8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

December 13, 2013Date of Report (Date of earliest event reported)

CRAILAR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

British Columbia
(State or other jurisdiction of incorporation) 000-50367
(Commission File Number) 98-0359306
(IRS Employer Identification No.)

305-4420 Chatterton Way
Victoria, British Columbia
(Address of principal executive offices) V8X 5J2
(Zip Code)

(250) 658-8582
Registrant's telephone number, including area code

Not applicable(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[     ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[     ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[     ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[     ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS

Item 1.01     Entry into a Material Definitive Agreement

Asset Purchase Agreement

As previously disclosed on a Current Report on Form 8-K filed with the SEC on November 13, 2013, Crailar Technologies Inc. (the "Company"), Schrurs NV ("Schrurs"), a Belgium limited liability company, and Mr. Serge Schrurs entered into an asset purchase agreement (the "Asset Purchase Agreement"), dated November 6, 2013, to purchase a European based fiber processing facility (the "Facility"), which includes certain assets related to the dyeing, bleaching, processing and treatment of all natural and synthetic fibers for the textile industry. Pursuant to the Asset Purchase Agreement, the Company will purchase from Schrurs: (i) any and all equipment, furniture, including office equipment and furniture, tools, fixtures, fittings and other tangible personal property (the "Equipment"); (ii) the environmental permit granted to Schrurs by decision of the Deputation of the Provincial Council of West Flanders dated February 8, 1996 (the "Permit"); and (iii) the rights, title and interests of Schrurs in to and under the employment contracts of the employees of Schrurs (the "Employees") (the Equipment, Permit and Employees being collectively referred to as the "Assets"). The price for the Assets shall be the payment of all outstanding debts of Schrurs, currently valued at approximately $1.2 million (EUR 881,056) over a three-year period.

The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Asset Purchase Agreement, which is filed as Exhibit 10.1 hereto, and is incorporated by reference herein.

Amended Asset Purchase Agreement

Effective December 13, 2013, the Company, Schrurs and Mr. Serge Schrurs entered into an amended asset purchase agreement (the "Amended Asset Purchase Agreement"), which shall be deemed to terminate and replace the initial Asset Purchase Agreement. The Amended Asset Purchase Agreement provides that the title to and economic risk in respect of the Permit and the Employees passed to the Company on December 13, 2013 (the "Closing Date"), however, the title to the Equipment shall only pass to the Company subject to full payment of the purchase price for the Assets notwithstanding the fact that physical possession and economic risk in respect of the Assets passed to the Company on the Closing Date. The Company shall not transfer, pledge or otherwise encumber the Equipment until the purchase price for the Assets has been paid in full. The retention of title on the Equipment can be enforced by Schrurs at any point in time and regardless of the outstanding amount of the purchase price at that point in time, it being understood that such retention of title shall at any time be enforced in respect to all of the Equipment. Schrurs and the Company agree to undertake that, in the event that upon enforcement of the retention of title, the market value of the Equipment would exceed the outstanding amount of the purchase price, Schrurs shall pay a surcharge to the Company (equal to the difference between the outstanding amount of the purchase price and the market value of the Equipment) so as to ensure that all of the Equipment is regained.

In addition, the Amended Asset Purchase Agreement provides that the Company shall have until the fifth anniversary of the Closing Date instead of the third anniversary as provided for under the initial Asset Purchase Agreement in order to fully pay the outstanding debts of Schrurs owing to KBC and BNP Paribas.

Furthermore, the Amended Asset Purchase Agreement removed any conditions precedent to closing, however, at closing Schrurs was required to deliver to the Company a declaration from each BNP Paribas and KBC with respect to the debts and liabilities owed by Schrurs to each of

them that they explicitly and unconditionally approve and consent to (i) the Amended Asset Purchase Agreement, and (ii) the fact that KBC debts and BNP Paribas debts shall be repaid by the Company on behalf of Schrurs and that any such repayment by the Company of any amount of the KBC debts and/or the BNP Paribas debts shall discharge Schrurs from its payment obligations towards KBC and/or BNP Paribas for the same amount.

Moreover, due to the retention of title provision added to the Amended Asset Purchase Agreement, the explicit termination clause was removed.

Finally, pursuant to the Amended Asset Purchase Agreement, Schrurs granted the Company a Belgian common law lease with respect to the building housing the Facility for a term of 10 years. The terms and conditions of such lease, which will also include a purchase option for the Company on the building housing the Facility, will be negotiated in good faith between Schrurs and the Company immediately following the Closing Date in accordance with Belgian standard market practices, and will be formalized in a lease agreement to be entered into no later than January 31, 2014.

The foregoing description of the Amended Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended Asset Purchase Agreement, which is filed as Exhibit 10.2 hereto, and is incorporated by reference herein.

Amended Promissory Notes

The Company, as "Borrower" entered into the following loan arrangements with each of the following Directors of the Company: Jason Finnis ("Finnis"), Kenneth Barker ("Barker") and Robert Edmunds ("Edmunds"; and each of Messrs. Finnis, Barker and Edmunds being singularly and collectively referred to as the "Lender" and "Lenders", respectively, as the context may require):

Finnis

(i)     pursuant to an original Convertible Promissory Note, dated for reference effective on October 11, 2013 (the "Original Finnis Promissory Note"), Mr. Finnis therein granted the Borrower a loan in the principal amount of CAD$100,000.00 (the "Finnis Loan") bearing interest at a rate of 12% per annum, and the Original Finnis Promissory Note provided that the Finnis Loan and the interest thereunder must be repaid by the Borrower to the Lender on December 11, 2013;

(ii)     effective on November 7, 2013, the Borrower repaid to the Lender CAD$50,000.00 of the Finnis Loan, such that a principal amount of CAD$50,000 was then owing under the Finnis Loan pursuant to the Original Finnis Promissory Note;

(iii)     pursuant to a Loan Extension Agreement, dated for reference effective on December 18, 2013 (which together with the Original Finnis Promissory Note being, collectively, the "Underlying Finnis Agreements"), and as a then condition precedent to the completion by the Company of the Private Placement (as defined below under Item 3.02), the parties therein agreed to extend the term for repayment of the Finnis Loan and the interest under the Original Finnis Promissory Note until the earlier of (i) one year from the completion of the Private Placement, and (ii) such time as the Company completes its next public offering of registered securities by way of a registration statement on Form S-1 of not less than CAD$3,000,000 in gross proceeds to the Company (the "New Term of the Finnis Loan"); and

(iv)     as a consequence of the completion by the Borrower of the Private Placement effective on December 20, 2013, the parties agreed to provide for a new Amended And Restated Promissory Note, dated for reference January 21, 2014 (the "Finnis Amended Promissory Note"), which bears interest at a rate of 12% per annum, and which is intended to fully amend and replace, in their entirety, each of the Underlying Finnis Agreements.

The foregoing description of the Finnis Amended Promissory Note does not purport to be complete and is qualified in its entirety by reference to the Finnis Amended Promissory Note, which is filed as Exhibit 10.3 hereto, and is incorporated by reference herein.

Barker

(i)     pursuant to an original Convertible Promissory Note, dated for reference effective on October 11, 2013 (the "Original Barker Promissory Note"), Mr. Barker therein granted the Borrower a loan in the principal amount of US$50,000.00 (the "Barker Loan") bearing interest at a rate of 12% per annum, and the Original Barker Promissory Note provided that the Barker Loan and the interest thereunder must be repaid by the Borrower to the Lender on December 11, 2013;

(ii)      pursuant to a Loan Extension Agreement, dated for reference effective on December 18, 2013 (which together with the Original Barker Promissory Note being, collectively, the "Underlying Barker Agreements"), and as a then condition precedent to the completion by the Company of the Private Placement, the parties therein agreed to extend the term for repayment of the Barker Loan and the interest under the Original Barker Promissory Note on same basis as the above-referenced New Term of the Finnis Loan; and

(iii)     as a consequence of the completion by the Borrower of the Private Placement effective on December 20, 2013, the parties agreed to provide for a new Amended And Restated Promissory Note, dated for reference January 21, 2014 (the "Barker Amended Promissory Note"), which bears interest at a rate of 12% per annum, and which is intended to fully amend and replace, in their entirety, each of the Underlying Barker Agreements.

