Document:

Exhibit
10.62

SECURITY AGREEMENT

 

This Security Agreement
is executed by Axion Power International, Inc., a Delaware corporation, and its subsidiaries, as Debtor, and Robert Averill, an
individual as Secured Party.

I

CREATION OF SECURITY INTEREST

 

Debtor hereby grants
to Secured Party a first priority security interest in the collateral described in this Security Agreement pursuant to the New
Jersey Uniform Commercial Code as in effect in New Jersey, N.J.S.A. 12A:1-101, et seq. (the “UCC”).

 

II

 

 OBLIGATIONS SECURED

 

The security interest
is granted to Secured Party to secure the following obligations:

 

A. Payment of the
indebtedness evidenced by an Amended Promissory Note of this same date executed by Debtor, payable to the order of Secured Party,
in the principal amount of Eight Hundred and One Thousand and Forty-Nine Dollars ($801,049.00), bearing interest at the initial
rate of nine percent (9%) compounded monthly, which will increase by one percent (1%) every month (up to the maximum rate allowed
by New Jersey law) beginning on September 16, 2014 and continuing until all principal, accured interest, as well as the accumulated
legal fees referenced therein have been paid in full, together with any renewals, extensions, modifications, or amendments of
the Amended Promissory Note (the “Note”); and

 

B.Upon
a default under the Note by the Debtor, the expenses and costs incurred or paid by Secured Party in the maintenance and preservation
of the collateral and the enforcement of the rights of Secured Party and the duties of Debtor as stated in this Security Agreement,
including, without limitation, reasonable attorneys’ fees, court costs, foreclosure expenses, and witness fees.

 

    	1

    	 

    

 

III

 

 DESCRIPTION OF COLLATERAL

 

The collateral of this
Security Agreement consists of the following:

 

1.All of Debtor’s
intellectual property.

 

2.All substitutions,
replacements, developments or accessions of the above-described collateral.

 

IV

 

CLASSIFICATION OF COLLATERAL

 

Debtor acknowledges
that at the time the security interest attaches, the collateral consists of intangible personal property, i.e., intellectual property.

 

V

 

PERFECTION OF SECURITY INTEREST

 

To perfect the security
interest granted to Secured Party by the terms of this Security Agreement, Debtor agrees to the following:

 

A.Debtor authorizes Secured Party
to file financing statements in all states, counties, and other jurisdictions as Secured Party may elect, without Debtor’s
signature as permitted by law.

 

B.Debtor shall execute and deliver
to Secured Party, in form and substance satisfactory to Secured Party, such financing statements and such further assurances as
Secured Party may, from time to time, consider reasonably necessary to create, perfect and preserve Secured Party’s security
interest herein granted, and Secured Party may cause such statements and assurances to be recorded and filed at such times and
places as may be required or permitted by law to so create, perfect and preserve such security interest.

 

    	2

    	 

    

 

Upon performance of
all obligations of Debtor to Secured Party that are secured by this Security Agreement, Secured Party (i) authorizes Debtor to
file financing termination statements and the like in all states, counties and other jurisdictions as Debtor may elect, without
Secured Party’s signature as permitted by law, and (ii) agrees to surrender possession of the original security instruments
to Debtor and to execute such documents as may be necessary to completely release Secured Party’s security interest created
hereby.

 

VI

 

DEBTOR’S COVENANTS AND WARRANTIES

 

A.Debtor is a corporation duly
organized and existing under the laws of the State of Delaware, is in good standing under the laws of the State of Delaware, and
the granting of the security interest and the performance of all other obligations provided in this Agreement are within the Debtor’s
powers, have been duly authorized, and are not in contravention of any law or the Debtor’s Articles of Organization, or any
agreement or undertaking of which Debtor is a party or by which it is bound.

 

B.Debtor agrees that during the
term of this Security Agreement, and as long as any obligation that is subject to this Security Agreement remains outstanding,
Debtor will not grant a security interest in the collateral or any part thereof to any person except as otherwise authorized in
accordance with the provisions of Article VI below.

 

C.During the term of this Security
Agreement, Debtor shall keep the collateral free and clear from any and all liens, encumbrances, and other security interests,
except with respect to those created hereunder, and will pay, prior to delinquency, all taxes, charges, encumbrances, liens, and
assessments against the collateral, and, should the Debtor fail to do so, Secured Party may, but shall not be required, to pay
or discharge the same. Debtor shall give Secured Party ten (10) days’ notice in the event of default of any of these obligations.
Debtor shall reimburse Secured Party for any such payments.

 

    	3

    	 

    

 

D.Debtor shall execute any and
all Financing Statements relating to the perfection, amendment, release, or termination of the security interest created hereby.
The Debtor hereby authorizes and appoints Secured Party, in the case of need, to sign on behalf of Debtor will full power of substitution
as the Debtor’s attorney-in-fact only with respect to the filing of such Financing Statements.

 

VII

 

USE OF COLLATERAL

 

So long as the Debtor
is not in default under the terms of this Security Agreement, Debtor may use the collateral in the ordinary course of Debtor’s
business. This right includes, but is not limited to, the use of collateral in the manufacture, preparation, and delivery of goods.

 

VIII

 

DEFAULT PROVISIONS

 

A.Definition of Default.
The occurrence of any of the following shall constitute a default by the Debtor under this Security Agreement;

 

1.The failure by Debtor to pay
or perform any obligations secured by the terms of this Security Agreement or to pay or perform under the Promissory Note executed
by it in conjunction with this Security Agreement.

 

2.The failure of Debtor to perform
any of Debtor’s obligations under the terms of this Security Agreement.

