall devote his best efforts and substantially all of his business time and services to
the Company and its affiliates to perform such duties as may be customarily incident to such
position and as may reasonably be assigned to him from time to time.
1.3. Place of Performance. The Executive shall perform his services hereunder at the
principal executive offices of the Company; provided, however, that the Executive will be required
to travel from time to time for business purposes.
2.1. Base Salary. The Executive shall receive an annual salary of CAD $584,300 (the
Base Salary), payable in accordance with the Companys payroll practices as in effect
from time to time.
2.2. Annual Bonuses.
2.2.1. Beginning in 2006, for each fiscal year ending during the Term, Executive will be
eligible for an annual bonus of up to 75% percent of his Annual Salary for the applicable fiscal
year, if specified corporate and individual performance goals are met for that year.
2.2.2. The corporate and individual performance goals relevant under this Section 2.2
for any particular fiscal year will be determined by the Board, in its sole discretion, and will be
communicated to Executive following the Boards adoption of the Companys budget for that fiscal
2.2.3. Any bonuses payable under this Section 2.2 will be paid within thirty (30) days
following the approval by the audit committee of the Board of the Companys audited financial
statements for the applicable fiscal year.
2.2.4. For purposes of determining any bonus payable to Executive, the measurement of
corporate and individual performance will be performed by the compensation committee of the Board
in good faith. From time to time, the Board may make adjustments to corporate or individual
performance goals, so that required departures from the Companys operating budget, changes in
accounting principles, acquisitions, dispositions, mergers, consolidations and other corporate
transactions, and other factors influencing the achievement or calculation of such goals do not
affect the operation of this provision in a manner inconsistent with the achievement of its
2.3. Stock Options
. As soon as practicable following the Closing Date, the Company
will grant or cause to be granted to the Executive an option to purchase common stock in each of
the Company and Lululemon Athletica
USA, Inc. in substantially the form as attached hereto as
; provided, however
, that for avoidance of doubt, the Executive acknowledges and
agrees that under circumstances described in Article IV of the Lulu Holding, Inc. Stockholders
Agreement dated December 5, 2005 by and among Lulu Holding, Inc. and certain of its stockholders (a
copy of which has been provided to the Executive), each such option may be replaced with an option
to purchase stock of Lulu Holding, Inc. in the manner described in that Article IV.
2.4. Employee Benefits. The Executive will be eligible to participate in
retirement/savings, health insurance, term life insurance, long term disability insurance and other
employee benefit plans, policies or arrangements maintained by the Company for its employees
generally, subject to the terms and conditions of such plans, policies or arrangements; provided,
however, that this Agreement will not limit the Companys ability to amend, modify or terminate
such plans, policies or arrangements at any time for any reason.
2.5. Vacations. In addition to holidays observed by the Company, the Executive shall
be entitled to three (3) weeks paid vacation time during each year of employment, per existing
Company policy. Vacation days that remain unused at the end of any year will accrue or expire to
the extent provided by Company policy, as in effect from time to time.
2.6. Life and Disability Insurance Allowance. Upon submission of proper invoices, the
Company will reimburse the Executive up to CAD $17,500 annually for premiums payable with respect
to supplemental term life insurance and/or long-term disability insurance.
3. Reimbursement of Expenses. The Executive will be reimbursed by the Company for all
reasonable business expenses incurred by him in accordance with the Companys customary expense
reimbursement policies as in effect from time to time.
4. Indemnification. The Company will indemnify Executive for and defend Executive
from claims arising from the Executives good faith performance of his duties as an employee of the
Company to the extent provided in the Articles of the Company.
5. Termination. Upon cessation of his employment with the Company, the Executive will
be entitled only to such compensation and benefits as described in this Section 5.
5.1. Termination without Cause. If the Executives employment by the Company is
terminated by the Company without Cause (as defined below) the Executive will be entitled to:
5.1.1. payment of all accrued and unpaid Base Salary through the date of such termination;
5.1.2. payment for all unused vacation and personal days accrued through the date of such
5.1.3. monthly severance payments equal to one-twelfth of the Executives Base Salary as of
the date of such termination for a period equal to the greater of (a) 24 months or, (b) the period
remaining until the fourth anniversary of the Closing Date; and
5.1.4. payment of any otherwise unpaid annual bonus payable under Section 2.2 with
respect to the fiscal year ending prior to the date of such termination.