The foregoing description of the Barker Amended Promissory Note does not purport to be complete and is qualified in its entirety by reference to the Barker Amended Promissory Note, which is filed as Exhibit 10.4 hereto, and is incorporated by reference herein.

Edmunds

(i)     pursuant to original Demand Convertible Promissory Notes, dated for reference effective on October 11, 2013 and December 4, 2013, respectively (collectively, the "Original Edmunds Promissory Notes"), Mr. Edmunds therein granted the Borrower loans in the aggregate principal amount of CAD$545,000.00 (collectively, the "Edmunds Loan") bearing interest at a rate of 20% per annum, and the Original Edmunds Promissory Notes provided that the Edmunds Loan and the interest thereunder must be repaid by the Borrower to the Lender on demand;

(ii)     pursuant to a Loan Extension and Bonus Share Agreement, dated for reference effective on December 18, 2013 (the "Loan Extension"; which together with the Original Edmunds Promissory Notes being, collectively, the "Underlying Edmunds Agreements"), and as a then condition precedent to the completion by the Company of the Private Placement, the parties therein agreed to extend the

term for repayment of the Edmunds Loan and the interest under the Original Edmunds Promissory Notes on same basis as the above-referenced New Term of the Finnis Loan and, as additional consideration thereof, subject to TSX Venture Exchange (the "TSXV") approval, allot and issue to Mr. Edmunds, as fully paid and non-assessable shares, an aggregate of up to 187,878 common shares of the Borrower (each a "Bonus Share"), representing a deemed value of 20% of the outstanding balance of the Loan and Interest based on an agreed value and deemed issuance price of CAD$0.60 per Bonus Share (the "Bonus Share Issuance").

(iii)     by letter dated January 20, 2014, the TSXV approved the final Bonus Share Issuance by the Borrower to Mr. Edmunds of 181,666 common shares of the Borrower (collectively, the "Bonus Shares"), at a deemed value of CAD$0.60 per Bonus Share (the "TSXV Approval"); and

(iv)     as a consequence of each of the completion by the Borrower of the Private Placement, effective on December 20, 2013, and the receipt of TSXV Approval to the above-referenced Bonus Share Issuance, the parties agreed to provide for a new Amended And Restated Promissory Note, dated for reference January 21, 2014 (the "Edmunds Amended Promissory Note"), which bears interest at a rate of 20% per annum, and which is intended to fully amend and replace, in their entirety, each of the Underlying Edmunds Agreements.

The foregoing description of the Edmunds Amended Promissory Note does not purport to be complete and is qualified in its entirety by reference to the Edmunds Amended Promissory Note, which is filed as Exhibit 10.5 hereto, and is incorporated by reference herein.

Loan Agreement with IKEA

On December 19, 2013, but having an effective date of November 29, 2013, the Company and IKEA Supply AG ("IKEA") entered into a loan agreement (the "Loan Agreement") whereby IKEA agreed to loan (the "IKEA Loan") the Company the amount of EUR 2,190,000 (approximately CAD$3.2 million) having a term until June 25, 2016 and bearing interest at a rate of 1.9% per annum. The Company is required to make monthly repayments of EUR11,000 from December 20, 2014 to June 20, 2016 and the outstanding amount including accrued and capitalized interest repaid in full on June 25, 2016, with all payments to be net of any withholding or similar taxes or fees collected at the source. As security for the IKEA Loan, IKEA required that the IKEA Loan be secured by assets purchased with the proceeds as well as a portion of the secured assets used to secure the July 26, 2013 10% Secured Convertible Debentures, which were disclosed on a Current Report on Form 8-K filed with the SEC on July 31, 2013.

The proceeds from the IKEA Loan are designated for the installation of equipment to support and expand the Company's European production facility and working capital for IKEA orders.

The foregoing description of the Loan Agreement with IKEA does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement, which is filed as Exhibit 10.6 hereto, and is incorporated by reference herein.

General Supply Agreement

In conjunction with entering into the Loan Agreement with IKEA, the Company and IKEA have entered into a General Agreement (the "General Supply Agreement") which provides for the order, shipping and delivery of the Company's flax fiber product for use in certain of IKEA's domestic textiles categories. In addition, the General Supply Agreement provides for minimum

order quantities, fiber property requirements, formula for calculating price, restriction on the Company's ability to supply CRAiLAR^(R) fiber to other persons for consumption in home textile applications as long as IKEA fulfills its commitment to capacity as set out in the agreement on sales and purchase volumes as provided in appendix 5 to the General Supply Agreement. The General Supply Agreement has a term until December 31, 2016 when it shall expire without either party having to provide notice thereof. However, IKEA may in its sole discretion extend the contract a maximum of two (2) times for 36 months each time by notifying the Company no later than six (6) months prior to the expiration of any term to the General Supply Agreement.

The foregoing description of the General Supply Agreement with IKEA does not purport to be complete and is qualified in its entirety by reference to the General Supply Agreement, which is filed as Exhibit 10.7 hereto, and is incorporated by reference herein.

Framework Agreement for Development Work

In conjunction with entering into the Loan Agreement with IKEA, the Company, IKEA and Schrurs NV ("Schrurs") have entered into a Framework Agreement Development Work (the "Framework Agreement") whereby IKEA has engaged the Company and Schrurs (each a "Development Partner" and collectively, the "Development Partners") to pursue Development Work (as defined in the Framework Agreement). During the term of the Framework Agreement, which commences on December 13, 2013 and continues until terminated by either party giving no less than six (6) months' prior notice, subject to the Framework Agreement immediately expiring and becoming null and void if either party commits a material breach of any of the provisions therein and does not remedy the situation within 14 days after receiving written notification stating the extent of the breach, IKEA shall be entitled to request Development Work from one or both Development Partners and each Development Partner shall be entitled to either accept or deny a request it received from IKEA. Once the arrangements for the requested Development Work have been agreed by the relevant parties, IKEA shall place an Assignment Order which shall be in the form attached as Exhibit 1 to the Framework Agreement. The Development Work shall be performed at a location as set out in each separate Assignment Order. In consideration of the provisions of a particular Assignment Order, IKEA shall pay to the Development Partners a fee as stated in the relevant Assignment Order. Each Development Partner shall issue an invoice at the end of each calendar month in respect of the Development Work provided during that month or in accordance with the invoicing schedule set out in the relevant Assignment Order. IKEA shall pay the fee within 30 days of receipt of the properly drawn up invoice. Under the Framework Agreement, except for the National Research Council of Canada's rights to use for government purposes certain additions or changes to the NRC technology produced by the Company, IKEA or anyone to whom IKEA may assign its rights, shall be the exclusive owner of all Works and Foreground Information (as defined in the Framework Agreement) created during the provision of the Development Work. Notwithstanding the foregoing, the parties may stipulate in the individual Order that the Company, or anyone to whom the Company may assign its rights, shall be the exclusive owner of the Works and Foreground Information. Where IKEA will be the exclusive owner of the Works, IKEA shall have the right to revise, further develop, adapt, alter, display, copy, manufacture, sell, advertise, or otherwise dispose of the Works in any way IKEA deems suitable for technical, business, economic or other reasons, including moving or starting up production at/to other suppliers. The Development Partners may not, without the prior written permission of IKEA, transfer any rights or obligations under the Framework Agreement to any third party. The Development Partners may not subcontract any part of the Development Work without IKEA's prior written approval.

On December 13, 2013, IKEA, the Company and Schrurs entered into an Assignment Order for Development Work on Fiber Quality Consistency ("Assignment Order 1-1"), attached as Exhibit 1-1 to the Framework Agreement. Assignment Order 1-1's goal is to be able to produce flax fiber which has properties that can be used in existing unmodified cotton spinning setups with a performance close to cotton. The Assignment Order 1-1 provides for the deliverables, technical specifications, instructions for handling deliverables, time table/project plan, location, reference persons and the specified resources at the Development Partner to have the Development Work performed. The Company is required to cover the cost for this quality consistency agenda, as the outcome of the work will become the Company's property.