 

    	4

    	 

    

 

3.A material breach of any covenant
or representation made to Secured Party herein.

 

4.The filing of a petition by or
against the Debtor under any state or federal law relating to the relief of debtors, any assignment by Debtor for the benefit of
creditors, or the insolvency or cessation of business by Debtor.

 

5.The sale, transfer, alienation,
encumbrance, or other disposition of the collateral, or of any party thereof or of any interest therein, whether voluntary or involuntarily,
without the prior written consent of Secured Party, except for encumbrances of the collateral as permitted in accordance with the
provisions of article VII above.

 

B.Notice and Right to Cure.

 

1.Notice. Secured Party
must, before pursuing any remedy for an alleged default by Debtor, give written notice of default to Debtor. Each notice of default
must specify the alleged event of default.

 

2.Debtor’s Right to Cure
Defaults. Debtor shall have thirty (30) days in which to cure a default after the delivery of the notice of default by Secured
Party. However, if a non-monetary default cannot reasonably be cured within thirty (30) days, then Debtor is not to be considered
in default if Debtor commences to cure the default within the thirty (30) day period and diligently and in good faith continues
to cure the default thereafter. In the event of a monetary default that is substantially cured within the thirty (30) day notice
period, Secured Party will provide reasonable time to complete the cure.

 

    	5

    	 

    

 

IX

 

SECURED PARTY’S RIGHTS AND REMEDIES

 

Upon the occurrence
of default that remains uncured within the time limit set forth in section VIII by Debtor, Secured Party may exercise the rights
of enforcement contained in the Uniform Commercial Code in force in New Jersey at the date of the default, including, but not limited
to, the following:

 

A.Acceleration. Secured
Party may, at Secured Party’s option, declare immediately due and payable the obligations of Debtor to Secured Party which
are secured hereby, and the same shall, upon notice to or demand on Debtor, become immediately due and payable.

 

B.Right to Possession of Collateral.
The Secured Party shall have the right to take possession of the collateral and the Debtor agrees to cooperate fully with Secured
Party in the exercise of Secured Party’s right to take possession of the collateral. This right includes, but is not limited
to, Debtor’s obligation to assemble and deliver the collateral or some portion of the collateral or some part or component
of the collateral upon request of the Secured Party, to a place designated by the Secured Party where it shall be made available
to the Secured Party. Failure to cooperate shall constitute a breach of this Agreement and the Debtor shall be liable for any and
all expenses incident to such failure or cooperation.

 

C.Right to Dispose of Collateral.
The Secured Party shall have the right to dispose of the collateral by public or private proceeding and by way of one or more contracts.
Such sale or other disposition of the collateral may be made as a unit or in parcels and at such time and on such terms as Secured
Party may determine, provided only that the disposition effected is commercially reasonable. Disposition of the collateral may
be from the premises of Debtor and Debtor agrees to cooperate fully in facilitating such a disposition, which may include, on request,
the obligation to assemble the collateral in some designated location of the Debtor where the collateral shall be made available
to prospective buyers. Disposition of the collateral may be from any other commercially reasonable location, including the principal
place of business of Secured Party.

 

    	6

    	 

    

 

D.Notice of Sale. Debtor
and Secured Party agree that notice of disposition of the collateral shall be commercially reasonable if such notice is received
by the Debtor by facsimile or hand delivery, as well as sent by regular and certified mail, return receipt requested, at least
ten (10) days prior to the date of the public sale or the date after which a private sale or other disposition may be effected.

 

E.Proceeds of Sale. The
proceeds of any sale or disposition of the collateral shall be applied in the manner provided by law and shall include any and
all expenses provided in this Agreement. Debtor agrees that Secured Party shall be entitled to recover reasonable attorneys’
fees and costs incurred by the Secured Party in exercising its rights and remedies under this Agreement. Upon payment of Secured
Party’s principle, interests and expenses as allowed by this agreement and by law, Secured Party will return possession of
all collateral to Debtor and agrees to execute such documents as may be necessary to completely release Secured Party’s security
interest created hereby.

 

F.Deficiency. In the event
the proceeds of collection, sale or disposition of the collateral are not sufficient to discharge Debtor’s obligation secured
hereby, Debtor shall be liable for the deficiency.

 

    	7

    	 

    

 

X

 

MISCELLANEOUS

 

A.Notices. Except as otherwise
expressly provided in this Security Agreement or by law, all notices must be in writing and shall be considered given upon delivery
of, or if mailed, upon the first to occur of actual receipt or the expiration of three (3) days after the deposit in United States
Postal Service mail, first class, postage prepaid and addressed at the address specified. Notices must be given by email and any
other method of delivery, such as facsimile, regular mail, overnight or personal delivery, to the parties listed below:

 

	To Secured Party:	Robert Averill
	 	 	377 Cupsaw Drive
	 	 	Ringwood, New Jersey 07456
	 	 	Facsimile:  973-962-6138
	 	 	Email:  averillbob@yahoo.com
	 	 	 
	 	With copy to:	Christopher Nucifora, Esq.
	 	 	Kaufman Dolowich & Voluck, LLP
	 	 	Court Plaza South
	 	 	21 Main Street, Suite 251
	 	 	Hackensack, New Jersey 07601
	 	 	Facsimile:  201-488-6652
	 	 	Email:  cnucifora@kdvlaw.com
	 	 	 
	To Debtor:	Axion Power International, Inc.
	 	 	Thomas Granville
	 	 	3601 Clover Lane
	 	 	New Castle, Pennsylvania 16105
	 	 	Facsimile:  724-654-3300
	 	 	Email:  tgranville@axionpower.com
	 	 	 
	 	With copy to:	Jolie Kahn, Esq.
	 	 	2 Liberty Place
	 	 	50 South 16th Street
	 	 	Suite 3401
	 	 	Philadelphia, Pennsylvania 19102
	 	 	Facsimile:  866-705-3071
	 	 	Email:  joliekahnlaw@sbcglobal.net

 

    	8

    	 

    

 

Any change in the address of any party
shall be given by the party having such change to the other parties in the manner provided above. Thereafter, all notices shall
be given in accordance with the notice of change of address. Notices given before actual receipt of the notice of change of address
shall not be invalidated by change of address.

