Document:

NRU 3QFY2015 10-Q Exhibit 10.1

 

 Executive Benefit Restoration Plan of
National Rural Utilities Cooperative Finance Corporation
REA#: 47260

Effective as of January 1, 2015

Intent and Construction.  This Plan is intended to be an unfunded and unsecured plan sponsored and maintained by the Cooperative primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees of the Cooperative.

1.    Definitions.  In addition to terms defined in quotations in parentheticals, the following definitions shall apply for purposes of the Plan:

“Actuarial Equivalent” means a benefit of equivalent present value, as of the date payment commences, to the stated EBR Benefit value under the Plan, determined in accordance with Section 21 (or successor provision) of the RS Plan, taking into account the timing rule for the Pension Limitation.

“Addendum” means the attachment to this Plan document that identifies each Participant, such Participant’s Vesting Dates, including the Initial Vesting Date and Subsequent Vesting Dates, if applicable, and such Participant’s Termination Date, if applicable.

“Beneficiary” shall mean the Participant’s beneficiary under the RS Plan.

“Board” means the Board of Directors of the Cooperative.

“Cause” shall have the meaning (A) the continued failure  by the Participant to perform material responsibilities and duties toward  the  Cooperative  (other  than  any such failure resulting from the Participant's  incapacity  due  to  physical  or  mental  illness), or (B) an act or omission  by  the  Participant  that harms or reasonably could harm the financial or reputational interests of the Cooperative.  For purposes of this Agreement,  an  act,  or failure to act, on the Participant’s part shall be considered  “willful”  or  “reckless”  only  if  done,  or  omitted, by the Participant not in good faith and without reasonable belief that the action or omission was in the best interest of the Cooperative.

“Code” means the Internal Revenue Code of 1986, as amended, including regulations and applicable authorities promulgated thereunder.

“Cooperative” means the National Rural Utilities Cooperative Finance Corporation.

“Disability” or “Disabled” means the following conditions are met:

		
	(a)
	The Participant satisfies the requirements necessary for the receipt of total disability benefits under the Long-Term Disability Plan for Employees of NRECA Member Systems (the “LTD Plan”), as the LTD Plan may be amended from time to time (whether or not the 

1

Cooperative actually participates in the LTD Plan); and

		
	(b)
	The Participant has continued to make contributions to the RS Plan, if required, for the six (6)-month period commencing with the first day of the month coincident with or next following the date his or her active employment ceased.

“EBR” or the “Plan” means this Executive Benefit Restoration Plan of National Rural Utilities Cooperative Finance Corporation, as amended from time to time.

“EBR Benefit” means the Pension Limitation amount as of the applicable determination date, taking into account all prior payments to the Participant, if any.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, including regulations and applicable authorities promulgated thereunder.

“Initial Vesting Date” means, with respect to a Participant who remains an employee of the Cooperative on such date, (i) with respect to the EBR Benefit accrued as of such date, the date designated by the Board in the Addendum as the Initial Vesting Date or, if no date is designated, the date the Participant attains age 62 as an employee of the Cooperative or the date on which the Participant has been participating in the EBR for 15 years, whichever comes first, and (ii) with respect to subsequently-accrued EBR Benefits as to which no Subsequent Vesting Date has been validly elected, the last day of the Plan Year in which such EBR Benefit accrues.

“NRECA” means the National Rural Electric Cooperative Association.

“Participant” means an employee of the Cooperative (i) who is in an “S” or “I” band position of the Cooperative or (ii) who is a member of a select group of management or highly compensated employees of the Cooperative, in each case who has been designated by the Board in writing on the Addendum as a Participant in this EBR.  The Board also may at any time determine a Participant’s Termination Date, as of which, the Participant shall cease to participate in the Plan; provided such determination shall be a prospective determination.

“Pension Limitation” means, subject to Subsection 3(d) hereof, the difference between the single sum Actuarial Equivalent of (i) the Participant’s accrued benefit under the RS Plan as calculated by NRECA without application of the limitations provided in Code §§ 401(a)(17) and 415, and (ii) the Participant’s accrued benefit under the RS Plan as calculated by NRECA after application of the limitations provided in Code §§ 401(a)(17) and 415, each of which is calculated at the time a Participant is entitled to a payment hereunder or, if earlier, Participant’s Termination Date.  For purposes of determining a Participant’s Pension Limitation, the definitions and rules in the RS Plan shall apply to this Plan, unless otherwise provided herein.  