In addition on December 13, 2013, IKEA, the Company and Schrurs entered into an Assignment Order for Development Work on Hemp Fiber Development ("Assignment Order 1-2"), attached as Exhibit 1-2 to the Framework Agreement. Assignment Order 1-2's goal is to be able to produce hemp fiber which has properties that can be used in existing unmodified cotton spinning setups with a performance close to cotton. The Assignment Order 1-2 provides for the deliverables, technical specifications, instructions for handling deliverables, time table/project plan, location, reference persons and the specified resources at the Development Partner to have the Development Work performed. The Company is required to cover the cost for this quality consistency agenda, as the outcome of the work will become the Company's property.

The foregoing description of the Framework Agreement Development Agreement does not purport to be complete and is qualified in its entirety by reference to the Framework Agreement Development Agreement, which is filed as Exhibit 10.8 hereto, and is incorporated by reference herein.

Tripartite Agreement with IKEA and National Research Council of Canada

In conjunction with entering into the Loan Agreement with IKEA, the Company, IKEA and the National Research Council of Canada (the "NRC") have entered into a Tripartite Agreement (the "Tripartite Agreement") whereby at any time before the repayment in full by the Company to IKEA of the IKEA Loan, including interest pursuant to the Loan Agreement and for two years thereafter, upon the occurrence of a Termination Event (as defined in the Tripartite Agreement) in accordance with Article 11 of the Licensing Agreement between the NRC and the Company, dated October 25, 2006 and amended on March 25, 2011, which provides the Company with the worldwide right to use NRC technologies for the extraction of hemp fiber and the enzymatic extraction of plant fiber, the NRC hereby grants to IKEA a new license that allows IKEA to substitute the Company with either an IKEA affiliate or a third party mutually agreed with the NRC, and to permit such new licensee to operate IKEA's business related to the NRC technology under substantially the same conditions as set out in the Licensing Agreement. In such case, any payments owed by IKEA to the Company are to be paid directly to the NRC. Upon occurrence of a Termination Event, the NRC and IKEA shall enter into a new license agreement that adequately reflects the new situation, on similar terms and conditions as the Licensing Agreement and reasonably taking into account any changes resulting from the Termination Event. IKEA's license to the NRC Intellectual Property (as defined in the Tripartite Agreement) shall however be limited to applications relevant for enzymatically processed flax and/or hemp fibers for spinning yarn in which applications relevant for the product applications listed in Appendix 1 (home textile applications) to the Tripartite Agreement shall be granted on an exclusive basis until December 31, 2016 and non-exclusive thereafter. Each of the NRC and the Company warrants to IKEA that it has not previously granted any rights that would conflict with the rights granted in this amendment. Each of the NRC and the Company also warrants to IKEA that it is either the current owner or licensee (with power to sub-license) of the NRC Technology, as defined in the Licensing Agreement.

The foregoing description of the Tripartite Agreement does not purport to be complete and is qualified in its entirety by reference to the Tripartite Agreement, which is filed as Exhibit 10.9 hereto, and is incorporated by reference herein.

Amendment to Conversion Price and Security for July 26, 2013 Secured Convertible Debentures

In accordance with the conditions of the IKEA Loan, the Company approached the debentureholders (the "Debentureholders") of the 10% Secured Convertible Debentures, which were issued on July 26, 2013 and which are governed pursuant to the Convertible Debenture Indenture (the "Indenture") between the Company and Computershare Trust Company of Canada (the "Trustee"), about releasing their security over certain assets held by the Company's subsidiary, Crailar Inc., a Nevada limited liability company, having an acquisition cost of $1,331,794, which form a portion of the assets secured pursuant to the Guaranty and Security Agreement (the "Guaranty") between Crailar Inc. (the "Guarantor") and the Trustee, dated July 26, 2013, as set forth in Schedule "A" to the Guaranty, to be used as separate security for the IKEA Loan to the Company.

The Debentureholders have signed an Extraordinary Written Consent Resolution of Debentureholders (the "Extraordinary Resolution"), dated to be effective as of December 17, 2013, pursuant to Section 11.11(b) and 11.15 of the Indenture, whereby the Debentureholders have authorized the modification and alteration of the rights of the Debentureholders and the Trustee against the Company with respect to the Secured Assets (as defined in the Indenture) set out in Schedule "F" to the Indenture and as set out in Schedule "A" to the Guaranty to now only include those specific assets held by the Guarantor as set forth in Schedule "A" attached to the Amended and Restated Guaranty and Security Agreement which have an acquisition cost of $3,922,240; and as consideration for such modification and alteration with respect to the Secured Assets, the Debentureholders require the Conversion Price (the "Conversion Price") of the Debentures to be reduced from $2.00 per common share in the capital of the Company (each a "Common Share") to $1.25 per Common Share, which was the closing price on the day prior to the July 3, 2013 news release with respect to the 10% Secured Convertible Debenture Private Placement and which is the same as the exercise price of the warrants issued in connections with such financing.

On December 23, 2013, the Company and the Trustee entered into an Amended and Restated Convertible Debenture Indenture (the "Amended and Restated Convertible Debenture Indenture"), which reflects the modification and alteration of the rights of the Debentureholders and the Trustee against the Company with respect to (i) the Secured Assets to now only include those specific assets held by the Guarantor as set forth in Schedule "F" to the Amended and Restated Convertible Debenture Indenture having an acquisition cost of $3,922,240, and (ii) the reduction of the Conversion Price of the Debentures from $2.00 per Common Share to $1.25 per Common Share.

In addition, on December 23, 2013, the Guarantor and the Trustee entered into an Amended and Restated Guaranty and Security Agreement (the "Amended and Restated Guaranty and Security Agreement"), which forms Schedule "G" to the Amended and Restated Convertible Debenture Indenture, and which reflects the modification and alteration with respect to the Secured Assets to now only include those specific assets held by the Guarantor as set forth in Schedule "A" to the Amended and Restated Guaranty and Security Agreement.

The foregoing description of the Amended and Restated Convertible Debenture Indenture does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Convertible Debenture Indenture, which is filed as Exhibit 4.1 hereto, and is incorporated by reference herein. The form of the Amended and Restated Guaranty and Security Agreement is attached to the Amended and Restated Convertible Debenture Indenture as Schedule "G".

SECTION 2 - FINANCIAL INFORMATION

The information set forth under Item 1.01 with respect to the Amended Promissory Notes, Loan Agreement with IKEA, Amended and Restated Convertible Debenture Indenture and Amended and Restated Guaranty and Security Agreement of this Current Report on Form 8-K are incorporated by reference into this Item 2.03.

SECTION 3 - SECURITIES AND TRADING MARKETS

Item 3.02     Unregistered Sale of Equity Securities.

On December 20, 2013, we issued 3,333,333 units (each a "Unit") pursuant to a private placement (the "Private Placement") to one entity at a price of CAD$0.60 per Unit for total gross proceeds of CAD$2,000,000. Each Unit consists of one common share (each a "Share") and one common share purchase warrant (each a "Warrant"). Each Warrant entitles the holder to purchase one additional common share (each a "Warrant Share") at a price of CAD$0.70 per Warrant Share for a period of five years expiring on December 20, 2018. We relied on exemptions from registration under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") provided by Regulation S for the one purchaser based on representations and warranties provided by the purchaser of the Units in its subscription agreement (the "Subscription Agreement") entered into between us and the purchaser.

Pursuant to the Subscription Agreement, the purchaser received a pre-emptive right (the "Pre-Emptive Right") with respect to the issuance of any equity securities of the Company other than the issue of equity securities: (i) for compensatory purposes to officers, employees, directors and consultants of the Company under compensation plans in existence on December 20, 2013; (ii) pursuant to any convertible securities of the Company outstanding on December 20, 2013; or (iii) as consideration for the arm's length purchase of businesses or assets by the Company or its subsidiaries; whereby the purchaser shall have the Pre-Emptive Right to subscribe for and purchase up to such number of equity securities in order to maintain the purchasers equity ownership percentage as at the date immediately prior to the closing of such equity financing. The Pre-Emptive Right will immediately terminate and be of no further force or effect on June 20, 2016.