 

B.Time of the Essence. Time
is of the essence of this Security Agreement.

 

C.Waiver. The waiver by
either party of the time for performing any act shall not constitute a waiver of the time for performing any other act or of an
identical act required to be performed at a later time. The exercise of any remedy provided for in this Security Agreement shall
not constitute a waiver of any other remedy provided by law.

 

D.Severability.The unenforceability,
invalidity, or illegality of any provisions of this Security Agreement shall not render any other provision unenforceable, invalid,
or illegal.

 

E.Choice of Law. This Security
Agreement shall be governed by and interpreted under the laws of the State of New Jersey in force from time to time.

 

F.Gender and Number. As
used in this Security Agreement, the masculine, feminine, or neuter gender, and the singular or plural number, shall each be considered
to include the others whenever the context so indicates.

 

G.Binding Effect. This Security
Agreement shall inure to the benefit of, and be binding upon, the heirs, assigns, transferees, personal representatives, and successors
in interest of the parties hereto.

 

H.Captions. The captions
in this Security Agreement shall have no effect on its interpretation.

 

    	9

    	 

    

 

I.Counterparts and Fax Signatures.
This Security Agreement may be signed in counterpart and all signatures shall constitute the entire agreement. Signature by facsimile
shall be deemed original.

 

Dated this 30th day of June,
2014

 

	 	DEBTOR	 
	 	 	 	 
	 	 	AXION POWER INTERNATIONAL, INC.
	 	 	A Delaware Corporation
	 	 	 	 
	 	 	 	 
	 	 	By: /s/ 	Thomas Granville
	 	 	 	Thomas Granville
	 	 	 	C.E.O.
	 	 	 	 
	 	SECURED PARTY
	 	 	 	 
	 	 	ROBERT AVERILL
	 	 	 	 
	 	 	 	 
	 	 	/s/ Robert Averill
	 	 	 	 
	 	 	 	 

 

    	10Crailar Technologies Inc.: Exhibit 4.10 - Filed by newsfilecorp.com

 

WARRANT CERTIFICATE

THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE
AFTER 5:00 PM (VANCOUVER TIME) ON ________ , 2019. 

WARRANT TO PURCHASE 
COMMON SHARES
OF CRAILAR TECHNOLOGIES INC. 

	Warrant Certificate Number: 2014-____________ 	Number of Warrants: 
  _________________

                    
THIS IS TO CERTIFY THAT for value received, _________ of
________________ (the “Warrantholder”) has the right to purchase
in respect of each warrant (the “Warrants”) represented by this
certificate or by a replacement certificate (in either case this “Warrant
Certificate”), at any time up to 5:00 p.m. (Vancouver time) on __________,
2019 (the “Expiry Time”) _____fully paid and non-assessable common share
(the “Common Shares” and which term shall include any shares or other
securities to be issued in addition thereto or in substitution or replacement
therefor as provided herein) of Crailar Technologies Inc. (the
“Corporation”), a corporation incorporated under the Business
Corporations Act (British Columbia), as constituted on the date hereof, at
an exercise purchase price (the purchase price in effect from time to time being
called the “Exercise Price”) of US$____________per Common Share if
exercised on or before on ____________, 2019, subject to adjustment as provided
herein. 

                    
The Corporation agrees that the Common Shares purchased pursuant to the exercise
of the Warrants shall be and be deemed to be issued to the Warrantholder as of
the close of business on the date on which this Warrant Certificate shall have
been surrendered and payment made for such Common Shares as aforesaid. 

                    
Nothing contained herein shall confer any right upon the Warrantholder to
subscribe for or purchase any Common Shares at any time after the Expiry Time
and from and after the Expiry Time the Warrants and all rights under this
Warrant Certificate shall be void and of no value. 

                    
The above provisions are subject to the following: 

1.                
 Exercise 

1.1              
In the event that the Warrantholder desires to exercise the right to purchase
Common Shares conferred hereby, the Warrantholder shall (a) surrender this
Warrant Certificate to the Corporation in accordance with section 9 hereof, (b)
complete and execute a subscription form in the form attached as Schedule A to
this Warrant Certificate, and (c) pay the amount payable on the exercise of this Warrant in respect of the
Common Shares subscribed for either by bank draft or cheque payable to the
Corporation. Upon such surrender and payment as aforesaid, the Warrantholder
shall be deemed for all purposes to be the holder of record of the number of
Common Shares to be so issued and the Warrantholder shall be entitled to
delivery of a certificate or certificates representing such Common Shares and
the Corporation shall cause such certificate or certificates to be delivered to
the Warrantholder at the address specified in the subscription form within five
business days after such surrender and payment as aforesaid. No fractional
Common Shares will be issuable upon any exercise of this Warrant and the
Warrantholder will not be entitled to any cash payment or compensation in lieu
of a fractional Common Share. 

- 2 - 

2.                 Partial
Exercise 

2.1              
The Warrantholder may from time to time subscribe for and purchase any lesser
number of Common Shares than the number of Common Shares expressed in this
Warrant Certificate. In the event that the Warrantholder subscribes for and
purchases any such lesser number of Common Shares prior to the Expiry Time, the
Warrantholder shall be entitled to receive a replacement certificate
representing the unexercised balance of the Warrants. 

