Crailar Technologies Inc.: Exhibit 10.17 - Filed by newsfilecorp.com






	

      2011 FIXED SHARE OPTION PLAN
      

 



 

 

For: 

 

CRAILAR TECHNOLOGIES INC. 

 

 

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






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;








- 3 - 

	 	(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.  







- 4 - 

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: 




- 5 - 

	 	(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 








- 6 - 


	 	(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. 




- 7 - 

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.








- 8 - 

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 




- 9 - 

	 	(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. 




- 10 - 


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) 



__________