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2011 FIXED SHARE OPTION PLAN
 

 

 

For:

 

CRAILAR TECHNOLOGIES INC.

 

 

Crailar Technologies Inc.
Suite 305 – 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2
__________

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CRAILAR TECHNOLOGIES INC.
(the “Company”)

2011 FIXED SHARE OPTION PLAN

Dated for reference effective on September 15, 2011
(Amended and Restated as of September 15, 2014)

ARTICLE 1
PURPOSE AND INTERPRETATION

Purpose and Entire Plan

1.1     The purpose of this Plan is to advance the interests of the Company by
encouraging equity participation in the Company through the acquisition of
Common Shares of the Company. It is the intention of the Company that this Plan
will at all times be in compliance with the TSX Venture Policies (or, if
applicable, the NEX Policies) and any inconsistencies between this Plan and the
TSX Venture Policies) (or, if applicable, the NEX Policies) will be resolved in
favour of the latter.

1.2     This Plan supersedes and replaces each of the Company’s previously
ratified stock option plans and including, without limitation, the Company’s
most recent and existing “2010 Fixed Share Option Plan”, dated as ratified by
the Board of the Company on September 22, 2010, except that any “Options”
theretofore granted by the Company under its 2010 Fixed Share Option Plan are
necessarily brought forward by the Company under this Plan without restriction
by the terms and conditions of this Plan going forward.

Definitions

1.3     In this Plan:

  (a)

“Affiliate” means a company that is a parent or subsidiary of the Company, or
that is controlled by the same entity as the Company;

        (b)

“Associate” has the meaning set out in the Securities Act;

        (c)

“Black-out Period” means an interval of time during which the Company has
determined that one or more Participants may not trade any securities of the
Company because they may be in possession of undisclosed material information
pertaining to the Company, or when in anticipation of the release of quarterly
or annual financials, to avoid potential conflicts associated with a company’s
insider-trading policy or applicable securities legislation, (which, for greater
certainty, does not include the period during which a cease trade order is in
effect to which the Company or in respect of an Insider, that Insider, is
subject);

        (d)

“Board” means the board of directors of the Company or any committee thereof
duly empowered or authorized to grant Options under this Plan;

        (e)

“Change of Control” includes situations where after giving effect to the
contemplated transaction and as a result of such transaction:

    (i)

any one Person holds a sufficient number of voting shares of the Company or
resulting company to affect materially the control of the Company or resulting
company, or,

            (ii)

any combination of Persons, acting in concert by virtue of an agreement,
arrangement, commitment or understanding, holds in total a sufficient number of
voting shares of the Company or its successor to affect materially the control
of the Company or its successor, where such Person or combination of Persons did
not previously hold a sufficient number of voting shares to affect materially
control of the Company or its successor. In the absence of evidence to the
contrary, any Person or combination of Persons acting in concert by virtue of an
agreement, arrangement, commitment or understanding, holding more than 20% of
the voting shares of the Company or resulting company is deemed to materially
affect control of the Company or resulting company;

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  (f)

“Common Shares” means common shares without par value in the capital of the
Company providing such class is listed on the TSX Venture (or the NEX, as the
case may be);

        (g)

“Company” means the company named at the top hereof and includes, unless the
context otherwise requires, all of its Affiliates and successors according to
law;

        (h)

“Consultant” means an individual or Consultant Company, other than an Employee,
or a Director of the Company that:

    (i)

is engaged to provide on an ongoing bona fide basis, consulting, technical,
management or other services to the Company or an Affiliate of the Company,
other than services provided in relation to a Distribution;

            (ii)

provides the services under a written contract between the Company or an
Affiliate and the individual or the Consultant Company;

            (iii)

in the reasonable opinion of the Company, spends or will spend a significant
amount of time and attention on the affairs and business of the Company or an
Affiliate of the Company; and

            (iv)

has a relationship with the Company or an Affiliate of the Company that enables
the individual or Consultant Company to be knowledgeable about the business and
affairs of the Company;

  (i)

