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






Exhibit
10.17

 

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 as approved by the shareholder on November 6, 2013 and
accepted by the TSX 
Venture Exchange on January 21, 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);







- 2 - 

	 	(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;

	 	 	 	 
	 	(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;







- 3 - 

	 	(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;

	 	 	 	 
	 	(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;







- 4 - 

	 	(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;







- 5 - 

	 	
      (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.
  



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. 




- 6 - 

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 8,894,539 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:


	 	(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;







- 7 - 

	 	(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;







- 8 - 

	 	(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

	 	 	 
	 	(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. 




- 9 - 

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







- 10 - 

		(b) 	
      such longer vesting period as the Board may
    determine.



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. 







- 11 - 

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 

	 	(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.







- 12 - 

	 		
      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. 

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: 




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	 	(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. 

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. 




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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:

[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) 

__________