Except as otherwise provided in this Section 5.1, all compensation and benefits will cease
at the time of such termination, subject to the terms of any benefits or compensation plans then in
force and applicable to the Executive, and the Company shall have no further liability or
obligation by reason of such termination. The payments and benefits described in this Section
5.1 are in lieu of, and not in addition to, any other severance arrangement maintained by the
Company. Notwithstanding any provision of this Agreement, the payments and benefits described in
Section 5.1 are conditioned on the Executives execution and delivery to the Company of a
release substantially identical to that attached hereto as Exhibit B in a manner consistent
with the requirements of applicable law (the Release). The severance benefits described
in Sections 5.1.1, 5.1.2, and 5.1.3 will be paid or commence to be paid as soon as the
Release becomes effective. The severance benefits described in Section 5.1.4 will be paid
when annual bonuses would otherwise be paid under Section 2.2, provided the Release is then
5.2. Other Terminations. If the Executives employment with the Company ceases for
any reason other than as described in Section 5.1, above (including but not limited to
termination (a) by the Company for Cause, (b) as a result of the Executives death, (c) as a result
of the Executives Disability, or (d) by the Executive for any reason), then the Companys
obligation to the Executive will be limited solely to the payment of accrued and unpaid Base Salary
through the date of such termination. All compensation and benefits will cease at the time of such
termination and the Company will have no further liability or obligation by reason of such
termination. The foregoing will not be construed to limit the Executives right to payment or
reimbursement for claims incurred prior to the date of such termination under any insurance
contract funding an employee benefit plan, policy or arrangement of the Company in accordance with
the terms of such insurance contract.
5.3. Maximum Payment Limit.
5.3.1. If any payment or benefit due to the Executive from the Company or any of its
subsidiaries, affiliates or related entities, would (if paid or provided) constitute an Excess
Parachute Payment (as defined below), the amounts otherwise payable and benefits otherwise due will
be limited to the minimum extent necessary to ensure that no portion thereof will fail to be
tax-deductible to the Company by reason of Section 280G of the Code. The determination of whether
any payment or benefit would (if paid or provided) constitute an Excess Parachute Payment will be
made by the Board, in its sole discretion, based on the advice of the Companys auditors.
5.3.2. Adjustments Necessary to Comply with Maximum Payment Limit. If,
notwithstanding the initial application of Section 5.3, the Internal Revenue Service
determines that any amount paid or benefit provided to Executive would constitute an Excess
Parachute Payment, Section 5.3 will be reapplied based on the Internal Revenue Services
determination and Executive will be required to repay to the Company any Overpayment (as defined
below) immediately upon receipt of written notice of the applicability of this section.
Definitions. For purposes of this Agreement:
(a) dishonesty in the course of employment or the misappropriation of funds;
(b) material breach of any agreement with or duty owed to the Company or any of its affiliates
(for avoidance of doubt, Lululemon Athletica
USA, Inc. and its subsidiaries will be deemed to be
affiliates of the Company for purposes of this Agreement);
(c) refusal to perform the lawful and reasonable directives of the Board, if not cured within
15 days following receipt from the Company of written notice thereof; or
(d) any other conduct that would constitute just cause at common law.
Disability means a condition entitling the Executive to benefits under the
Companys long term disability plan, policy or arrangement; provided, however, that if no such
plan, policy or arrangement is then maintained by the Company and applicable to the Executive,
Disability will mean the Executives inability to perform his duties under this Agreement due to
a mental or physical condition that can be expected to result in death or that can be expected to
last (or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180
consecutive day period. Termination as a result of a Disability will not be construed as a
termination by the Company without Cause.
5.4.3. Excess Parachute Payment has the same meaning as used in Section 280G(b)(1)
of the Code.
5.4.4. Overpayment means any amount paid to Executive in excess of the maximum
payment limit of Section 5.3 of this Agreement
Covenants. To induce the Company to enter into this Agreement, and in
consideration of the compensation potentially payable to the Executive pursuant to Sections 2
and 5 of this Agreement, the Executive agrees to be bound by the provisions of this Section
6 (the Restrictive Covenants). These Restrictive Covenants will apply without regard
to whether any termination or cessation of the Executives employment is initiated by the Company
or the Executive, and without regard to the reason for that termination or cessation.