“Consultant Company” means for an individual consultant, a company or
partnership of which the individual is an employee, shareholder or partner;

        (j)

“Directors” means the directors of the Company as may be elected from time to
time;

        (k)

“Discounted Market Price” has the meaning assigned by Policy 1.1 of the TSX
Venture Policies;

        (l)

“Disinterested Shareholder Approval” means approval by a majority of the votes
cast by all the Company’s shareholders at a duly constituted shareholders’
meeting, excluding votes attached to Common Shares beneficially owned by
Insiders who are Service Providers or their Associates;

        (m)

“Distribution” has the meaning assigned by the Securities Act, and generally
refers to a distribution of securities by the Company from treasury;

        (n)

“Effective Date” for an Option means the date of grant thereof by the Board;

        (o)

“Employee” means:

    (i)

an individual who is considered an employee of the Company or its subsidiary
under the Income Tax Act (i.e. for whom income tax, employment insurance and CPP
deductions must be made at source);

            (ii)

an individual who works full-time for the Company or a subsidiary providing
services normally provided by an employee and who is subject to the same control
and direction by the Company over the details and methods of work as an employee
of the Company, but for whom income tax deductions are not made at source; or

            (iii)

an individual who works for the Company or its subsidiary on a continuing and
regular basis for a minimum amount of time per week providing services normally
provided by an employee and who is subject to the same control and direction by
the Company over the details and methods of work as an employee of the Company,
but for whom income tax deductions need not be made at source;

  (p)

“Exercise Price” means the amount payable per Common Share on the exercise of an
Option, as determined in accordance with the terms hereof;

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  (q) “Expiry Date” means the day on which an Option lapses as specified in the
Option Commitment therefore or in accordance with the terms of this Plan;   (r)
“Insider” means an insider as defined in the TSX Venture Policies or as defined
in securities legislation applicable to the Company;   (s) “Investor Relations
Activities” has the meaning assigned by Policy 1.1 of the TSX Venture Policies;
  (t) “Management Company Employee” means an individual employed by a Person
providing management services to the Company which are required for the ongoing
successful operation of the business enterprise of the Company, but excluding a
Person engaged in Investor Relations Activities;   (u) “NEX” means a separate
board of the TSX Venture for companies previously listed on the TSX Venture or
the Toronto Stock Exchange which have failed to maintain compliance with the
ongoing financial listing standards of those markets;   (v) “NEX Issuer” means a
company listed on the NEX;   (w) “NEX Policies” means the rules and policies of
the NEX as amended from time to time;   (x) “Officer” means a Board appointed
officer of the Company;   (y) “Option” means the right to purchase Common Shares
granted hereunder to a Service Provider;   (z) “Option Commitment” means the
notice of grant of an Option delivered by the Company hereunder to a Service
Provider and substantially in the form of Schedule A attached hereto;   (aa)
“Optioned Shares” means Common Shares that may be issued in the future to a
Service Provider upon the exercise of an Option;   (bb) “Optionee” means the
recipient of an Option hereunder;   (cc) “Outstanding Shares” means at the
relevant time, the number of issued and outstanding Common Shares of the Company
from time to time;   (dd) “Participant” means a Service Provider that becomes an
Optionee;   (ee) “Person” includes a company, any unincorporated entity, or an
individual;   (ff) “Plan” means this “2011 Fixed Share Option Plan”, the terms
of which are set out herein or as may be amended;   (gg) “Plan Shares” means the
total number of Common Shares which may be reserved for issuance as Optioned
Shares under the Plan as provided in §2.2;   (hh) “Regulatory Approval” means
the approval of the TSX Venture and any other securities regulatory authority
that has lawful jurisdiction over the Plan and any Options issued hereunder;  
(ii) “Securities Act” means the Securities Act, R.S.B.C. 1996, c. 418, or any
successor legislation;   (jj) “Service Provider” means a Person who is a bona
fide Director, Officer, Employee, Management Company Employee, Consultant or
Company Consultant, and also includes a company, 100% of the share capital of
which is beneficially owned by one or more Service Providers;   (kk) “Share
Compensation Arrangement” means any Option under this Plan but also includes any
other stock option, stock option plan, employee stock purchase plan or any other
compensation or incentive mechanism involving the issuance or potential issuance
of Common Shares to a Service Provider;   (ll) “Shareholder Approval” means
approval by a majority of the votes cast by eligible shareholders of the Company
at a duly constituted shareholders’ meeting;   (mm) “Take Over Bid” means a take
over bid as defined in subsection 92(1) of the Securities Act or the analogous
provisions of securities legislation applicable to the Company;   (kk)
“Termination Date” has the meaning ascribed thereto in §3.10;   (nn) “TSX
Venture” means the TSX Venture Exchange and any successor thereto; and   (oo)
“TSX Venture Policies” means the rules and policies of the TSX Venture as
amended from time to time.