The proceeds from the Private Placement of Units will be used for general corporate and working capital purposes.

Pursuant to the Subscription Agreement, the Company, has agreed to use its commercially reasonable efforts to raise CAD$3,000,000 through a best efforts public offering of equity securities to be launched during the first 90 days of 2014.

The foregoing description of the Subscription Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Subscription Agreement, which is filed as Exhibit 4.2 hereto, and is incorporated by reference herein.

The Shares, Warrants and Warrant Shares issuable upon exercise of the Warrants have not been and will not be registered under the U.S. Securities Act, or under the securities laws of any state of the United States and are "restricted securities" as defined under Rule 144(a)(3) of the U.S. Securities Act and contain the appropriate restrictive legends as required under the U.S. Securities Act, Canadian Securities Administrators National Instrument 45-102 and as required by the TSX Venture Exchange. The Shares, Warrants and Warrant Shares issuable upon exercise of the Warrants may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

The information set forth under Item 1.01 with respect to the Amended and Restated Convertible Debenture Indenture of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

On January 30, 2014, we issued 181,666 common shares (each a "Bonus Share" and collectively, the "Bonus Shares") to Mr. Edmunds at a deemed value of CAD$0.60 per Bonus Share pursuant to the Loan Extension and Bonus Share Agreement, which was approved by the TSXV on January 20, 2014. We relied on the exemption from registration under the U.S. Securities Act provided by Regulation S for the issuance to Mr. Edmunds. The Bonus Shares have not been and will not be registered under the U.S. Securities Act, or under the securities laws of any state of the United States and are "restricted securities" as defined under Rule 144(a)(3) of the U.S. Securities Act and contain the appropriate restrictive legends as required under the U.S. Securities Act, Canadian Securities Administrators National Instrument 45-102 and as required by the TSXV.

SECTION 8 - OTHER EVENTS

Item 8.01     Other Events

On December 24, 2013, we issued a news release announcing the closing of its previously announced CAD$3.2 million loan financing with IKEA, the amendment to the conversion price of its July 26, 2013 10% Secured Convertible Debentures to $1.25 instead of $2.00 per common share and the closing of its previously announced private placement for CAD$2.0 million.

A copy of the December 24, 2013 press release is attached as Exhibit 99.1 hereto.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01      Financial Statements and Exhibits

(a)     Financial Statements of Business Acquired

Not applicable.

(b)     Pro forma Financial Information

Not applicable.

(c)     Shell Company Transaction

Not applicable.

(d)    Exhibits

Exhibit	Description
4.1	Amended and Restated Convertible Debenture Indenture among Crailar Technologies Inc. and Computershare Trust Company of Canada, dated December 23, 2013
4.2	Form of Subscription Agreement
4.3	Form of Warrant
10.1	Asset Purchase Agreement between Schrurs NV, Crailar Technologies Inc. and Mr. Serge Schrurs, dated November 6, 2013
10.2	Asset Purchase Agreement between Schrurs NV, Crailar Technologies Inc. and Mr. Serge Schrurs, dated December 13, 2013
10.3	Amended and Restated Promissory Note from Crailar Technologies Inc. to Jason Finnis, dated January 21, 2014
10.4	Amended and Restated Promissory Note from Crailar Technologies Inc. to Kenneth Barker, dated January 21, 2014
10.5	Amended and Restated Promissory Note from Crailar Technologies Inc. to Robert Edmunds, dated January 21, 2014
10.6	Loan Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated November 29, 2013
10.7	General Supply Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated December 9, 2013
10.8	Framework Agreement Development Work between IKEA Supply AG, Crailar Technologies Inc. and Schrurs NV, dated December 13, 2013
10.9	Tripartite Agreement between National Research Council of Canada, CRAiLAR Technologies Inc. and IKEA Supply AG, dated December 18, 2013
99.1	Press release dated December 24, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CRAILAR TECHNOLOGIES INC.
Date: February 4, 2014	/s/ Theodore Sanders                  Name:    Theodore Sanders Title:     Chief Financial Officer

__________

EX-4

AMENDED AND RESTATED CONVERTIBLE DEBENTURE INDENTURE

Made as of December 23, 2013

Between

CRAILAR Technologies Inc.