6.1. Covenant Not To Compete. The Executive covenants that, during his employment by
the Company and any of its affiliates and for a period of 24 months following immediately
thereafter (the Restricted Period), the Executive will not (except in his capacity as an
employee or director of the Company) do any of the following, directly or indirectly:
6.1.1. engage or participate in any Competing Business (as defined below) in the United States
6.1.2. become interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant) any person, firm, corporation, association or other entity
engaged in a Competing Business. Notwithstanding the foregoing, the Executive may hold the
outstanding securities of any class of any publicly-traded securities of any company;
6.1.3. influence or attempt to influence any employee, consultant, supplier, licensor,
licensee, contractor, agent, strategic partner, distributor, customer or other person to terminate
modify any written or oral agreement, arrangement or course of dealing with the Company or its
6.1.4. solicit for employment or employ or retain (or arrange to have any other person or
entity employ or retain) any person who has been employed or retained by the Company or its
affiliates within the preceding 12 months.
6.2. Confidentiality. The Executive recognizes and acknowledges that the Proprietary
Information (as defined below) is a valuable, special and unique asset of the business of the
Company or its affiliates, as applicable. As a result, both during his employment and thereafter,
the Executive will not, without the prior written consent of the Company, for any reason divulge to
any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of
the Company and its affiliates, any Proprietary Information. Notwithstanding the foregoing, if the
Executive is compelled to disclose Proprietary Information by court order or other legal process,
to the extent permitted by applicable law, he shall promptly so notify the Company so that it may
seek a protective order or other assurance that confidential treatment of such Proprietary
Information shall be afforded, and the Executive shall reasonably cooperate with the Company in
connection therewith. If the Executive is so obligated by court order or other legal process to
disclose Proprietary Information he will disclose only the minimum amount of such Proprietary
Information as is necessary for the Executive to comply with such court order or other legal
6.3. Property of the Company.
6.3.1. Proprietary Information. All right, title and interest in and to Proprietary
Information will be and remain the sole and exclusive property of the Company or its affiliates, as
applicable. The Executive will not remove from the Companys offices or premises any documents,
records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging to the Company or its
affiliates unless necessary or appropriate in the performance of his duties to the Company. If the
Executive removes such materials or property in the performance of his duties, he will return such
materials or property promptly after the removal has served its purpose. The Executive will not
make, retain, remove and/or distribute any copies of any such materials or property, or divulge to
any third person the nature of and/or contents of such materials or property, except to the extent
necessary to perform his duties on behalf of the Company. Upon termination of the Executives
employment with the Company, he will leave with the Company or promptly return to the Company all
originals and copies of such materials or property then in his possession.
6.3.2. Intellectual Property. The Executive agrees that all right, title and interest
in the Intellectual Property (as defined below) will be considered to be the sole and exclusive
property of the Company or its affiliates, as applicable. To the extent that any of the
Intellectual Property may not by law be considered a work made for hire, or to the extent that,
notwithstanding the foregoing, the Executive retains any interest in the Intellectual Property, the
Executive hereby irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Executive may now or in the future have in the Intellectual Property under
patent, copyright, trade secret, trademark or other law, in perpetuity or for the longest period
otherwise permitted by law, without the necessity of further consideration. If and to the extent
that this assignment is not effective in respect of any Intellectual Property, the Executive will
hold in trust for the sole benefit of the Company or its affiliates, as applicable, and will assign
exclusively to the Company or its affiliates, as applicable, all of his right, title and interest
in and to that Intellectual Property. The Company will be entitled to obtain and hold in its own
name all copyrights, patents, trade secrets, trademarks and other similar registrations with
respect to such Intellectual Property. The Executive further agrees to execute any and all
documents and provide
any further cooperation or assistance reasonably required by the Company to perfect, maintain
or otherwise protect its rights in the Intellectual Property. If the Company is unable after
reasonable efforts to secure the Executives signature, cooperation or assistance in accordance
with the preceding sentence, whether because of the Executives incapacity or any other reason
whatsoever, the Executive hereby designates and appoints the Company or its designee as the
Executives agent and attorney-in-fact, to act on his behalf, to execute and file documents and to
do all other lawfully permitted acts necessary or desirable to perfect, maintain or otherwise
protect the Companys rights in the Intellectual Property. The Executive acknowledges and agrees
that such appointment is coupled with an interest and is therefore irrevocable.