3.                
 Not a Shareholder 

3.1              
The holding of the Warrants shall not constitute the Warrantholder a shareholder
of the Corporation nor entitle the Warrantholder to any right or interest in
respect thereof except as expressly provided in this Warrant Certificate. 

4.                 
Covenants and Representations 

4.1              
The Corporation hereby represents and warrants that it is authorized to issue
and that it will cause the Common Shares from time to time subscribed for and
purchased in the manner provided in this Warrant Certificate and the certificate
representing such Common Shares to be issued and that, at all times prior to the
Expiry Time, it will reserve and there will remain unissued a sufficient number
of Common Shares to satisfy the right of purchase provided in this Warrant
Certificate. The Common Shares (including the shares to be issued upon exercise
of the Warrants) are listed on the TSX Venture Exchange and trade on the OTCQB
tier of the OTC Markets Group, Inc. The Corporation hereby further covenants and
agrees that it will at its expense expeditiously use its best efforts to obtain
the listing of such Common Shares (subject to issue or notice of issue) on each
stock exchange or over-the-counter market on which the Common Shares may be
listed from time to time. All Common Shares which are issued upon the exercise
of the right of purchase provided in this Warrant Certificate, upon payment
therefor of the amount at which such Common Shares may be purchased pursuant to
the provisions of this Warrant Certificate, shall be and be deemed to be fully
paid and non-assessable shares and free from all taxes, liens and charges with
respect to the issue thereof. The Corporation hereby represents and warrants
that this Warrant Certificate is a valid and enforceable obligation of the
Corporation, enforceable in accordance with the provisions of this Warrant
Certificate. The Corporation hereby further covenants and agrees that it shall
make all requisite filings under the securities laws of the United States of
America and each Province of Canada and the respective regulations made
thereunder including those necessary to remain a reporting issuer not in default of any requirement of such acts
and regulations. The Corporation hereby represents and warrants that it will at
all times prior to the Expiry Time of any Warrants hereunder maintain its
existence, will carry on and conduct its business in a prudent manner in
accordance with industry standards and good business practice, and will keep or
cause to be kept proper books of account in accordance with applicable law. 

- 3 - 

5.                 
Anti-Dilution Protection: 

5.1               
 Definitions: For the purposes of this section 5, unless there is
something in the subject matter or context inconsistent therewith, the words and
terms defined below shall have the respective meanings specified therefor in
this subsection 5.1: 

	 	(a) 	
      “Adjustment Period” means the period commencing on
      
__________
, 2014 and ending at the Expiry Time;

	 	 	 
	 	(b) 	
      “Current Market Price” of the Common Shares at any
      date means the price per share equal to the weighted average price at
      which the Common Shares have traded on the TSX Venture Exchange or, if the
      Common Shares are not then listed on the TSX Venture Exchange, on such
      other Canadian stock exchange as may be selected by the directors of the
      Corporation for such purpose or, if the Common Shares are not then listed
      on any Canadian stock exchange, in the over-the- counter market, during
      the period of any 20 consecutive trading days ending not more than five
      business days before such date; provided that the weighted average price
      shall be determined by dividing the aggregate sale price of all Common
      Shares sold on the said exchange or market, as the case may be, during
      such 20 consecutive trading days by the total number of Common Shares so
      sold; and provided further that if the Common Shares are not then listed
      on any Canadian stock exchange or traded in the over-the-counter market,
      then the Current Market Price shall be determined by such firm of
      independent chartered accountants as may be selected by the directors of
      the Corporation;

	 	 	 
	 	(c) 	
      “director” means a director of the Corporation for
      the time being and, unless otherwise specified herein, a reference to
      action “by the directors” means action by the directors of the Corporation
      as a board or, whenever empowered, action by any committee of the
      directors of the Corporation; and

	 	 	 
	 	(d) 	
      “trading day” with respect to a stock exchange or
      over-the-counter market means a day on which such stock exchange or market
      is open for business.

5.2                 Adjustments:
The Exercise Price and the number of Common Shares issuable to the Warrantholder
pursuant to this Warrant Certificate shall be subject to adjustment from time to
time in the events and in the manner provided as follows: 

	 	(a) 	
      If at any time during the Adjustment Period the
      Corporation shall:

- 4 - 

	 	(i) 	
      fix a record date for the issue of, or issue, Common
      Shares to the holders of all or substantially all of the outstanding
      Common Shares by way of a stock dividend;

	 	 	 
	 	(ii) 	
      fix a record date for the distribution to, or make a
      distribution to, the holders of all or substantially all of the
      outstanding Common Shares payable in Common Shares or securities
      exchangeable for or convertible into Common Shares;

	 	 	 
	 	(iii) 	
      subdivide the outstanding Common Shares into a greater
      number of Common Shares; or

	 	 	 
	 	(iv) 	
      consolidate the outstanding Common Shares into a lesser
      number of Common Shares;

(any of such events in subclauses
5.2(a)(i), 5.2(a)(ii), 5.2(a)(iii) and 5.2(a)(iv) above being herein called a
“Common Share Reorganization”), the Exercise Price shall be adjusted on
the earlier of the record date on which holders of Common Shares are determined
for the purposes of the Common Share Reorganization and the effective date of
the Common Share Reorganization to the amount determined by multiplying the
Exercise Price in effect immediately prior to such record date or effective
date, as the case may be, by a fraction: 

	 	(A) 	
      the numerator of which shall be the number of Common
      Shares outstanding on such record date or effective date, as the case may
      be, before giving effect to such Common Share Reorganization;
and

	 	 	 
	 	(B) 	
      the denominator of which shall be the number of Common
      Shares which will be outstanding immediately after giving effect to such
      Common Share Reorganization (including in the case of a distribution of
      securities exchangeable for or convertible into Common Shares the number
      of Common Shares that would have been outstanding had such securities been
      exchanged for or converted into Common Shares on such
  date).