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Other Words and Phrases

1.4     Words and phrases used in this Plan but which are not defined in the
Plan, but are defined in the TSX Venture Policies (and, if applicable, the NEX
Policies), will have the meaning assigned to them in the TSX Venture Policies
(and, if applicable, the NEX Policies).

Gender

1.5     Words importing the masculine gender include the feminine or neuter,
words in the singular include the plural, words importing a corporate entity
include individuals, and vice versa.

ARTICLE 2
SHARE OPTION PLAN

Establishment of the Share Option Plan

2.1     The Plan is hereby established to recognize contributions made by
Service Providers and to create an incentive for their continuing assistance to
the Company and its Affiliates.

Maximum Plan Shares

2.2     The maximum aggregate number of Plan Shares that may be reserved for
issuance under the Plan at any point in time is 13,275,600 Shares (which
represents 20% of the Company’s issued and outstanding Common Shares on the
effective date of this Plan), less any Common Shares reserved for issuance under
share options granted under Share Compensation Arrangements other than this
Plan, unless this Plan is amended pursuant to the requirements of the TSX
Venture Policies and, if applicable, the NEX Policies.

Eligibility

2.3     Options to purchase Common Shares may be granted hereunder to Service
Providers from time to time by the Board. Service Providers that are not
individuals will be required to undertake in writing not to effect or permit any
transfer of ownership or option of any of its securities, or to issue more of
its securities (so as to indirectly transfer the benefits of an Option), as long
as such Option remains outstanding, unless the written permission of the TSX
Venture and the Company is obtained.

Options Granted Under the Plan

2.4     All Options granted under the Plan will be evidenced by an Option
Commitment in the form attached as Schedule A, showing the number of Optioned
Shares, the term of the Option, a reference to vesting terms, if any, and the
Exercise Price.

2.5     Subject to specific variations approved by the Board, all terms and
conditions set out herein will be deemed to be incorporated into and form part
of an Option Commitment made hereunder.

Limitations on Issue

2.6     Subject to §2.10, the following restrictions on issuances of Options are
applicable under the Plan:

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  (a)

no Service Provider can be granted an Option if that Option would result in the
total number of Options, together with all other Share Compensation Arrangements
granted to such Service Provider in the previous 12 months, exceeding 5% of the
Outstanding Shares unless the Company has obtained Disinterested Shareholder
Approval to do so;

  (b)

the aggregate number of Options granted to Service Providers conducting Investor
Relations Activities in any 12-month period cannot exceed 2% of the Outstanding
Shares, calculated at the time of grant; and

  (c)

the aggregate number of Options granted to any one Consultant in any 12-month
period cannot exceed 2% of the Outstanding Shares, calculated at the time of
grant.

Options Not Exercised

2.7     In the event an Option granted under the Plan expires unexercised or is
terminated by reason of dismissal of the Optionee for cause or is otherwise
lawfully cancelled prior to exercise of the Option, the Optioned Shares that
were issuable thereunder will be returned to the Plan and will be eligible for
re-issuance.