6.3.3. The Executive agrees that the Company, its assignees and its licensees are not required
to designate the Executive as the author of any Intellectual Property and the Executive hereby
waives in whole all moral rights which he may have in the Intellectual Property, including the
right to the integrity of the Intellectual Property, the right to be associated with the
Intellectual Property, the right to restrain or claim damages for any distortion, mutilation or
other modification of the Intellectual Property, and the right to restrain use or reproduction of
the Intellectual Property in any context and in connection with any product, service, cause or
6.4. Definitions. For purposes of this Agreement:
6.4.1. Competing Business means (a) the design, manufacture or distribution of
active lifestyle apparel and accessories (including, without limitation, yoga and other athletic
apparel and accessories), and (b) any other business activity the same as or in direct competition
with business activities then carried on or being definitively planned by the Company or its
affiliates (or, with respect to periods following the cessation of the Executives employment,
business activities carried on or being definitively planned by the Company or its affiliates as of
the date of such cessation).
6.4.2. Intellectual Property means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all patents and
patent applications claiming such inventions, (b) all trademarks, service marks, trade dress,
logos, trade names, fictitious names, brand names, brand marks and corporate names, together with
all translations, adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets (including research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques, methodologies,
technical data, designs, drawings and specifications), (f) all computer software (including data,
source and object codes and related documentation), (g) all other proprietary rights, (h) all
copies and tangible embodiments thereof (in whatever form or medium), or (i) similar intangible
personal property which have been or are developed or created in whole or in part by the Executive
(1) at any time and at any place while the Executive is employed by Company and which, in the case
of any or all of the foregoing, are related to and used in connection with the business of the
Company or its affiliates, or (2) as a result of tasks assigned to the Executive by the Company.
6.4.3. Proprietary Information means any and all proprietary information developed
or acquired by the Company or any of its affiliates that has not been specifically authorized to be
disclosed. Such Proprietary Information shall include, but shall not be limited to, the following
items and information relating to the following items: (a) all intellectual property and other
proprietary rights (including, without limitation, the Intellectual Property), (b) computer codes
and instructions, processing systems and techniques, inputs and outputs (regardless of the media on
which stored or located) and hardware and software configurations, designs, architecture and
interfaces, (c) business research, studies,
procedures and costs, (d) financial data, (e) distribution methods, (f) marketing data,
methods, plans and efforts, (g) the identities of actual and prospective suppliers, (h) the terms
of contracts and agreements with, the needs and requirements of, and the Companys or its
affiliates course of dealing with, actual or prospective suppliers, (i) personnel information, (j)
customer and vendor credit information, and (k) information received from third parties subject to
obligations of non-disclosure or non-use. Failure to mark any of the Proprietary Information as
confidential or proprietary shall not affect its status as Proprietary Information.
6.5. Acknowledgements. The Executive acknowledges that the Restrictive Covenants are
reasonable and necessary to protect the legitimate interests of the Company and its affiliates,
that the duration and geographic scope of the Restrictive Covenants are reasonable given the nature
of this Agreement and the position the Executive will hold within the Company, and that the Company
would not enter into this Agreement or otherwise employ the Executive unless the Executive agrees
to be bound by the Restrictive Covenants set forth in this Section 6.
6.6. Remedies and Enforcement Upon Breach.
6.6.1. Specific Enforcement. The Executive acknowledges that any breach by him,
willfully or otherwise, of the Restrictive Covenants will cause continuing and irreparable injury
to the Company for which monetary damages would not be an adequate remedy. The Executive shall
not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that such an adequate remedy at law exists. In the event of any such breach by
the Executive of any of the Restrictive Covenants, the Company shall be entitled to injunctive or
other similar equitable relief in any court, without any requirement that a bond or other security
be posted, and this Agreement shall not in any way limit remedies of law or in equity otherwise
available to the Company.
6.6.2. Judicial Modification. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of
such provision, such court shall have the power to modify such provision and, in its modified form,
such provision shall then be enforceable.
6.6.3. Accounting. If the Executive breaches any of the Restrictive Covenants, the
Company will have the right and remedy to require the Executive to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other benefits derived or
received by the Executive as the result of such breach. This right and remedy will be in addition
to, and not in lieu of, any other rights and remedies available to the Company under law or in
6.6.4. Enforceability. If any court holds the Restrictive Covenants unenforceable by
reason of their breadth or scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the right of the Company to the relief provided above in
the courts of any other jurisdiction within the geographic scope of such Restrictive Covenants.