To the extent that any adjustment in
the Exercise Price occurs pursuant to this clause 5.2(a) as a result of the
fixing by the Corporation of a record date for the distribution of securities
exchangeable for or convertible into Common Shares, the Exercise Price shall be
readjusted immediately after the expiry of any relevant exchange or conversion
right to the Exercise Price which would then be in effect based upon the number
of Common Shares actually issued and remaining issuable after such expiry and
shall be further readjusted in such manner upon the expiry of any further such
right. If the Warrantholder has not exercised its right to subscribe for and
purchase Common Shares on or prior to the record date of such stock dividend or
distribution or the effective date of such subdivision or consolidation, as the
case may be, upon the exercise of such right thereafter shall be entitled to receive and shall accept in lieu of the
      number of Common Shares then subscribed for and purchased by the
      Warrantholder, at the Exercise Price determined in accordance with this
      clause 5.2(a) the aggregate number of Common Shares that the Warrantholder
      would have been entitled to receive as a result of such Common Share
      Reorganization, if, on such record date or effective date, as the case may
      be, the Warrantholder had been the holder of record of the number of
Common Shares so subscribed for and purchased.

- 5 - 

	 	(b) 	
      If at any time during the Adjustment Period the
      Corporation shall fix a record date for the issue or distribution to the
      holders of all or substantially all of the outstanding Common Shares of
      rights, options or warrants pursuant to which such holders are entitled,
      during a period expiring not more than 45 days after the record date for
      such issue (such period being the “Rights Period”), to subscribe
      for or purchase Common Shares or securities exchangeable for or
      convertible into Common Shares at a price per share to the holder (or in
      the case of securities exchangeable for or convertible into Common Shares,
      at an exchange or conversion price per share) at the date of issue of such
      securities of less than 95% of the Current Market Price of the Common
      Shares on such record date (any of such events being called a “Rights
      Offering”), the Exercise Price shall be adjusted effective immediately
      after the record date for such Rights Offering to the amount determined by
      multiplying the Exercise Price in effect on such record date by a
      fraction:

	 	(i) 	
      the numerator of which shall be the aggregate
  of:

	 	 	 	 
	 		(A) 	
      the number of Common Shares outstanding on the record
      date for the Rights Offering; and

	 	 	 	 
	 		(B) 	
      the quotient determined by
dividing:

	 	(I) 	
      either (a) the product of the number of Common Shares
      offered during the Rights Period pursuant to the Rights Offering and the
      price at which such Common Shares are offered, or, (b) the product of the
      exchange, exercise or conversion price of the securities so offered and
      the number of Common Shares for or into which the securities offered
      pursuant to the Rights Offering may be exchanged, exercised or converted,
      as the case may be; by

	 	 	 
	 	(II) 	
      the Current Market Price of the Common Shares as of the
      record date for the Rights Offering; and

	 	(ii) 	
      the denominator of which shall be the aggregate of the
      number of Common Shares outstanding on such record date and the number of
      Common Shares offered pursuant to the Rights Offering (including in the
      case of the issue or distribution of securities exchangeable or
exercisable for or convertible into Common Shares the number of Common Shares into which such securities may be exchanged, exercised or converted). 

- 6 - 

	 		
      If by the terms of the rights, options, or warrants
      referred to in this clause 5.2(b), there is more than one purchase,
      conversion or exchange price per Common Share, the aggregate price of the
      total number of additional Common Shares offered for subscription or
      purchase, or the aggregate conversion or exchange price of the convertible
      or exchangeable securities so offered, shall be calculated for purposes of
      the adjustment on the basis of the lowest purchase, conversion or exchange
      price per Common Share, as the case may be. Any Common Shares owned by or
      held for the account of the Corporation shall be deemed not to be
      outstanding for the purpose of any such calculation. To the extent that
      any adjustment in the Exercise Price occurs pursuant to this clause 5.2(b)
      as a result of the fixing by the Corporation of a record date for the
      issue or distribution of rights, options or warrants referred to in this
      clause 5.2(b), the Exercise Price shall be readjusted immediately after
      the expiry of any relevant exchange, conversion or exercise right to the
      Exercise Price which would then be in effect based upon the number of
      Common Shares actually issued and remaining issuable after such expiry and
      shall be further readjusted in such manner upon the expiry of any further
      such right.

	 	 	 
	 	(c) 	
      If at any time during the Adjustment Period the
      Corporation shall fix a record date for the issue or distribution to the
      holders of all or substantially all of the Common Shares
  of:

	 	(i) 	
      shares of the Corporation of any class other than Common
      Shares;

	 	 	 
	 	(ii) 	
      rights, options or warrants to acquire Common Shares or
      securities exchangeable or exercisable for or convertible into Common
      Shares (other than rights, options or warrants pursuant to which holders
      of Common Shares are entitled, during a period expiring not more than 45
      days after the record date for such issue, to subscribe for or purchase
      Common Shares or securities exchangeable for or convertible into Common
      Shares at a price per share (or in the case of securities exchangeable or
      exercisable for or convertible into Common Shares at an exchange, exercise
      or conversion price per share on the record date for the issue of such
      securities) of at least 95% of the Current Market Price of the Common
      Shares on such record date);