and

COMPUTERSHARE TRUST COMPANY OF CANADA

TABLE OF CONTENTS

ARTICLE 1 - INTERPRETATION	1
1.1 Definitions	1
1.2 Meaning of "Outstanding"	7
1.3 Interpretation	8
1.4 Headings, Etc	9
1.5 Time of Essence	9
1.6 Monetary References	9
1.7 Invalidity, Etc	9
1.8 Language	9
1.9 Successors and Assigns	9
1.10 Severability	9
1.11 Entire Agreement	10
1.12 Benefits of Indenture	10
1.13 Applicable Law and Attornment	10
1.14 Currency of Payment	10
1.15 Non-Business Days	10
1.16 Accounting Terms	10
1.17 Calculations	11
1.18 Schedules	11
ARTCILE 2 THE DEBENTURES	11
2.1 Limit of Debentures	11
2.2 Terms of Debentures of any Series	11
2.3 Form of Debentures	13
2.4 Form and Terms of Initial Debentures	14
2.5 Certification and Devliery of Additional Debentures	17
2.6 Issue of Global Debentures	18
2.7 Execution of Debentures	19
2.8 Certification	19
2.9 Mutilation, Loss, Theft or Destruction	20
2.10 Concerning Interest	20
2.11 Rank	20
2.12 Payments of Amounts Due on Maturity	21
2.13 U.S. Legend on the Debentures and Common Shares	21
2.14 Payment of Interest	23
2.15 Additional Amounts	24
ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP	25
3.1 Definitive Debentures	25
3.3 Transferee Entitled to Registration	27
3.4 No Notice of Trusts	28
3.5 Registers Open for Inspection	28
3.6 Exchanges of Debentures	28
3.7 Closing of Registers	28
3.8 Charges for Registration, Transfer and Exchange	29
3.9 Ownership of Debentures	29
ARTICLE 4 REDEMPTION AND PURCHASE OF DEBENTURES	30
4.1 Applicability of Article	30
4.2 Partial Redemption	31
4.3 Notice of Redemption	31
4.4 Debentures Due on Redemption Dates	32
4.5  Deposit of Redemption Monies	32
4.6 Failure to Surrender Debentures Called for Redemption	33
4.7 Cancellation of Debentures Redeemed	33
4.8 Purchase of Debentures by the Corporation	33
4.9 Deposit of Maturity Monies	34
ARTICLE 5 SECURITY FOR AND SUBORDINTATION OF DEBENTURES	34
5.1 Crailar US Amended and Restated Guaranty and Security Agreement	34
5.2 Registration of Security	34
5.3 Permitted Dispositions of Secured Assets Before Default	34
5.4 Applicability of Article	35
5.5 Order of Payment - Crailar US	35
5.6 Order of Payment - The Corporation	37
5.7 Subrogation to Rights of Holders of Senior Indebtedness	38
5.8 Obligation to Pay Not Impaired	38
5.9 No Payment if Senior Indebtedness in Default	39
5.10 Payment on Debentures Permitted	40
5.11 Confirmation of Subordination	40
5.12 Knowledge of Trustee	40
5.13 Trustee May Hold Senior Indebtedness	41
5.14 Rights of Holders of Seniore Indebtedness Not Impaired	41
5.15 Altering the Senior Indebtedness	41
5.16 Additional Indebtedness	41
5.17 Right of Debentureholder to Convert Not Impaired	41
5.18 Invalidated Payments	41
5.19 Contesting Security	42
5.20 Subordination to Security Interest	42
ARTICLE 6 CONVERSION OF DEBENTURES	42
6.1 Applicability of Article	42
6.2 Notice of Expiry of Conversion Priviledge	42
6.3 Revival of Right to Convert	43
6.4 Manner of Exercise of Right to Convert	43
6.5 Adjustment of Conversion Price	44
6.6 No Requirement to Issue Fractional Common Shares	50
6.7 Corporation to Reserve Common Shares	50
6.8 Cancellation of Converted Debentures	50
6.9 Certificate as to Adjustment	50
6.10 Notice of Special Matters	51
6.11 Protection of Trustee	51
6.12 U.S. Legend on Common Shares	51
ARTICLE 7 CONVENTNATS OF THE CORPORATION	52
7.1 To Pay Principal, Premium (if any) and Interest	52
7.2 To Pay Trustee's Remuneration	52
7.3 To Give Notice of Default	52
7.4 Preservation of Existence, etc.	52
7.5 Keeping of Books	52
7.6 Certificate of Compliacne	53
7.7 Performance of Covenants by Trustee	53
7.8 SEC Notice	53
7.9 No Dividends on Common Shares if Event of Default	53
7.10 Maintain Listing	53
7.11 Covenants as to Security	54
ARTICLE 8 DEFAULT	54
8.1 Events of Default	54
8.2 Notice of Events of Default	56
8.3 Waiver of Default	56
8.4 Enforcement by the Trustee	57
8.5 No Suits by Debentureholders	58
8.6 Application of Monies by Trustee	59
8.7 Notice of Payment by Trustee	60
8.8 Trustee May Demand Production of Debentures	60
8.9 Remedies Cumulative	60
8.10 Judgment Against the Corporation	60
8.11 Immunity of Directions, Officers and Others	60
ARTICLE 9 SATISFACTION AND DISCHARGE	61
9.1 Cancellation and Destruction	61
9.2 Non-Presentation of Debentures	61
9.3 Repayment of Unclaimed Monies	61
9.4 Discharge	62
9.5 Satisfaction	62
9.6 Continuance of Rights, Duties and Obligations	64
ARTICLE 10 SUCCESSORS	64
10.1 Corporation may Consolidate, Etc., Only on Certain Terms	64
10.2 Successor Subsituted	65
ARTICLE 11 MEETINGS OF DEBENTUREHOLDERS	66
11.1 Right to Convene Meeting	66
11.2 Notice of Meetings	66
11.3 Chairman	68
11.4 Quorum	68
11.5 Power to Adjourn	68
11.6 Show of Hands	68
11.7 Poll	69
11.8 Voting	69
11.9 Proxies	69
11.10 Persons Entitled to Attend Meetings	70
11.11 Powers Exercisable by Extraordinary Resolution	70
11.12 Meaning of "Extraordinary Resolution"	72
11.13 Powers Cumulative	73
11.14 Minutes	73
11.15 Instruments in Writing	73
11.16 Binding Effect of Resolutions	74
11.17 Evidence of Rights of Debenturesholders	74
11.18 Concerning Serial Meetings	74
ARTICLE 12 NOTICES	74
12.1 Notice oto Corporation	74
12.2 Notice to Debentureholders	75
12.3 Notice to Trustee	75
12.4 Mail Service Interruption	75
ARTICLE 13 CONCERNING THE TRUSTEE	76
13.1 No Conflict of Interest	76
13.2 Replacement of Trustee	76
13.3 Duties of Trustee	77
13.4 Reliance Upon Declarations, Opinions, etc.	77
13.5 Evidence and Authority to Trustee, Opinons, etc.	77
13.6 Officers' Certificates Evidence	78
13.7 Experts, Advisers and Agents	79
13.8 Trustee May Deal in Debentures	79
13.9 Investment of Monies Held by Trustee	79
13.10 Trustee Not Ordinarily Bound	80
13.11 Trustee Not Required to Give Security	80
13.12 Trustee Not Bound to Act on Corporation's Request	80
13.13 Conditions Precedent to Trustee's Obligations to Act Hereunder	80
13.14 Authority to Carry on Business	81
13.15 Compensation and Indemnity	81
13.16 Acceptance of Trust	82
13.17 Third Party Interest	82
13.18 Privacy Laws	82
13.19 Force Majeure	82
13.20 Anti-Money Laundering	83
ARTICLE 14 SUPPLEMENTAL INDENTURES	83
14.1 Supplemental Indentures	83
ARTICLE 15 EXECUTION AND FORMAL DATE	84
15.1 Execution	84
15.2 Formal Date	84
SCHEDULE A - FORM OF DEBENTURE
SCHEDULE B - FORM OF REDEMPTION NOTICE
SCHEDULE C - FORM OF NOTICE OF CONVERSION
SCHEDULE D - COMMON SHARE LEGENDS
SCHEDULE E - FORM OF DECLARATION FOR REMOVAL OF LEGEND
SCHEDULE F - SECURED ASSETS
SCHEDULE G - FORM OF CRAILAR US AMENDED AND RESTATED GUARANTY AND SECURITY AGREEMENT

AMENDED AND RESTATED CONVERTIBLE DEBENTURE INDENTURE

This Agreement is made as of the 23^rd day of December, 2013, between

CRAILAR Technologies Inc., a corporation existing under the laws of British Columbia and having its head office in Victoria, in the Province of British Columbia (hereinafter called "Crailar" or the "Corporation")

and

COMPUTERSHARE TRUST COMPANY OF CANADA

a trust company having an office in the City of Vancouver, in the Province of British Columbia (hereinafter called the "Trustee")

WITNESSETH THAT:

WHEREAS the Corporation on July 26, 2013 has created and issued the Debentures in the manner and subject to the terms and conditions of this Indenture;

WHEREAS the Debentureholders (as defined below) of not less than sixty-six and two-thirds percentage (66-2/3%) of the principal amount of the Corporation's 10% Convertible Secured Debentures outstanding as at December 17, 2013, which were issued on July 26, 2013 pursuant to the Convertible Debenture Indenture (the "Original Indenture") between the Corporation and the Trustee, dated July 26, 2013, to which this Amended and Restated Convertible Debenture Indenture relates, signed an Extraordinary Written Consent Resolution of Debentureholders (the "Extraordinary Resolution"), dated to be effective as of December 17, 2013, pursuant to Section 11.11(b) and 11.15 of the Original Indenture, whereby the Debentureholders have authorized the modification and alteration of the rights of the Debentureholders and the Trustee against the Corporation with respect to the Secured Assets (as defined in the Original Indenture) set out in Schedule "F" to the Original Indenture and as set out in Schedule "A" to the Guaranty and Security Agreement (the "Guaranty") between Crailar Inc. (the "Guarantor") and the Trustee, dated July 26, 2013, to now only include those specific assets held by the Guarantor as set forth in Schedule "F" attached hereto which have an acquisition cost of $3,922,240; and as consideration for such modification and alteration with respect to the Secured Assets, the Debentureholders require the Conversion Price (as defined below) of the Debentures to be reduced from $2.00 per Common Share (as defined below) to $1.25 per Common Share;

WHEREAS pursuant to the Extraordinary Resolution, the Corporation and the Trustee are authorized to enter into and execute this Amended and Restated Indenture (the "Indenture") to reflect the reduced Conversion Price to $1.25 per Common Share and the modification and alteration to the Secured Assets to revise Schedule "F" attached hereto; and

WHEREAS pursuant to the Extraordinary Resolution, the Guarantor and the Trustee are authorized to enter into and execute an amended and restated Guaranty and Security Agreement (the "Amended and Restated Guaranty and Security Agreement") to reflect the modification and alteration to the Secured Assets to revise Schedule "A" to the Amended and Restated Guaranty and Security Agreement.

