AGREEMENT

               3.6.     Schedule C is amended to confirm that Commencement Date and the Effective Date of the Franchise Agreement are both November 1, 2004.

4.          EXPANSION OF THE LULULEMON BRAND

                         Lawn and Lululemon agree to adopt the Business Plan and to discuss (without any legal obligation to enter into) a potential joint venture between Lululemon and Lawn and/or Newco regarding the proposed expansion of the Lululemon brand in Australia and New Zealand.

5.          GRANT OF OPTION

               5.1.     Put Option

                         In consideration of the matters referred to in Recital D and the sum of $10 paid by Lawn to Lululemon (receipt of which is acknowledged by Lululemon’s execution of this Agreement), Lululemon grants to Lawn and Newco a Put Option to require Lululemon to purchase all, and not less than all, of the Option Securities for a purchase price determined in accordance with the following:

                         5.1.1.     the purchase price for any shareholders’ loans owing by the Company to Lawn or Newco shall be the face value of such loans, subject to a maximum rate of accrued interest of 8% per annum; and

                         5.1.2.     the purchase price of the Shares shall be determined using the following valuation principles:

                                                  (1)     the value of each Lululemon Franchise operated by the Company on the date of exercise of the Put Option (the “Buy Out Date”) shall be equal to 25% of Gross Sales of such franchise for the 12 month period immediately preceding the Buy Out Date;

                                                  (2)     the value of all assets owned by the Company, other than Lululemon Franchise, shall be equal to the net book value of such assets on the Buy Out Date as recorded in the books and records of the Company (assuming 20% straight line depreciation per annum on all leasehold improvements, calculated pro-rated if necessary); and

                                                  (3)     all liabilities of the Company are valued at book value as recorded in the books and records of the Company.

               5.2.     Termination of Option

                         The Put Option shall terminate on the earliest of:

                         5.2.1.     Completion of a joint venture agreement for the future expansion of the Lululemon brand in Australia and New Zealand between Lululemon and Lawn and/or Newco on terms satisfactory to lawn; or

                         5.2.2.     5 pm on the Expiry Date.

               5.3.     Expiry Date

                         The Put Option can not be exercised after it has terminated in accordance with clause 5.2 hereof.

6.          EXERCISE OF OPTION

               6.1.     Subject to earlier expiry pursuant to clause 5.3 hereof, the Put Option may only be exercised by Lawn or Newco, as the case may be, during the Option Period.

               6.2.     To exercise the Put Option, Lawn or Newco must serve the Notice of Exercise on a Business Day to Lululemon in the form annexed at Schedule 3.

7.          PAYMENT OF OPTION PRICE

               7.1.     Valuation of Option Price

                         Upon Lawn delivering the Notice of Exercise of the Option to Lululemon, Lululemon and Lawn will endeavour to negotiate and agree on the fair market value of the Option Securities within three calendar months of receipt of the Notice to Exercise and in default of agreement, the fair market value of the Option Securities shall be determined by arbitration pursuant to the provisions of clause 8 hereof.

               7.2.     Payment

                         Within 7 days of the determination of the Option Price pursuant to the provisions of this Agreement, and upon the exchange of all documentation necessary to transfer and assign the Option Securities to Lululemon, free and clear of any Encumbrance, Lululemon is obliged to pay the Option Price to Lawn or Newco; as the case may be.

8.          DISPUTE RESOLUTION

               8.1.     Referral to Senior Management

                         All disputes arising out of or in connection with this Agreement shall be referred first to the senior management of the parties for resolution. The senior management of the parties will use their best efforts to co-operate in arriving at a mutually satisfactory resolution of any dispute referred to them. If any dispute is not satisfactorily resolved within thirty (30) days of its referral to senior management pursuant to this clause 8.1, then any party hereto may refer the dispute to binding arbitration pursuant to Section 8.2.

               8.2.     Arbitration of Disputes

                         Any dispute referred by any party hereto to binding arbitration in accordance with the following provisions:

                                                  (a)     the case will be administered by the International Chamber of Commerce (the “ICC”) in accordance with its rules, as the same may be varied or modified by the provisions of this clause 8.2;

                                                  (b)     the place of arbitration will be Hawaii, USA;

                                                  (c)     the arbitration will be conducted in the English language;

                                                  (d)     a single arbitrator will be appointed by mutual agreement of the parties within ten (10) days of receipt of the responding notice referred to in clause 8.2(e) below. If the parties cannot agree, a single arbitrator will be appointed by each of the parties within ten (10) days following the parties’ failure to agree and the two (2) arbitrators so appointed will together appoint a third arbitrator within the following ten days. If the third appointment cannot be agreed to, a third arbitrator will be appointed in accordance with the ICC Rules. The three (3) arbitrators so appointed will arbitrate as a panel. Any arbitrator must be an individual not employed by any of the parties, or any affiliate thereof;

                                                  (e)     written notice of the referral to arbitration will be given within five (5) days by the referring party to the other parties setting out the issues for resolution, the parties position with regard to such issues, the monetary amount involved (if any) and the remedy sought. The other parties will respond within ten (10) days of receipt of such notice by giving the referring party notice of any counterclaims, the other parties’ position with regard to all issues, the monetary amount involved (if any) and the remedy sought;

                                                  (f)     the arbitration will commence within thirty (30) calendar days of the referral;

                                                  (g)     all documents, materials and information in the possession of each party which is in any way relevant to the issues in dispute will be made available to the other parties forthwith. To the extent possible, the arbitrator will not be bound by the rules of civil procedure or evidence and will consider such written and oral presentations as reasonable business persons would use in the conduct of their day-to-day affairs, and may require the parties to submit some or all of their case by written declaration or such other manner of presentation as the arbitrator may determine to be appropriate, it being the desire of the parties to limit live testimony and cross-examination to the extent absolutely necessary to ensure a fair hearing to the parties on significant and material issues;

                                                  (h)     the decision of the arbitrator or arbitrators will be in writing;

                                                  (i)     a decision of the arbitrator or arbitrators will be final and binding and the arbitrator or arbitrators may require remedial measures and injunctive or other equitable relief as part of any award. The arbitrator or arbitrators may award legal fees and costs to the prevailing party or parties; and

                                                  (j)     reference to arbitration must be made within two (2) years of the act, omission or occurrence giving rise to the referral.