	 	 	 
	 	(iii) 	
      evidences of indebtedness of the Corporation;
or

	 	 	 
	 	(iv) 	
      any property or assets of the
  Corporation;

and if such issue or distribution does
not constitute a Common Share Reorganization or a Rights Offering (any of such
non-excluded events being herein called a “Special Distribution”), the
Exercise Price shall be adjusted effective immediately after the record date for
the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction: 

- 7 - 

	 	(A) 	
      the numerator of which shall be the difference
      between:

	 	 	 	 
	 		(I) 	
      the product of the number of Common Shares outstanding on
      such record date and the Current Market Price of the Common Shares on such
      record date; and

	 	 	 	 
	 		(II) 	
      the fair value, as determined by a recognized independent
      firm of valuators, to the holders of Common Shares of the shares, rights,
      options, warrants, evidences of indebtedness or property or assets to be
      issued or distributed in the Special Distribution; and

	 	 	 	 
	 	(B) 	
      the denominator of which shall be the product obtained by
      multiplying the number of Common Shares outstanding on such record date by
      the Current Market Price of the Common Shares on such record
  date.

	 		
      Any Common Shares owned by or held for the account of the
      Corporation shall be deemed not to be outstanding for the purpose of such
      calculation. To the extent that any adjustment in the Exercise Price
      occurs pursuant to this clause 5.2(c) as a result of the fixing by the
      Corporation of a record date for the issue or distribution of rights,
      options or warrants to acquire Common Shares or securities exchangeable or
      exercisable for or convertible into Common Shares referred to in this
      clause 5.2(c), the Exercise Price shall be readjusted immediately after
      the expiry of any relevant exchange, exercise or conversion right to the
      amount which would then be in effect if the current market value of the
      Common Shares had been determined on the basis of the number of Common
      Shares issued and remaining issuable immediately after such expiry, and
      shall be further readjusted in such manner upon the expiry of any further
      such right.

	 	 	 	 
	 	(d) 	
      If at any time during the Adjustment Period there shall
      occur:

	 	 	 	 
	 		(i) 	
      a reclassification or redesignation of the Common Shares,
      any change of the Common Shares into other shares or securities or any
      other capital reorganization involving the Common Shares other than a
      Common Share Reorganization;

	 	 	 	 
	 		(ii) 	
      a consolidation, amalgamation or merger of the
      Corporation with or into any other body corporate which results in a
      reclassification or redesignation of the Common Shares or a change of the
      Common Shares into other shares or securities; or

	 	 	 	 
	 		(iii) 	
      the transfer of the undertaking or assets of the
      Corporation as an entirety or substantially as an entirety to another
corporation or entity; (any of such events being herein called a "Capital Reorganization"), after the effective date of the Capital Reorganization: 

- 8 - 

	 	(iv) 	
      the Warrantholder shall be entitled to receive, and shall
      accept, for the same aggregate consideration, upon exercise of this
      Warrant, in lieu of the number of Common Shares which the Warrantholder
      was theretofore entitled to purchase or receive upon the exercise of this
      Warrant, the kind and aggregate number of shares and other securities or
      property resulting from the Capital Reorganization which the Warrantholder
      would have been entitled to receive as a result of the Capital
      Reorganization if, on the effective date thereof, the Warrantholder had
      been the registered holder of the number of Common Shares to which the
      Warrantholder was theretofore entitled to purchase or receive upon the
      exercise of this Warrant; and

	 	 	 
	 	(v) 	
      the Exercise Price shall, on the effective date of the
      Capital Reorganization, be adjusted by multiplying the Exercise Price in
      effect immediately prior to such Capital Reorganization by the number of
      Common Shares purchasable pursuant to this Warrant Certificate immediately
      prior to the Capital Reorganization, and dividing the product thereof by
      the number of successor securities determined in Section 5.2(d)(iv)
      above.

	 	(e) 	
      If necessary, as a result of any Capital Reorganization,
      appropriate adjustments shall be made in the application of the provisions
      of this Warrant Certificate with respect to the rights and interest
      thereafter of the Warrantholder to the end that the provisions of this
      Warrant Certificate shall thereafter correspondingly be made applicable as
      nearly as may reasonably be possible in relation to any shares or other
      securities or property thereafter deliverable upon the exercise of this
      Warrant.

	 	 	 
	 	(f) 	
      If at any time during the Adjustment Period any
      adjustment or readjustment in the Exercise Price shall occur pursuant to
      the provisions of clauses 5.2(a), 5.2(b) or 5.2(c) hereof, then the number
      of Common Shares purchasable upon the subsequent exercise of this Warrant
      shall be simultaneously adjusted or readjusted, as the case may be, by
      multiplying the number of Common Shares purchasable upon the exercise of
      this Warrant immediately prior to such adjustment or readjustment by a
      fraction which shall be the reciprocal of the fraction used in the
      adjustment or readjustment of the Exercise Price.

5.3       
            Rules:
The following rules and procedures shall be applicable to adjustments made
pursuant to subsection 5.2 hereof. 

	 	(a) 	
      Subject to the following provisions of this subsection
      5.3, any adjustment made pursuant to subsection 5.2 hereof shall be made
      successively whenever an event referred to therein shall
  occur.