6.6.5. Disclosure of Restrictive Covenants. The Executive agrees to disclose the
existence and terms of the Restrictive Covenants to any employer that the Executive may work for
during the Restricted Period.
6.6.6. Extension of Restricted Period. If the Executive breaches Section 6.1
in any respect, the restrictions contained in that section will be extended for a period equal to
the period that the Executive was in breach.
7.1. No Liability of Officers and Directors for Severance Upon Insolvency.
Notwithstanding any other provision of the Agreement and intending to be bound by this provision,
the Executive hereby (a) waives any right to claim payment of amounts owed to him, now or in the
future, pursuant to this Agreement from directors or officers of the Company if the Company becomes
insolvent, and (b) fully and forever releases and discharges the Companys officers and directors
from any and all claims, demands, liens, actions, suits, causes of action or judgments arising out
of any present or future claim for such amounts.
7.2. Other Agreements. The Executive represents and warrants to the Company that
there are no restrictions, agreements or understandings whatsoever to which he is a party that
would prevent or make unlawful his execution of this Agreement, that would be inconsistent or in
conflict with this Agreement or the Executives obligations hereunder, or that would otherwise
prevent, limit or impair the performance by the Executive of his duties under this Agreement.
7.3. Successors and Assigns. The Company may assign this Agreement to any successor
to all or substantially all of its assets and business by means of liquidation, dissolution,
merger, consolidation, transfer of assets, sale of stock or otherwise. The duties of the Executive
hereunder are personal to the Executive and may not be assigned by him.
7.4. Governing Law and Enforcement. This Agreement shall be governed by and construed
in accordance with the laws of the Province of British Columbia without regard to the principles of
conflicts of laws. Any legal proceeding arising out of or relating to this Agreement will be
instituted in a provincial or federal court in the Province of British Columbia and the Executive
and the Company hereby consent to the personal and exclusive jurisdiction of such court(s) and
hereby waive any objection(s) that they may have to personal jurisdiction, the laying of venue of
any such proceeding and any claim or defense of inconvenient forum.
7.5. Waivers. The waiver by either party of any right hereunder or of any breach by
the other party will not be deemed a waiver of any other right hereunder or of any other breach by
the other party. No waiver will be deemed to have occurred unless set forth in a writing. No
waiver will constitute a continuing waiver unless specifically stated, and any waiver will operate
only as to the specific term or condition waived.
7.6. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision, and this Agreement
will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.
7.7. Survival. Section 6 of this Agreement will survive termination or
expiration of this Agreement and/or the cessation of Executives employment with the Company.
7.8. Notices. Any notice or communication required or permitted under this Agreement
shall be made in writing and (a) sent by overnight courier, (b) mailed by overnight express mail,
return receipt requested, or (c) sent by telecopier, addressed as follows:
If to the Executive:
to the address indicated below his signature on this Agreement
If to Company:
Attn: Dennis Wilson
1945 McLean Drive
Vancouver, BC V5N-3J7
with a copy to:
Advent International Corporation
75 State Street
Boston, MA 02109
Attention: Steven J. Collins
or to such other address as either party may from time to time duly specify by notice given to the
other party in the manner specified above.
7.9. Entire Agreement; Amendments. This Agreement and the attached exhibits contain
the entire agreement and understanding of the parties hereto relating to the subject matter hereof,
and merges and supersedes all prior and contemporaneous discussions, agreements and understandings
of every nature relating to the subject matter. This Agreement may not be changed or modified,
except by an agreement in writing signed by each of the parties hereto.
7.10. Withholding. All payments (or transfers of property) to the Executive will be
subject to tax withholding in accordance with applicable law.
7.11. Section Headings. The headings of sections and paragraphs of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
7.12. Counterparts; Facsimile. This Agreement may be executed in multiple
counterparts (including by facsimile signature), each of which will be deemed to be an original,
but all of which together will constitute but one and the same instrument.
space left blank intentionally; signature page follows]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Executive has executed this Agreement, in each case as of the date
first above written.
||LULULEMON ATHLETICA INC.
||/s/ Dennis Wilson
||/s/ Bob Meers