               8.3.     Payment of Arbitration Fees

                         The parties agree that all arbitration fees imposed by or otherwise payable to the ICC or the arbitrator or arbitrators in respect of arbitration proceedings hereunder shall be shared equally amongst the parties, and further that the failure of any party to pay any such fees in respect of arbitration proceedings hereunder shall constitute a waiver by that party of its right to participate in and present evidence at the arbitration proceedings.

9.          WARRANTIES

               9.1.     General Warranties

                         Each party makes the following representations and warranties for the benefit of the other parties:

                         9.1.1.     It has the power to enter into and perform its obligations under this Agreement;

                         9.1.2.     It has taken all necessary corporate and trust action to authorise the entry into and performance of this Agreement and to carry out the transactions contemplated by this Agreement;

               9.2.     Binding Agreement

                         This Agreement is a valid and binding obligation enforceable in accordance with this Agreement’s terms.

               9.3.     Execution in accordance with Law

                         The execution and performance by it of this Agreement and each transaction contemplated under this Agreement did not and will not violate in any respect a provision of

                         9.3.1.     A law or treaty or a judgment, ruling, order or decree binding on it or any of its assets;

                         9.3.2.     Its constituent documents or any trust deed for the trust in respect of which it is trustee as specified in this Agreement; or

                         9.3.3.     Any other document or agreement which is binding on its or any of its assets.

10.          EFFECTIVE DATES

                         The Warranties are given both as at the date of this Agreement and as at the time of payment of the Option Price under clause 7.2, subject to the exception that if the warranty is expressed to be made as at another date the warranty is given with respect to that date only.

11.          FURTHER ASSURANCES

                         Each party agrees to do all things and execute all deeds, instruments, transfers, discharges or other documents as may be necessary or desirable to give full effect to the provisions of this Agreement and the transactions contemplated by it.

12.          ENTIRE AGREEMENT

                         This Agreement contains the entire agreement between the parties as at the date of this Agreement with respect to its subject matter and supersedes all prior agreements and understandings between the parties in connection thereto.

13.          NOTICES

               13.1.     Any notice, demand, consent, request or other communication given or made under this Agreement or the Franchise Agreement (“Notice”)

                         13.1.1.     must be in writing and signed by its attorney or another person duly authorised by the sender;

                         13.1.2.     may be either delivered to the intended recipient by hand or sent by prepaid post (if posted to an address in another country, by registered airmail) or fax to the address or fax number below or the address or fax number last notified by the intended recipient to the sender:

		Lawn:		DAVID LAWN
				28 Huntingtower Road
				Armadale, Victoria 3143
				Facsimile:___
		Lululemon:		Lululemon Athletica Inc.
				2285 Clark Drive
				Vancouver, BC V5N 3G9
				Canada
				Facsimile: (604)  ###-###-####
		The Company:		Lululemon Athletica (Australia) Pty Ltd.
				248 Chapel Street
				Prahran, Victoria 3181
				Facsimile:___

               13.2.     Any Notice will be duly given or made:

                         13.2.1.     in the case of delivery in person, when delivered;

                         13.2.2.     in the case of delivery by post two business days after the date of posting;

                         13.2.3.     in the case of fax, on receipt by the sender or a transmission control report from the despatching machine showing the relevant number of pages and the correct destination tax machine number and indicating that the transmission has been made without error,

                         13.2.4.     but if the result is that a Notice would be taken to be given or made on a day which is not a Business Day in the place to which the Notice is sent or is later than 5 pm (local time) it will be taken to have been duly given or made at the commencement of the next Business Day.

14.          SEVERABILITY OF PROVISIONS

                         Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction is ineffective as to that jurisdiction to the extent of the prohibition or unenforceability. That does not invalidate the remaining provisions of this Agreement nor affect the validity or enforceability of that provision in any other jurisdiction.

15.          AMENDMENT

                         No amendment or variation of this Agreement is valid or binding on a party unless made in writing executed by or on behalf of all parties.

16.          ASSIGNMENT

                         The rights of Lawn and the Company under this Agreement cannot be assigned, Encumbered or otherwise dealt and neither Lawn nor the Company shall attempt, or purport, to do so except with the prior written consent of Lululemon.

17.          COUNTERPARTS

                         This Agreement maybe executed in any number of counterparts. All counterparts will be taken to constitute one instrument.

18.          GOVERNING LAW AND JURISDICTION

                         This Agreement is governed by the laws of Victoria. Each party submits to the nonexclusive jurisdiction of courts exercising jurisdiction there in connection with matters concerning this Agreement.

SIGNED, SEALED and DELIVERED by DAVID ANDREW LAWNS the presence of:		Witness
/s/ John McKell		Name of Witness (print)

SIGNED for and on behalf of LULULEMON ATHLETICA (AUSTRALIA) PTY LTD. CAN 110 186 233 by two officers of the Company in accordance with the provisions of Section 127(1) of the Corporations Act, in the presence of:		/s/ Brian Bacon
		DIRECTOR
/s/ Bree Sidebottom		Name of Director (print) Brian Bacon
		DIRECTOR/SECRETARY
		Name of Director (print) Darrell Kopke