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NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the respective covenants and agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged), the Corporation and the Trustee covenant and agree, for the benefit of each other and for the equal and rateable benefit of the holders, as follows:

ARTICLE 1 - interpretation

1.1     Definitions

In this Indenture and in the Debentures, unless there is something in the subject matter or context inconsistent therewith, the expressions following shall have the following meanings, namely:

(a)     "this Indenture", "this Convertible Debenture Indenture", "hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to this Indenture and not to any particular Article, Section, subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto;

(b)     "Additional Amounts" has the meaning ascribed thereto in Section 2.15(a);

(c)     "Additional Debentures" means Debentures of any one or more series, other than the first series of Debentures, being the Initial Debentures, issued under the Indenture;

(d)     "Applicable Period" means any period announced by the Board of Directors as a period of time for which a cash dividend or distribution will be declared and paid by the Corporation to the holders of all or substantially all of the outstanding Common Shares;

(e)     "Applicable Securities Legislation" means applicable securities laws (including rules, regulations, policies and instruments) in each of the provinces of Canada;

(f)     "Auditors of the Corporation" means an independent firm of chartered accountants duly appointed as auditors of the Corporation;

(g)     "Beneficial Holder" means any Person who holds a beneficial interest in a Global Debenture as shown on the books of the Depository or a Depository Participant;

(h)     "Board of Directors" means the board of directors of the Corporation or any committee thereof;

(i)     "Business Day" means any day other than a Saturday, Sunday or any other day that the Trustee in Vancouver, British Columbia is not generally open for business;

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(j)    "Capital Stock" of any Person means any and all shares, partnership interests, common shares, participations, rights in or other equivalents of, or interests in, the equity of such Person.

(k)     "CDS" means CDS Clearing and Depository Services Inc.;

(l)      "Common Shares" means common shares in the capital of the Corporation, as such common shares are constituted on the date of execution and delivery of this Indenture; provided that in the event of a change or a subdivision, revision, reduction, combination or consolidation thereof, any reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up, or such successive changes, subdivisions, redivisions, reductions, combinations or consolidations, reclassifications, capital reorganizations, consolidations, amalgamations, arrangements, mergers, sales or conveyances or liquidations, dissolutions or windings-up, then, subject to adjustments, if any, having been made in accordance with the provisions of Section 6.5, "Common Shares" shall mean the shares or other securities or property resulting from such change, subdivision, redivision, reduction, combination or consolidation, reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance or liquidation, dissolution or winding-up;

(m)    "Conversion Price" means the dollar amount for which each Common Share may be issued from time to time upon the conversion of Debentures or any series of Debentures which are by their terms convertible in accordance with the provisions of Article 6, and without limiting the generality of the foregoing, the Conversion Price for the Initial Debentures is as set out in Section 2.4(g);

(n)     "Corporation" means Crailar Technologies Inc. and includes any successor to or of the Corporation that shall have complied with the provisions of Article 10;

(o)     "Counsel" means a barrister or solicitor or firm of barristers or solicitors retained or employed by the Trustee or retained or employed by the Corporation and reasonably acceptable to the Trustee;

(p)     "Crailar" means Crailar Technologies Inc. and includes any successor to or of Crailar that shall have complied with the provisions of Article 10;

(q)     "Crailar US" means Crailar Inc., a wholly-owned subsidiary of the Corporation incorporated under the laws of the State of Nevada, U.S.A.;

(r)     "Crailar US Amended and Restated Guaranty and Security Agreement" means the guaranty and security agreement in the form attached as Schedule "G" entered into by Crailar US in favour of the Trustee, on behalf of itself and the Debentureholders, providing for, inter alia, a guarantee by Crailar US of the Corporation's obligations under the Debentures and this Indenture, limited to the value of the Secured Assets, on the terms set forth in such agreement, and a Security Interest on the Secured Assets;

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(s)     "Current Market Price" means, generally, the volume weighted average trading price of the Common Shares on the TSXV, if the Common Shares are listed on the TSXV, for the 20 consecutive trading days ending on the fifth trading day preceding the applicable date. If the Common Shares are not listed on the TSXV, reference shall be made for the purpose of the above calculation to the principal securities exchange or market on which the Common Shares are listed or quoted or if no such prices are available "Current Market Price" shall be the fair value of a Common Share as reasonably determined by the Board of Directors;

(t)     "Date of Conversion" has the meaning ascribed thereto in Section 6.4(b);

(u)     "Debentureholders" or "holders" means the Persons for the time being entered in the register for Debentures as registered holders of Debentures or any transferees of such Persons by endorsement or delivery;

(v)     "Debentures" means the debentures, notes or other evidence of indebtedness of the Corporation issued and certified hereunder, or deemed to be issued and certified hereunder, including, without limitation, the Initial Debentures, and for the time being outstanding, whether in definitive or interim form;

(w)     "Defeased Debentures" has the meaning ascribed thereto in Section 9.6(b);

(x)     "Definitive Debenture" means a certificated Debenture fully registered in the name of the holder thereof;

(y)     "Depository" means, with respect to the Debentures of any series issuable or issued in whole or in part in the form of one or more Global Debentures, the person designated as depository by the Corporation pursuant to Section 3.2 until a successor depository shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depository" shall mean each person who is then a depository hereunder, and if at any time there is more than one such person, "Depository" as used with respect to the Debentures of any series shall mean each depository with respect to the Global Debentures of such series, it being understood that there shall initially be no Depository with respect to the Initial Debentures, which shall initially be issued in the form of Definitive Debentures;

(z)     "Depository Participant" means a broker, dealer, bank, other financial institution or other person for whom, from time to time, a Depository effects book entries for a Global Debenture deposited with the Depository;

(aa)     "Distributed Securities" has the meaning ascribed thereto in Section 6.5(e);

(bb)     "Event of Default" has the meaning ascribed thereto in Section 8.1;

(cc)     "Extraordinary Resolution" has the meaning ascribed thereto in Section 11.12;

(dd)     "generally accepted accounting principles" or "GAAP" means generally accepted accounting principles established by the Financial Accounting Standards Board of the United States, as amended from time to time (including as further described in Section 1.16);

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(ee)     "Global Debenture" means a Debenture that is issued to and registered in the name of the Depository, or its nominee, pursuant to Section 2.6 for purposes of being held by or on behalf of the Depository as custodian for participants in the Depository's book-entry only registration system;

(ff)     "Global Debenture Legend" means the legend identified as such in Schedule "A";

(gg)     "Guarantee Liabilities" has the meaning ascribed thereto in Section 5.4;

(hh)     "Guarantees" means any guarantee, undertaking to assume, endorse, contingently agree to purchase, or to provide funds for the payment of, or otherwise become liable in respect of, any indebtedness, liability or obligation of any Person;

(ii)     "IFRS" means International Financial Reporting Standards;

(jj)     "Ineligible Consideration" has the meaning ascribed thereto in Section 6.5(d);

(kk)     "Initial Debentures" means the Debentures designated as "10% Convertible Secured Debentures" and described in Section 2.4;

(ll)     "Interest Payment Date" means a date specified in a Debenture as the date on which interest on such Debenture shall become due and payable;

(mm)     "Issue Price" has the meaning ascribed thereto in Section 2.4(a);

(nn)     "Mandatory Redemption" has the meaning ascribed thereto in Section 2.4(e);

(oo)     "Maturity Account" means an account or accounts required to be established by the Corporation (and which shall be maintained by and subject to the control of the Trustee) for each series of Debentures issued pursuant to and in accordance with this Indenture;

(pp)     "Maturity Date" means the date specified for maturity of any Debentures;

(qq)     "Offering" means the private placement offering of up to $5,000,000 aggregate principal amount of Initial Debentures;

(rr)     "Officers' Certificate" means a certificate of the Corporation signed by any two authorized officers or directors of the Corporation, in their capacities as officers or directors of the Corporation, and not in their personal capacities;

(ss)     "Periodic Offering" means an offering of Debentures of a series from time to time, the specific terms of which Debentures, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Corporation upon the issuance of such Debentures from time to time;

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(tt)     "Permitted Priority Encumbrances" means as of any particular time any of the following encumbrances on the Secured Assets or property intended to form part of the Secured Assets or any part thereof:

(i)     liens for taxes, assessments or governmental charges not at the time due or delinquent or the validity of which are being contested at the time in good faith by Crailar US by proceedings diligently conducted;

(ii)     security given by Crailar US to a public utility or any municipality or governmental or other public authority which is required by such utility or municipality or other authority in connection with the operations of Crailar US, all in the ordinary course of its business which singly or in the aggregate does not materially detract from the value of the assets concerned or materially impair their use in the operation of the business of Crailar US; and

(iii)     any security interest consented to in writing by an Extraordinary Resolution delivered to the Trustee;