- 9 - 

	 	(b) 	
      No adjustment in the Exercise Price shall be required
      unless such adjustment would result in a change of at least one per cent
      in the then Exercise Price and no adjustment shall be made in the number
      of Common Shares purchasable or issuable on the exercise of this Warrant
      unless it would result in a change of at least one one-hundredth of a
      Common Share; provided, however, that any adjustments which except for the
      provision of this clause 5.3(b) would otherwise have been required to be
      made shall be carried forward and taken into account in any subsequent
      adjustment. Notwithstanding any other provision of subsection 5.2 hereof,
      no adjustment of the Exercise Price shall be made which would result in an
      increase in the Exercise Price or a decrease in the number of Common
      Shares issuable upon the exercise of this Warrant (except in respect of
      the Common Share Reorganization described in subclause 5.2(a)(iv) hereof
      or a Capital Reorganization described in subclause 5.2(d)(ii)
    hereof).

	 	 	 
	 	(c) 	
      No adjustment in the Exercise Price or in the number or
      kind of securities purchasable upon the exercise of this Warrant shall be
      made in respect of any event described in section 5 hereof if the
      Warrantholder is entitled to participate in such event on the same terms
      mutatis mutandis as if the Warrantholder had exercised this Warrant prior
      to or on the record date or effective date, as the case may be, of such
      event.

	 	 	 
	 	(d) 	
      No adjustment in the Exercise Price or in the number of
      Common Shares purchasable upon the exercise of this Warrant shall be made
      pursuant to subsection 5.2 hereof in respect of the issue from time to
      time of Common Shares pursuant to this Warrant Certificate or pursuant to
      any stock option, stock purchase or stock bonus plan in effect from time
      to time for directors, officers or employees of the Corporation and/or any
      subsidiary of the Corporation and any such issue, and any grant of options
      in connection therewith, shall be deemed not to be a Common Share
      Reorganization, a Rights Offering nor any other event described in
      subsection 5.2 hereof.

	 	 	 
	 	(e) 	
      If at any time during the Adjustment Period the
      Corporation shall take any action affecting the Common Shares, other than
      an action described in subsection 5.2 hereof, which in the opinion of the
      directors would have a material adverse effect upon the rights of the
      Warrantholder, either or both the Exercise Price and the number of Common
      Shares purchasable upon exercise of this Warrant shall be adjusted in such
      manner and at such time by action by the directors, in their sole
      discretion, as may be equitable in the circumstances. Failure of the
      taking of action by the directors so as to provide for an adjustment prior
      to the effective date of any action by the Corporation affecting the
      Common Shares shall be deemed to be conclusive evidence that the directors
      have determined that it is equitable to make no adjustment in the
      circumstances.

	 	 	 
	 	(f) 	
      If the Corporation shall set a record date to determine
      holders of Common Shares for the purpose of entitling such holders to
      receive any dividend or distribution or any subscription or purchase
      rights and shall, thereafter and before the distribution to such holders of any such dividend,
      distribution or subscription or purchase rights, legally abandon its plan
      to payor deliver such dividend, distribution or subscription or purchase
      rights, then no adjustment in the Exercise Price or the number of Common
      Shares purchasable upon exercise of this Warrant shall be required by
  reason of the setting of such record date.

- 10 - 

	 	(g) 	
      In any case in which this Warrant shall require that an
      adjustment shall become effective immediately after a record date for an
      event referred to in subsection 5.2 hereof, the Corporation may defer,
      until the occurrence of such event:

	 	 	 	 
	 		(i) 	
      issuing to the Warrantholder, to the extent that this
      Warrant is exercised after such record date and before the occurrence of
      such event, the additional Common Shares issuable upon such exercise by
      reason of the adjustment required by such event; and

	 	 	 	 
	 		(ii) 	
      delivering to the Warrantholder any distribution declared
      with respect to such additional Common Shares after such record date and
      before such event;

	 		
      provided, however, that the Corporation shall deliver to
      the Warrantholder an appropriate instrument evidencing the right of the
      Warrantholder, upon the occurrence of the event requiring the adjustment,
      to an adjustment in the Exercise Price and the number of Common Shares
      purchasable upon the exercise of this Warrant and to such distribution
      declared with respect to any such additional Common Shares issuable on
      this exercise of this Warrant.

	 	 	 
	 	(h) 	
      In the absence of a resolution of the directors fixing a
      record date for a Rights Offering, the Corporation shall be deemed to have
      fixed as the record date therefor the date of the issue of the rights,
      options or warrants issued pursuant to the Rights Offering.

	 	 	 
	 	(i) 	
      If a dispute shall at any time arise with respect to
      adjustments of the Exercise Price or the number of Common Shares
      purchasable upon the exercise of this Warrant, such disputes shall be
      conclusively determined by the auditors of the Corporation or if they are
      unable or unwilling to act, by such other firm of independent chartered
      accountants as may be selected by the directors and any such determination
      shall be conclusive evidence of the correctness of any adjustment made
      pursuant to subsection 5.2 hereof and shall be binding upon the
      Corporation and the Warrantholder.

	 	 	 
	 	(j) 	
      As a condition precedent to the taking of any action
      which would require an adjustment pursuant to subsection 5.2 hereof,
      including the Exercise Price and the number or class of Common Shares or
      other securities which are to be received upon the exercise thereof, the
      Corporation shall take any action which may, in the opinion of counsel to
      the Corporation, be necessary in order that the Corporation may validly
      and legally issue as fully paid and non-assessable shares all of
  the Common Shares or other securities which the Warrantholder is entitled to receive in accordance with the provisions of this Warrant Certificate. 