Powers of the Board

2.8     The Board will be responsible for the general administration of the Plan
and the proper execution of its provisions, the interpretation of the Plan and
the determination of all questions arising hereunder. Without limiting the
generality of the foregoing, the Board has the power to

  (a)

allot Common Shares for issuance in connection with the exercise of Options;

  (b)

grant Options hereunder;

  (c)

subject to any necessary Regulatory Approval, amend, suspend, terminate or
discontinue the Plan, or revoke or alter any action taken in connection
therewith, except that no general amendment or suspension of the Plan will,
without the prior written consent of all Optionees, alter or impair any Option
previously granted under the Plan unless the alteration or impairment occurred
as a result of a change in the TSX Venture Policies or the Company’s tier
classification thereunder; and

  (d)

delegate all or such portion of its powers hereunder as it may determine to one
or more committees of the Board, either indefinitely or for such period of time
as it may specify, and thereafter each such committee may exercise the powers
and discharge the duties of the Board in respect of the Plan so delegated to the
same extent as the Board is hereby authorized so to do.

Amendment of the Plan by the Board of Directors

2.9     Subject to the requirements of the TSX Venture Policies and the prior
receipt of any necessary Regulatory Approval, the Board may in its absolute
discretion, amend or modify the Plan or any Option granted as follows:

  (a)

it may make amendments which are of a typographical, grammatical or clerical
nature only;

  (b)

it may change the vesting provisions of an Option granted hereunder;

  (c)

it may change the termination provision of an Option granted hereunder which
does not entail an extension beyond the original Expiry Date of such Option;

  (d)

it may make amendments necessary as a result in changes in securities laws
applicable to the Company;

  (e)

if the Company becomes listed or quoted on a stock exchange or stock market
senior to the TSX Venture, it may make such amendments as may be required by the
policies of such senior stock exchange or stock market; and

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  (f)

amend this Plan (except for previously granted and outstanding Options) to
reduce the benefits that may be granted to Service Providers (before a
particular Option is granted) subject to the other terms hereof.

Terms or Amendments Requiring Disinterested Shareholder Approval

2.10    The Company shall obtain Disinterested Shareholder Approval prior to any
of the following actions becoming effective:

  (a)

the Plan, together with all of the Company’s other Share Compensation
Arrangements, could result at any time in:

    (i)

the aggregate number of Common Shares reserved for issuance under Options
granted to Insiders exceeding 10% of the Outstanding Shares (in the event that
this Plan is amended to reserve for issuance more than 10% of the Outstanding
Shares);

    (ii)

the number of Optioned Shares issued to Insiders within a one-year period
exceeding 10% of the Outstanding Shares (in the event that this Plan is amended
to reserve for issuance more than 10% of the Outstanding Shares); or,

    (iii)

the issuance to any one Optionee, within a 12-month period, of a number of
Common Shares exceeding 5% of Outstanding Shares; or

  (b)

any reduction in the Exercise Price of an Option previously granted to an
Insider.

Options Granted Under the Company’s Previous Share Option Plans

2.11    Any option granted pursuant to a stock option plan previously adopted by
the Board which is outstanding at the time this Plan comes into effect shall be
deemed to have been issued under this Plan and shall, as of the date this Plan
comes into effect, be governed by the terms hereof.

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ARTICLE 3
TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1     The Exercise Price of an Option will be set by the Board on the
Effective Date of the Option and cannot be less than the Discounted Market
Price.

Term of Option

3.2     An Option can be exercisable for a maximum of 10 years from the
Effective Date.

Option Amendment

3.3     Subject to §2.10(b), the Exercise Price of an Option may be amended only
if at least six (6) months have elapsed since the later of the Effective Date,
the date the Common Shares commenced trading on the TSX Venture, and the date of
the last amendment of the Exercise Price.

3.4     An Option must be outstanding for at least one year before the Company
may extend its term, subject to the limits contained in §3.2.

3.5     Any proposed amendment to the terms of an Option must be approved by the
TSX Venture prior to the exercise of such Option.