(uu)     "Person" includes an individual, corporation, company, partnership, joint venture, association, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof;

(vv)     "Prescribed Securities" has the meaning ascribed thereto in Section 6.5(d);

(ww)     "Receiver" means a receiver or a receiver-manager;

(xx)     "Redemption Date" has the meaning ascribed thereto in Section 4.3;

(yy)     "Redemption Notice" has the meaning ascribed thereto in Section 4.3;

(zz)     "Redemption Price" means, in respect of a Debenture, the amount payable on the Redemption Date;

(aaa)     "Regulation S" means Regulation S adopted by the United States Exchange Commission under the U.S. Securities Act;

(bbb)     "Secured Assets" means those certain assets of the Corporation set out in Schedule "F" subject to, or intended to be subject to, the Security Interest created pursuant to the Security Documents and any proceeds thereof and includes any part thereof as the context requires;

(ccc)     "Security Documents" means, collectively, the Crailar US Amended and Restated Guaranty and Security Agreement and such further agreements, instruments and other documents that may at any time be required to be provided by Crailar US hereunder to ensure that the Trustee (for itself and the Debentureholders) has, subject to the Permitted Priority Encumbrances, a first priority Security Interest in all of the Secured Assets;

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(ddd)     "Security Interest" means the security interest granted to the Trustee on behalf of itself and the Debentureholders in the Secured Assets pursuant to the terms and conditions of the Crailar US Amended and Restated Guaranty and Security Agreement;

(eee)     "Senior Creditor" means a holder or holders of Senior Indebtedness and includes any representative or representatives, agent or agents or trustee or trustees of any such holder or holders;

(fff)     "Senior Indebtedness" (i) with respect to the Corporation means the principal of and premium, if any, and interest on and other amounts in respect of secured debt, statutory liens, secured bank or other institutional debt or renewals, extension and refunding of such indebtedness of the Corporation, whether outstanding on the date of this Indenture or thereafter created, incurred, assumed or guaranteed, and (ii) with respect to Crailar US means statutory liens; provided that in the case of both (i) and (ii) "Senior Indebtedness" shall not include any indebtedness that would otherwise be Senior Indebtedness if it is expressly stated to be subordinate to or rank pari passu with the Security Documents or the Debentures;

(ggg)     "Senior Security" means all mortgages, liens, pledges, charges (whether fixed or floating), security interests, hypothecs or other encumbrances of any kind, contingent or absolute, held by or on behalf of any Senior Creditor and in any manner securing any Senior Indebtedness. Solely for the purposes of determining whether a Senior Security exists for the purposes of this Indenture, a Person shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale or capital lease or other title retention agreement and any lease in the nature thereof (excluding, for the avoidance of doubt, operating leases) and such retention of title by another Person shall constitute a Senior Security;

(hhh)    "Spinoff Securities" has the meaning ascribed thereto in Section 6.5(e);

(iii)   "Serial Meeting" has the meaning ascribed thereto in Section 11.2(b)(i);

(jjj)     "Subsidiary" has the meaning ascribed thereto in the Securities Act (British Columbia);

(kkk)   "Tax Act" means the Income Tax Act (Canada), as amended from time to time;

(lll)    "Taxes" has the meaning ascribed thereto in Section 2.15(a);

(mmm)     "Taxing Jurisdiction" has the meaning ascribed thereto in Section 2.15(a);

(nnn)    "Time of Expiry" means the time of expiry of certain rights with respect to the conversion of Debentures under Article 6 or under Section 2.4(g) with respect to the Initial Debentures, which is to be set forth separately in the form and terms for each series of Debentures which by their terms are to be convertible;

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(ooo)     "trading day" means, with respect to the TSXV or other market for securities, any day on which such exchange or market is open for trading or quotation;

(ppp)     "Trustee" means Computershare Trust Company of Canada, or its successor or successors for the time being as trustee hereunder;

(qqq)     "TSXV" means the TSX Venture Exchange or its successor or successors;

(rrrr)     "United States" or "U.S." means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

(sss)     "U.S. Legend" has the meaning ascribed thereto in Section 2.13;

(ttt)     "U.S. Person" means "U.S. person" as defined in Regulation S;

(uuu)     "U.S. Securities Act" means the United States Securities Act of 1933, as amended;

(vvv)     "Written Direction of the Corporation" means an instrument in writing signed by any one officer or director of the Corporation; and

1.2     Meaning of "Outstanding"

Every Debenture certified and delivered by the Trustee hereunder shall be deemed to be outstanding until it is cancelled, converted or redeemed or delivered to the Trustee for cancellation, conversion or redemption for monies and/or Common Shares, as the case may be, or the payment thereof shall have been set aside under Section 9.2, provided that:

(a)     Debentures which have been partially redeemed, purchased or converted shall be deemed to be outstanding only to the extent of the unredeemed, unpurchased or unconverted part of the principal amount thereof;

(b)     when a new Debenture has been issued in substitution for a Debenture which has been lost, stolen or destroyed, only one of such Debentures shall be counted for the purpose of determining the aggregate principal amount of Debentures outstanding; and

(c)     for the purposes of any provision of this Indenture entitling holders of outstanding Debentures to vote, sign consents, requisitions or other instruments or take any other action under this Indenture, or to constitute a quorum of any meeting of Debentureholders, Debentures owned directly or indirectly, legally or equitably, by the Corporation shall be disregarded except that:

(i)     for the purpose of determining whether the Trustee shall be protected in relying on any such vote, consent, requisition or other instrument or action, or on the holders of Debentures present or represented at any meeting of Debentureholders, only the Debentures which the Trustee knows are so owned shall be so disregarded; and

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(ii)     Debentures so owned which have been pledged in good faith other than to the Corporation shall not be so disregarded if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Debentures, sign consents, requisitions or other instruments or take such other actions in his discretion free from the control of the Corporation or a Subsidiary of the Corporation.

1.3     Interpretation

In this Indenture:

(a)     words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa;

(b)     all references to Articles and Schedules refer, unless otherwise specified, to articles of and schedules to this Indenture;

(c)     all references to Sections refer, unless otherwise specified, to Sections, subsections or clauses of this Indenture;

(d)     words and terms denoting inclusiveness (such as "include" or "includes" or "including"), whether or not so stated, are not limited by and do not imply limitation of their context or the words or phrases which precede or succeed them;

(e)     reference to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from time to time;

(f)     unless otherwise indicated, reference to a statute shall be deemed to be a reference to such statute as amended, re-enacted or replaced from time to time; and

(g)     unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated by including the day on which the period commences and excluding the day on which the period ends.

1.4     Headings, Etc.

The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Debentures.

1.5     Time of Essence

Time shall be of the essence of this Indenture.

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1.6     Monetary References

Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed.

1.7     Invalidity, Etc.

Any provision hereof which is prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof.

1.18     Language

Each of the parties hereto hereby acknowledges that it has consented to and requested that this Indenture and all documents relating thereto, including the form of Debenture attached hereto as Schedule "A", be drawn up in the English language only. Chacune des parties aux presentes reconnait avoir accepte et demande que cette acte de fiducie et tous les documents y relies, y compris le modele de debenture joint aux presentes a titre d'Annexe a « A », soient rediges en anglais seulement.

1.9     Successors and Assigns

All covenants and agreements of the Corporation in this Indenture and the Debentures shall bind its successors and assigns, whether so expressed or not. All covenants and agreements of the Trustee in this Indenture shall bind its successors.

1.10     Severability

In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, such provision shall be deemed to be severed herefrom or therefrom and the validity, legality and enforceability of the remaining provisions shall not in any way be affected, prejudiced or impaired thereby.

1.11     Entire Agreement

This Indenture and all supplemental indentures and Schedules hereto and thereto, and the Debentures issued hereunder and thereunder, together constitute the entire agreement between the parties hereto with respect to the indebtedness created hereunder and thereunder and under the Debentures and supersedes as of the date hereof all prior memoranda, agreements, negotiations, discussions and term sheets, whether oral or written, with respect to the indebtedness created hereunder or thereunder and under the Debentures.