“Plan Year” means the twelve (12)-month period beginning on January 1 and ending on December 31.

“Qualifying Termination” means, with respect to a Participant, (i) termination of the Participant’s employment with the Cooperative on account of death or Disability or (ii) involuntary termination of the Participant’s employment with the Cooperative by the Cooperative without Cause.

“RS Plan” means the Retirement Security Plan adopted by the Cooperative through NRECA.

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“RS Plan Benefit Election Date” means the date on or after a Participant’s applicable Vesting Date on which a Participant elects to commence benefits from the RS Plan but has not separated from service and thus may continue to accrue benefits under the RS Plan.

“Subsequent Vesting Date” means, with respect to a Participant who remains an employee of the Cooperative on such date, (i) with respect to the EBR Benefit accrued on such date, the Vesting Date identified by the Board in the Addendum as the Subsequent Vesting Date and (ii) with respect to subsequently-accrued EBR Benefits as to which no new Subsequent Vesting Date has been validly elected, the last day of the Plan Year in which such EBR Benefit accrues.

“Termination Date” means the date as of which the Participant ceases to be a Participant under the Plan, as designated by the Board or, if later, the date of the Participant’s termination of employment with the Cooperative.

“Vesting Date” means, subject to Subsection 4(b) hereof, the date, which may be an Initial Vesting Date or a Subsequent Vesting Date, as applicable, upon which a Participant becomes fully vested in, and the substantial risk of forfeiture lapses with respect to, his or her EBR Benefit under and determined pursuant to this Plan.  

2.    Participation.

The Participants in the EBR eligible for benefits shall be a select group of management or highly compensated employees of the Cooperative whose compensation exceeds the limits of Code § 401(a)(17) and/or whose benefit exceeds the limits of Code § 415, and who are designated in writing by the Board on the attached Addendum (or similar document adopted by the Board) as Participants, and who on their Vesting Dates, or upon such other date as the Board may designate, have a Pension Limitation hereunder.  The Board may at any time determine that a Participant shall cease participation under the Plan on a prospective basis and designate such Participant’s Termination Date.

3.    EBR Benefit Payment. 

(a)    A Participant’s EBR Benefit shall only be paid in the event that the Participant remains an employee of the Cooperative on the applicable Vesting Date of such EBR Benefit or experiences a Qualifying Termination pursuant to Subsection 4(b).

(b)    A Participant’s vested EBR Benefit shall be paid as a single lump sum that is the Actuarial Equivalent of the Pension Limitation.
 
(c)    In determining the Participant’s accrued benefit under the RS Plan to determine the Pension Limitation, there shall be included in the calculation amounts (i) paid in cash to the Participant or Beneficiary, (ii) transferred to an individual retirement account or annuity for the benefit of the Participant or Beneficiary, or (iii) transferred to the Participant's account in the NRECA 401(k) Pension Plan in such a manner to ensure that periods of benefit service are not included more than once in any determination of EBR accruals. 

(d)    In the event a Participant is eligible to receive more than one EBR Benefit (for example, in the case of a Participant who receives payment of an EBR Benefit in connection with first attaining his 

3

or her Initial Vesting Date, and subsequently accrues and becomes vested in another EBR Benefit), the Pension Limitation shall be calculated for each EBR Benefit payment.  In addition, any subsequent EBR Benefit shall be offset to take into account any EBR Benefit previously paid to the Participant by adding the differences between (i) and (ii) described in the Pension Limitation definition for the previous payments to the amount under (ii) in the Pension Limitation definition for the current payment.

(e)Prior to the Plan Year in which occurs the Participant’s Initial Vesting Date, the Participant may elect a Subsequent Vesting Date to apply to any EBR Benefit accrued in subsequent Plan Years; provided that the elected Subsequent Vesting Date is no earlier than twenty-four (24) months from the Initial Vesting Date.  Correspondingly, prior to the Plan Year in which occurs the Participant’s selected Subsequent Vesting Date, the Participant may elect a new Subsequent Vesting Date to apply to any EBR Benefit accrued in subsequent Plan Years; provided that the elected new Subsequent Vesting Date is no earlier than twenty-four (24) months from the previous Subsequent Vesting Date.  If no Initial Vesting Date or new Subsequent Vesting Date is validly elected, then further EBR Benefits shall be calculated and paid each Plan Year following the applicable Vesting Date on a fully vested basis. 