Vesting of Options

3.6     Subject to §3.7, vesting of Options shall be at the discretion of the
Board, and will generally be subject to:

  (a)

the Service Provider remaining employed by or continuing to provide services to
the Company or any of its Affiliates as well as, at the discretion of the Board,
achieving certain milestones which may be defined by the Board from time to time
or receiving a satisfactory performance review by the Company or any of its
Affiliates during the vesting period; or

  (b)

the Service Provider remaining as a Director of the Company or any of its
Affiliates during the vesting period.

Vesting of Options Granted to Consultants Conducting Investor Relations
Activities

3.7     Notwithstanding §3.6, Options granted to Consultants conducting Investor
Relations Activities will vest:

  (a)

over a period of not less than 12 months as to 25% on the date that is three
months from the date of grant, and a further 25% on each successive date that is
three months from the date of the previous vesting; or

  (b)

such longer vesting period as the Board may determine.

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Effect of Take Over Bid

3.8     If a Take Over Bid is made to the shareholders, all options issued to
directors, officers, employees and consultants that are not yet fully vested
will immediately become fully vested, unless such options are subject to vesting
restrictions in accordance with TSX Venture policies.

3.9     If a Take Over Bid is made to the shareholders generally then the
Company shall, immediately upon receipt of notice of the Take Over Bid, notify
each Optionee currently holding an Option of the Take Over Bid, with full
particulars thereof whereupon such Option may, subject to receipt of Regulatory
Approval and notwithstanding §3.6, §3.7 and §3.7 be immediately exercised in
whole or in part by the Optionee.

Extension of Options Expiring During Blackout Period

3.10    Should the Expiry Date for an Option fall within a Blackout Period, or
within nine (9) Business Days following the expiration of a Blackout Period,
such Expiry Date shall be automatically extended without any further act or
formality to that day which is the tenth (10th) Business Day after the end of
the Blackout Period, such tenth Business Day to be considered the Expiry Date
for such Option for all purposes under the Plan. Notwithstanding §2.8, the tenth
Business Day period referred to in this §3.10 may not be extended by the Board.

Optionee Ceasing to be Director, Employee or Service Provider

3.11    No Option may be exercised after the earlier of the date the Service
Provider has left his employ/office and the date that the Service Provider has
been advised by the Company that his services are no longer required or his
service contract has expired (the “Termination Date”), except as follows:

  (a)

in the case of the death of an Optionee, any vested Option held by him at the
date of death will become exercisable by the Optionee’s lawful personal
representatives, heirs or executors until the earlier of one year after the date
of death of such Optionee and the date of expiration of the term otherwise
applicable to such Option;

  (b)

Options granted to a Service Provider conducting Investor Relations Activities
will expire 90 days after the Termination Date, but only to the extent that such
Option has vested as at the Termination Date;

  (c)

any Option granted to an Optionee other than one conducting Investor Relations
Activities will expire one year after the Termination Date, but only to the
extent that such Option has vested as at the Termination Date; and

  (d)

in the case of an Optionee being dismissed from employment or service for cause,
such Optionee’s Options, whether or not vested at the date of dismissal will
immediately terminate without right to exercise same.

Non Assignable

3.12    Subject to §3.11, all Options will be exercisable only by the Optionee
to whom they are granted and will not be assignable or transferable.

Adjustment of the Number of Optioned Shares

3.13    The number of Common Shares subject to an Option will be subject to
adjustment in the events and in the manner following

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  (a)

in the event of a subdivision of Common Shares as constituted on the date
hereof, at any time while an Option is in effect, into a greater number of
Common Shares, the Company will thereafter deliver at the time of purchase of
Optioned Shares hereunder, in addition to the number of Optioned Shares in
respect of which the right to purchase is then being exercised, such additional
number of Common Shares as result from the subdivision without an Optionee
making any additional payment or giving any other consideration therefore;