- 11 - 

5.4               
 Notice: At least 21 days prior to any record date or effective
date, as the case may be, for any event which requires or might require an
adjustment in any of the rights of the Warrantholder under this Warrant,
including the Exercise Price and ‘the number of Common Shares which are
purchasable under this Warrant, the Corporation shall deliver to the
Warrantholder a certificate of the Corporation specifying the particulars of
such event and, if determinable, the required adjustment and the calculation of
such adjustment. In case any adjustment for which a notice in this subsection
5.4 has been given is not then determinable, the Corporation shall promptly
after such adjustment is determinable deliver to the Warrantholder a certificate
providing the calculation of such adjustment. The Corporation hereby covenants
and agrees that the register of transfers and transfer books for the Common
Shares will be open, and that the Corporation will not take any action which
might deprive the Warrantholder of the opportunity of exercising the rights of
subscription contained in this Warrant Certificate, during such 21 day period.

6.                    Further
Assurances

                       The
Corporation hereby covenants and agrees that it will do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, all and
every such other act, deed and assurance as the Warrantholder shall reasonably
require for the better accomplishing and effectuating of the intentions and
provisions of this Warrant Certificate. 

7.                  
 Time of Essence 

                      
Time is of the essence of this Warrant Certificate. 

8.                  
 Governing Laws 

                      
This Warrant Certificate shall be governed by, and construed in accordance with,
the laws of the State of California, without reference to the choice of law
provisions thereof.

9.                   
Notices 

                      
All notices or other communications to be given under this Warrant Certificate
shall be delivered by hand or by telecopier and, if delivered by hand, shall be
deemed to have been given on the delivery date and, if sent by telecopier, on
the date of transmission if sent before 4:00 p.m. on a business day or, if such
day is not a business day, on the first business day following the date of
transmission. 

- 12 - 

                      
Notices to the Corporation shall be addressed to: 

Crailar Technologies Inc. 
305 -
4420 Chatterton Way, Victoria, British Columbia, V8X 5J2 
Attention: Guy
Prevost, Controller 
Fax Number: (250) 658-8586. 

                      
The Corporation or the Warrantholder may change its address for service by
notice in writing to the other of them specifying its new address for service
under this Warrant Certificate. 

10.               
 Lost Certificate 

10.1              
If this Warrant Certificate or any replacement hereof becomes stolen, lost,
mutilated or destroyed, the Corporation shall, on such terms as it may in its
discretion impose, acting reasonably, issue and deliver a new certificate, in
form identical hereto but with appropriate changes, representing any unexercised
portion of the subscription rights represented hereby to replace the certificate
so stolen, lost, mutilated or destroyed. 

11.                
Language 

                      
The parties hereto acknowledge and confirm that they have requested that this
Warrant Certificate as well as all notices and other documents contemplated
hereby be drawn up in the English language. Les parties aux présentes
reconnaissent et confirment qu’elles ont exigé que la présente convention ainsi
que tous les avis et documents qui s’y rattachent soient rédigés dans la langue
anglaise. 

12.                
Transfer 

12.1              
The Warrants are transferable and the term “Warrantholder” shall mean and
include any successor, transferee or assignee of the current or any future
Warrantholder. The term “Warrantholder” shall mean and include any successor of
the Warrantholder. The Warrants may be transferred by the Warrantholder or its
legal representatives or its attorney duly appointed by an instrument in writing
in form and execution reasonably satisfactory to the Corporation only by
surrendering to the Corporation this Warrant Certificate and completing and
delivering to the Corporation the transfer form attached hereto as Schedule
B or a substantial equivalent.

- 13 - 

13.                
Successors and Assigns 

13.1              
This Warrant Certificate shall enure to the benefit of the Warrantholder and the
successors and assignees thereof and shall be binding upon the Corporation and
the successors thereof. 

                      
IN WITNESS WHEREOF, the Corporation has caused this Warrant
Certificate to be signed by an authorized officer as of the ________ day
of_________, 2014. 

CRAILAR TECHNOLOGIES INC.

 

	Per:     _______________________________________________________________
	           Authorized
      Signatory 

__________ 

Schedule A 

SUBSCRIPTION FORM 

	To: 	Crailar Technologies Inc.
  

            The
undersigned registered holder irrevocably elects to exercise
_____________Warrants represented by this Warrant Certificate, and to purchase
the shares of Common Stock issuable upon the exercise of such Warrants, and
requests that certificates for such shares shall be issued in the name of: 

Name:
______________________________________________________
            (please
typewrite or print in block letters) 

Address:
____________________________________________________

____________________________________________________________

Tax ID Number:
______________________________________________

and be delivered to: 

Name: 
______________________________________________________
           
(please typewrite or print in block letters) 

Address:
____________________________________________________

____________________________________________________________

and, if such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such Warrants be registered in the name of, and delivered to, the
registered holder at the address stated below:

 

Dated: __________________

Signature: ________________

Address:
____________________________________________________

____________________________________________________________

Tax ID Number:
______________________________________________

__________ 

Schedule B 

FORM OF ASSIGNMENT 

[To be completed and signed only upon transfer of the Warrants]

	TO: 	Crailar Technologies Inc. 
	 	 
	RE: 	Warrants issued on ________, 2014 (Warrant
      Certificate No. ____) 

      
     FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto the transferee indicated below the right represented
by the above-captioned Warrant Certificate to purchase ____________ Common
Shares of Crailar Technologies Inc. (the “Corporation”) and appoints
_____________________ attorney to transfer said right on the books of the
Corporation with full power of substitution in the premises. 

Dated: _______________, ______

Holder: ________________________________________________
                   
(Print Name) 

Signature: 
______________________________________________
                   
(Signature must conform in all respects to name

                   
of holder as specified on the face of the
Warrant 
                   
Certificate. Indicate title if signing on behalf
of 
                   
an entity.) 

Transferee Information:

Name:
______________________________________________

Address:
____________________________________________

____________________________________________________

Fax No.:
______________________________________________

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