(f)If a Participant incurs an RS Plan Benefit Election Date and commences his RS Benefit while in service, in lieu of awaiting the Participant’s applicable Vesting Date to determine the Participant’s EBR Benefit, the Cooperative may elect, in its sole discretion, to calculate the Participant’s Pension Limitation as of such date, and the Participant’s EBR Benefit shall be based on such amount with respect to participation in the RS Plan through the RS Plan Benefit Election Date.  If the Cooperative elects this determination methodology, the Participant’s EBR Benefit shall be redetermined each Plan Year thereafter up to the Plan Year preceding the Participant’s applicable Vesting Date.  If this method is elected, the EBR Benefit shall be credited to an account to be paid on the Participant’s applicable Vesting Date.  The account shall be adjusted based upon the investment experience of such amount, whether held in trust or otherwise separately accounted for, to provide the basis pursuant to which earnings and losses may be attributed and credited to the account of the Participant.  The investment vehicle, vehicles, or funds for purposes of measuring the value of the amount credited to the account of the Participant shall be determined by the Cooperative.  However, the Participant, in the sole discretion of the Cooperative, may designate the investment vehicle to be used for purposes of measuring the value of the amount credited to the account of the Participant.  Neither the trustee of the trust with respect to which assets may be held, if any, nor the Cooperative shall be obligated to make actual investments in any such investment vehicles or funds.  The account established pursuant to this Subsection 3(f) shall be maintained for bookkeeping purposes only and shall not represent any actual investment made by the Cooperative or a trust, if any.  For the avoidance of doubt, a Participant who continues to be employed by the Cooperative after his or her RS Plan Benefit Election Date shall continue to participate in the Plan until his or her Termination Date.

4.    EBR Benefit Forfeitable by Participant.

(a)    The EBR Benefit is subject to a substantial risk of forfeiture and, subject to Subsection 4(b) hereof, shall be forfeited in its entirety if the Participant's employment with the Cooperative is terminated for any reason before the applicable Vesting Date for such Participant.

(b)    If a Participant shall incur a Qualifying Termination, the Participant shall become fully vested in, and the substantial risk of forfeiture shall lapse with respect to, his or her EBR Benefit under and determined pursuant to this Plan.

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(c)    A Participant’s eligibility for the EBR Benefit under this Plan shall not be transferrable to another employer. 

(d)    It is the intention of the Cooperative that the forfeiture provision of this EBR shall constitute a substantial risk of forfeiture as defined in Code § 457(f)(3)(B).

5.    Timing and Form of Payment.

(a)    The Participant’s vested EBR Benefit shall be payable to the Participant (or if deceased, to his or her Beneficiary) from the general assets of the Cooperative in a lump sum payment immediately upon the Participant’s applicable Vesting Date, but in no event later than two and a half (2 1⁄2) months following the calendar year in which the applicable Vesting Date occurs; however, payments received by a Participant in the calendar year following the calendar year of the applicable Vesting Date shall be treated as includable income for the calendar year in which the Vesting Date occurred.  The Cooperative has the sole responsibility for compliance with the timely payment of EBR Benefits.  Payment of an EBR Benefit may be delayed if calculation of the Pension Limitation cannot be performed for any reason (including because necessary data is not available or has not been provided to NRECA), but in no event will payment occur later than two and a half (2 1⁄2) months following the calendar year in which the applicable Vesting Date occurs.

(b)    The Cooperative shall make arrangements to satisfy any federal, state, or local income tax withholding requirements, employment taxes, or other requirements applicable to the granting, crediting, vesting, or payment of benefits under the Plan.  There shall be deducted from any payment under the Plan or any other compensation payable to the Participant all taxes which are required to be withheld by the Cooperative in respect to such payment or the Plan.  Determining withholding and payment of taxes shall be the responsibility of the Cooperative and not NRECA.