  (b)

in the event of a consolidation of the Common Shares as constituted on the date
hereof, at any time while an Option is in effect, into a lesser number of Common
Shares, the Company will thereafter deliver and an Optionee will accept, at the
time of purchase of Optioned Shares hereunder, in lieu of the number of Optioned
Shares in respect of which the right to purchase is then being exercised, the
lesser number of Common Shares as result from the consolidation;

  (c)

in the event of any change of the Common Shares as constituted on the date
hereof, at any time while an Option is in effect, the Company will thereafter
deliver at the time of purchase of Optioned Shares hereunder the number of
shares of the appropriate class resulting from the said change as an Optionee
would have been entitled to receive in respect of the number of Common Shares so
purchased had the right to purchase been exercised before such change;

  (d)

in the event of a capital reorganization, reclassification or change of
outstanding equity shares (other than a change in the par value thereof) of the
Company, a consolidation, merger or amalgamation of the Company with or into any
other company or a sale of the property of the Company as or substantially as an
entirety at any time while an Option is in effect, an Optionee will thereafter
have the right to purchase and receive, in lieu of the Optioned Shares
immediately theretofore purchasable and receivable upon the exercise of the
Option, the kind and amount of shares and other securities and property
receivable upon such capital reorganization, reclassification, change,
consolidation, merger, amalgamation or sale which the holder of a number of
Common Shares equal to the number of Optioned Shares immediately theretofore
purchasable and receivable upon the exercise of the Option would have received
as a result thereof. The subdivision or consolidation of Common Shares at any
time outstanding (whether with or without par value) will not be deemed to be a
capital reorganization or a reclassification of the capital of the Company for
the purposes of this §3.13;

  (e)

an adjustment will take effect at the time of the event giving rise to the
adjustment, and the adjustments provided for in this section are cumulative;

  (f)

the Company will not be required to issue fractional shares in satisfaction of
its obligations hereunder. Any fractional interest in a Common Share that would,
except for the provisions of this §3.13, be deliverable upon the exercise of an
Option will be cancelled and not be deliverable by the Company; and

  (g)

if any questions arise at any time with respect to the Exercise Price or number
of Optioned Shares deliverable upon exercise of an Option in any of the events
set out in this §3.13, such questions will be conclusively determined by the
Company’s auditors, or, if they decline to so act, any other firm of Chartered
Accountants, in Vancouver, British Columbia (or in the city of the Company’s
principal executive office) that the Company may designate and who will be
granted access to all appropriate records. Such determination will be binding
upon the Company and all Optionees.

ARTICLE 4
COMMITMENT AND EXERCISE PROCEDURES

Option Commitment

4.1     Upon grant of an Option hereunder, an authorized officer of the Company
will deliver to the Optionee an Option Commitment detailing the terms of such
Options and upon such delivery the Optionee will be subject to the Plan and have
the right to purchase the Optioned Shares at the Exercise Price set out therein
subject to the terms and conditions hereof.

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Manner of Exercise

4.2     An Optionee who wishes to exercise his Option may do so by delivering

  (a)

a written notice to the Company specifying the number of Optioned Shares being
acquired pursuant to the Option; and

  (b)

a certified cheque, wire transfer or bank draft payable to the Company for the
aggregate Exercise Price by the Optioned Shares being acquired.

Tax Withholding and Procedures

4.3     Notwithstanding anything else contained in this Plan, the Company may,
from time to time, implement such procedures and conditions as it determines
appropriate with respect to the withholding and remittance of taxes imposed
under applicable law, or the funding of related amounts for which liability may
arise under such applicable law. Without limiting the generality of the
foregoing, an Optionee who wishes to exercise an Option must, in addition to
following the procedures set out elsewhere in this Plan, and as a condition of
exercise:

  (a)

deliver a certified cheque, wire transfer or bank draft payable to the Company
for the amount determined by the Company to be the appropriate amount on account
of such taxes or related amounts; or

        (b)

otherwise ensure, in a manner acceptable to the Company (if at all) in its sole
and unfettered discretion, that the amount will be securely funded;

and must in all other respects follow any related procedures and conditions
imposed by the Company.

Delivery of Certificate and Hold Periods

4.4     As soon as practicable after receipt of the notice of exercise described
in §4.2 and payment in full for the Optioned Shares being acquired, the Company
will direct its transfer agent to issue a certificate to the Optionee for the
appropriate number of Optioned Shares. Such certificate issued will bear a
legend stipulating any resale restrictions required under applicable securities
laws. Further, if the Exercise Price is set below than the then current market
price of the Common Shares on the TSX Venture, the certificate will also bear a
legend stipulating that the Optioned Shares are subject to a four-month TSX
Venture hold period commencing the date of the grant of the Option.

ARTICLE 5
GENERAL

Employment and Services

5.1     Nothing contained in the Plan will confer upon or imply in favour of any
Optionee any right with respect to office, employment or provision of services
with the Company, or interfere in any way with the right of the Company to
lawfully terminate the Optionee’s office, employment or service at any time
pursuant to the arrangements pertaining to same. Participation in the Plan by an
Optionee is voluntary.

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No Representation or Warranty

5.2     The Company makes no representation or warranty as to the future market
value of Common Shares issued in accordance with the provisions of the Plan or
to the effect of the Income Tax Act (Canada) or any other taxing statute
governing the Options or the Common Shares issuable thereunder or the tax
consequences to a Service Provider. Compliance with applicable securities laws
as to the disclosure and resale obligations of each Participant is the
responsibility of each Participant and not the Company.

Interpretation

5.3     The Plan will be governed and construed in accordance with the laws of
the Province of British Columbia.

Effective Date of Plan

5.4     The Plan will become effective from and after September 15, 2011.

__________

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Schedule A

SHARE OPTION PLAN

OPTION COMMITMENT

Notice is hereby given that, effective this ________ day of 
________________, ________ (the “Effective Date”), CRAILAR TECHNOLOGIES INC.
(the “Company”) has granted to ___________________________________________ (the
“Optionee”) an Option to acquire ______________ Common Shares (collectively, the
“Optioned Shares”) up to 5:00 p.m. Vancouver Time on the ________ day
of ________________, ________ (the “Expiry Date”) at an Exercise Price of US$
________ (CDN$ ____________ ) per Optioned Share.

At the date of grant of the Option the Company is classified as [a Tier ____
Issuer under TSX Venture Policies] [an NEX Issuer].

Optioned Shares will vest and may be exercised as follows:

{COMPLETE ONE}

__________ In accordance with the vesting provisions set out in Schedule B of
the Plan; 
                        or
__________ As follows: [INSERT VESTING SCHEDULE ]

The grant of the Option evidenced hereby is made subject to the terms and
conditions of the Plan, which are hereby incorporated herein and forms part
hereof.

To exercise your Option, deliver a written notice specifying the number of
Optioned Shares you wish to acquire, together with a certified cheque, wire
transfer or bank draft payable to the Company for the aggregate Exercise Price.
A certificate for the Optioned Shares so acquired will be issued by the transfer
agent as soon as practicable thereafter and will bear a minimum four month
non-transferability legend from the date of this Option Commitment, the text of
which is as follows. [The Company may grant stock options without a hold period,
provided the exercise price of the options is set at or above the market price
of the Company’s shares rather than below.].

“WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH
ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL 12:00 A.M. (MIDNIGHT) ON [insert
date 4 months from the date of grant].”.

The Company and the Optionee represent that the Optionee under the terms and
conditions of the Plan is a bona fide Service Provider (as defined in the Plan),
entitled to receive Options under TSX Venture Policies.

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The Optionee also acknowledges and consents to the collection and use of
Personal Information (as defined in the Policies of the TSX Venture Exchange) by
both the Company and the TSX Venture (or the NEX, as the case may be) as more
particularly set out in the Acknowledgement – Personal Information in use by the
TSX Venture (or the NEX, as the case may be) on the date of this Share Option
Plan.

CRAILAR TECHNOLOGIES INC.

Authorized Signatory (SIGNATURE OF OPTIONEE)

__________

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