6.    Amendment and Termination.  The Board may amend any or all provisions of this Plan at any time by written instrument identified as an amendment effective as of a specified date.  The EBR may be terminated in whole or in part at any time by action of the Board.  However, no such amendment or termination shall reduce any benefit accrued by a Participant in this Plan prior to the effective date of the amendment or termination.
7.    Assets of the Plan and Benefit Payments.  The EBR Benefits payable pursuant to this EBR shall be payable from the general assets of the Cooperative.  The Cooperative may elect to place assets in a grantor trust to provide itself with a source of funds to meet its obligations under the Plan, provided that the assets of such trust remain subject to the general creditors of the Cooperative.  No part of the Participant's EBR Benefit shall be liable for the debts, contracts, or engagements of any Participant, nor shall a Participant's EBR Benefit be subject to execution, levy, attachment, or garnishment.  No Participant (or his or her successor or assigns) shall have any right to alienate, anticipate, sell, transfer, encumber, or assign any benefits or payments hereunder in any manner whatsoever.
8.    Death of Participant.

(a)    Death Prior to Vesting Date.  In the event of a Participant’s death prior to his attainment of the applicable Vesting Date, his accrued but unvested EBR Benefit shall vest and be paid to the 

5

Participant’s Beneficiaries.  The amount so payable shall be determined using the same calculation methodology used by the RS Plan to determine the amount payable to the Participant’s beneficiaries from the RS Plan.

(b)    Death Following Vesting Date. In the event of the death of a Participant following an applicable Vesting Date as to which his or her EBR Benefit remains unpaid at the time of death, the unpaid EBR Benefit shall be paid to the Participant’s Beneficiary.

9.    Disability.  A Participant who becomes Disabled, and whose participation in the RS Plan continues under the RS Plan waiver, will cease accruing an EBR Benefit as of the date on which he or she is determined to be Disabled.  The EBR Benefit will be calculated as of the date on which the Participant is determined by the Board to be Disabled, and the Cooperative will distribute the EBR Benefit to the Participant within sixty (60) days, but in no event less than two and a half (2 1⁄2) months following the end of the calendar year in which the Participant was determined by the Board to be Disabled.

10.    General Administrative Powers and Duties.

(a)    General administration of the Plan shall be delegated to the Board.  The Board shall have the power to take all actions and to make all determinations required to carry out the provisions of the EBR and shall further have the following powers and duties which shall be exercised in a manner consistent with the provisions of the EBR:

(i)    To construe and interpret the provisions of the EBR and to make rules and regulations under the EBR to the extent deemed advisable;

(ii)    To make all determinations and decide all questions as to an individual’s initial and continuing eligibility to be a Participant in the EBR (including the Participant’s Termination Date, as applicable) and as to the rights and benefits (including Vesting Dates) of Participants under the EBR;

(iii)    To file or cause to be filed all such reports and other statements as may be required by any federal or state statute, agency, or authority for the EBR; and 

(iv)    To do or take such other acts as it deems necessary or advisable to administer the EBR in accordance with its provisions or as may be required by applicable law.

11.    Grant of Discretion.  In discharging the duties assigned to it under the EBR, the Board and its delegates have the discretion and final authority to interpret and construe the terms of the EBR; to determine coverage and eligibility for, and amount of benefits under, the EBR; to adopt, amend, and rescind rules, regulations, and procedures pertaining to its duties under the EBR and the administration of the EBR; and to make all other determinations deemed necessary or advisable for the discharge of its duties or the administration of the EBR.  The discretionary authority of the Board and its delegates is final, absolute, conclusive, and exclusive, and binds all parties, so long as exercised in good faith.  Any judicial review of any decision of the Board or its delegates shall be limited to the arbitrary and capricious standard of review.

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12.    Claim Adjudicator.  All claims for benefits under the EBR shall be determined by the Cooperative, which shall be the administrator and named fiduciary of the Plan for purposes of Section 503 of ERISA with respect to adjudication of such claims for benefits under the EBR.

13.    Claim Procedure.  Upon the submission of a claim for benefits under the EBR to the Cooperative, notice of a decision with respect to the claim shall be furnished within ninety (90) days.  If circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished by the Cooperative to the claimant prior to the expiration of the initial ninety (90)-day period.  The notice of extension shall indicate the circumstances requiring the extension and the date by which the notice of the decision with respect to the claim shall be furnished.  Commencement of benefit payment shall constitute notice of approval of a claim to the extent of the amount of approved benefit.  If such claim is wholly or partially denied, such notice shall be in writing and worded in a manner calculated to be understood by the claimant and shall set forth (a) the reason or reasons for the denial, (b) specific reference to pertinent provisions of the EBR on which the denial was based, (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and (d) an explanation of the claims review procedure.  If the claimant is not notified of the decision in accordance with this Section 13, such claim shall be deemed denied, and the claimant shall then be permitted to proceed with the claims review procedure provided in Section 14 hereof.

14.    Claims Review Procedure.

(a)     Within ninety (90) days following receipt of notice of a claim denial, or within ninety (90) days following close of the ninety (90)-day period referred to in Section 13 hereof, the claimant may file an appeal of the denial of a claim in writing with the Board requesting a review of such denial.

(b)    Prior to a decision on the appeal by the Board, the claimant or the claimant's duly authorized representative may review pertinent documents and submit issues and comments in writing for consideration.  The issues and comments submitted by a claimant or the claimant's duly authorized representative shall supplement the administrative record on which the appeal is to be decided and should contain all of the additional information the claimant wishes to be considered in the review.

(c)    Within sixty (60) days following timely receipt of an appeal, the Board shall render a written decision.  If circumstances require an extension of time for reviewing an appeal, written notice of the extension shall be furnished to the claimant or the claimant's authorized representative prior to the commencement of the extension.  If an extension of time is elected, the Board shall render its decision within one hundred twenty (120) days after timely receipt of the appeal.

(d)    The Board's decision on the appeal shall be in writing, worded in a manner calculated to be understood by the claimant, and shall set forth (a) the reason or reasons for the decision and (b) specific reference to pertinent provisions of the EBR on which the denial was based.

(e)    Any action brought for judicial review of the Board’s decision may be made only after exhaustion of the claims review process and must commence within one year following the date on which the Board renders its final decision to the claimant in writing.

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15.    Notices.

(a)     The Cooperative shall notify NRECA in writing upon the occurrence of any of the following events:

(i)    The date a Participant experiences a Vesting Date or a Qualifying Termination and becomes due a payment under the EBR,

(ii)    The payment of an EBR Benefit to a Participant in the EBR, including the amount and time of the payment, 

(iii)    The adoption, amendment, or termination of the EBR, including a copy of the signed EBR, as adopted or amended, and the Board resolution authorizing such action or the resolution authorizing the termination of the EBR, and

(iv)    The date on which the Participant experiences an RS Plan Benefit Election Date under the RS Plan.

(b)    All notices sent to NRECA shall be mailed to:
            
Debi Strong
Deferred Compensation Products Group
Insurance & Financial Services Department
National Rural Electric Cooperative Association
4301 Wilson Boulevard
Arlington, Virginia 22203

16.    No Right to Employment.  Nothing in the EBR shall constitute, nor be interpreted to constitute, a promise or representation with respect to the employment or service relationship, or continued employment or service relationship, of any individual by the Cooperative or any other entity.

17.    No Waiver or Estoppel.  No term, condition, or provision of the EBR shall be deemed to have been waived, and there shall be no estoppel against the enforcement of any provision of the EBR, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

18.    Misstatements of Information.  In the event of any misstatement of any fact affecting benefits and/or eligibility for benefits, the true facts shall be used to determine eligibility and benefits.

19.      Applicable Law.  The provisions of this EBR shall be construed according to the laws of the State of Virginia, except as preempted by Federal law and in accordance with the Code and ERISA.

20.    Code § 409A.  The Plan is intended to be exempt from Code § 409A as a short-term deferral plan because benefits under the Plan must be paid no later than two and a half (2 1⁄2) months following the calendar year in which the applicable Vesting Date occurs.  However, to the extent that for any reason any benefit provided under the Plan is treated as deferred compensation for purposes of 

8

Code § 409A, then notwithstanding any provision to the contrary in this EBR, each provision in this EBR shall be interpreted to comply with Code § 409A and the guidance issued thereunder.  Any provision of the EBR that would conflict with such requirements shall not be valid or enforceable.

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IN WITNESS WHEREOF, the Cooperative has caused this document to be executed as of December 9, 2014.  

	
		
	 
	NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

By: /s/ SHELDON C. PETERSEN
Name:  Sheldon C. Petersen
Title: Chief Executive Officer

10Crailar 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; 

- 2 - 

	 	(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. 

- 11 - 

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.

__________ 

- 12 - 

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. 

- 13 - 

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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