1.12     Benefits of Indenture

Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any paying agent, the holders of Debentures, the Senior Creditors (to the extent provided in Article 5 only), and (to the extent provided in Section 8.11) the holders of Common Shares, any benefit or any legal or equitable right, remedy or claim under this Indenture.

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1.13     Applicable Law and Attornment

This Indenture, any supplemental indenture and the Debentures shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein and shall be treated in all respects as British Columbia contracts. With respect to any suit, action or proceedings relating to this Indenture, any supplemental indenture or any Debenture, the Corporation, the Trustee and each holder irrevocably submit and attorn to the non-exclusive jurisdiction of the courts of the Province of British Columbia. The parties hereto hereby waive any right they may have to require a trial by jury of any proceeding commenced in connection herewith.

1.14     Currency of Payment

Unless otherwise indicated in a supplemental indenture with respect to any particular series of Debentures, all payments to be made under this Indenture or a supplemental indenture shall be made in Canadian dollars.

1.15     Non-Business Days

Whenever any payment to be made hereunder shall be due, any period of time would begin or end, any calculation is to be made or any other action is to be taken on, or as of, or from a period ending on, a day other than a Business Day, such payment shall be made, such period of time shall begin or end, such calculation shall be made and such other action shall be taken, as the case may be, unless otherwise specifically provided herein, on or as of the next succeeding Business Day without any additional interest, cost or charge to the Corporation.

1.16     Accounting Terms

Except as hereinafter provided or as otherwise indicated in this Indenture, all calculations required or permitted to be made hereunder pursuant to the terms of this Indenture shall be made in accordance with GAAP. For greater certainty, GAAP shall include any accounting standards, including IFRS, that may from time to time be approved for general application by the Financial Accounting Standards Board of the United States.

1.17     Calculations

The Corporation shall be responsible for making all calculations called for hereunder including, without limitation, calculations of Current Market Price. The Corporation shall make such calculations in good faith and, absent manifest error, the Corporation's calculations shall be final and binding on holders and the Trustee, except for interest calculations which will be performed by the Trustee. The Corporation will provide a schedule of its calculations to the Trustee and the Trustee shall be entitled to rely conclusively on the accuracy of such calculations without independent verification.

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1.18     Schedules

The following Schedules are incorporated into and form part of this Indenture:

Schedule "A"	-	Form of Debenture
Schedule "B"	-	Form of Redemption Notice
Schedule "C"	-	Form of Notice of Conversion
Schedule "D"	-	Common Share Legends
Schedule "E"	-	Form of Declaration for Removal of Legend
Schedule "F"	-	Secured Assets
Schedule "G"		Form of Crailar US Guaranty and Security Agreement

In the event of any inconsistency between the provisions of any Section of this Indenture and the provisions of the Schedules which form a part hereof, the provisions of this Indenture shall prevail to the extent of the inconsistency.

ARTICLE 2
THE DEBENTURES

2.1     Limit of Debentures

Subject to the limitation in respect of the Initial Debentures set out in Section 2.4(b), the aggregate principal amount of Debentures authorized to be issued under this Indenture is unlimited, but Debentures may be issued only upon and subject to the conditions and limitations herein set forth.

2.2     Terms of Debentures of any Series

The Debentures may be issued in one or more series. There shall be established herein or in or pursuant to one or more indentures supplemental hereto, prior to the initial issuance of Debentures of any particular series:

(a)     the designation of the Debentures of the series (which need not include the term "Debentures"), which shall distinguish the Debentures of the series from the Debentures of all other series;

(b)     any limit upon the aggregate principal amount of the Debentures of the series that may be certified and delivered under this Indenture (except for Debentures certified and delivered upon registration of, transfer of, amendment of, or in exchange for, or in lieu of, other Debentures of the series pursuant to Sections 2.9, 3.2, 3.3 and 3.6 and Article 4 and Article 6);

(c)     the date or dates on which the principal of the Debentures of the series is payable;

(d)     the rate or rates at which the Debentures of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and on which record date, if any, shall be taken for the determination of holders to whom such interest shall be payable and/or the method or methods by which such rate or rates or date or dates shall be determined;

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(e)     the place or places where the principal of and any interest on Debentures of the series shall be payable or where any Debentures of the series may be surrendered for registration of transfer or exchange;

(f)     the right, if any, of the Corporation to redeem Debentures of the series, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which, Debentures of the series may be so redeemed;

(g)     the obligation, if any, of the Corporation to redeem, purchase or repay Debentures of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which, the date or dates on which, and any terms and conditions upon which, Debentures of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations;

(h)     if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Debentures of the series shall be issuable;

(i)     subject to the provisions of this Indenture, any trustee, Depositories, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Debentures of the series;

(j)     any other events of default or covenants with respect to the Debentures of the series;

(k)    whether and under what circumstances the Debentures of the series will be convertible into or exchangeable for securities of any Person;

(l)     the form and terms of the Debentures of the series;

(m)     if applicable, that the Debentures of the series shall be issuable in whole or in part as one or more Global Debentures and, in such case, the Depository or Depositories for such Global Debentures in whose name the Global Debentures will be registered, and any circumstances other than or in addition to those set forth in Section 3.2 or those applicable with respect to any specific series of Debentures, as the case may be, in which any such Global Debenture may be exchanged for Definitive Debentures, or transferred to and registered in the name of a person other than the Depository for such Global Debentures or a nominee thereof;

(n)     if other than Canadian currency, the currency in which the Debentures of the series are issuable; and

(o)     any other terms of the Debentures of the series (which terms shall not be inconsistent with the provisions of this Indenture).

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All Debentures of any one series shall be substantially identical, except as may otherwise be established herein or by or pursuant to a resolution of the Board of Directors, Officers' Certificate or in an indenture supplemental hereto. All Debentures of any one series need not be issued at the same time and may be issued from time to time, including pursuant to a Periodic Offering, consistent with the terms of this Indenture, if so provided herein, by or pursuant to such resolution of the Board of Directors, Officers' Certificate or in an indenture supplemental hereto.

No payment (by purchase of Debentures or otherwise) shall be made by the Corporation under the Debentures and neither the Trustee nor the holders of Debentures shall be entitled to demand, institute proceedings for the collection of (which shall, for certainty include proceedings related to an adjudication or declaration as to the insolvency or bankruptcy of the Corporation and other similar creditor proceedings), or receive any payment or benefit (including without limitation by set-off, combination of accounts or otherwise in any manner whatsoever) on account of the Debentures in a manner inconsistent with the terms (as they exist on the date of issue) of the Debentures.

2.3      Form of Debentures

Except in respect of the Initial Debentures, the form of which is provided for herein, the Debentures of each series shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established herein or by or pursuant to one or more resolutions of the Board of Directors (or to the extent established pursuant to, rather than set forth in, a resolution of the Board of Directors, in an Officers' Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto or with any rules or regulations of any securities exchange or securities regulatory authority or to conform to general usage, all as may be determined by the directors or officers of the Corporation executing such Debentures on behalf of the Corporation, as conclusively evidenced by their execution of such Debentures.

2.4     Form and Terms of Initial Debentures

(a)     The first series of Debentures (the "Initial Debentures") authorized for issue immediately is limited to an aggregate principal amount of $5,000,000 at an issue price of $1,000 per Debenture (the "Issue Price") and shall be designated as "10% Convertible Secured Debentures", which consists of the Debentures offered in the Offering.

(b)     The Initial Debentures shall be dated as of the date of issue of the Initial Debentures and shall mature on July 26, 2016 (the "Maturity Date" for the Initial Debentures).

(c)     The Initial Debentures shall bear interest from the date of issue at the rate of 10% per annum, payable in arrears in equal (with the exception of the first interest payment, which will include interest from and including the date of issue of the Initial Debentures as set forth below, and the last interest payment, which will include interest from March 31, 2016 to July 26, 2016, if not redeemed or

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converted prior to the Maturity Date) semi-annual payments in arrears on March 31 and September 30 in each year, the first such payment to fall due on September 30, 2013 and the last such payment (representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date of the Initial Debentures) to fall due on July 26, 2016, payable after as well as before maturity and after as well as before default, with interest on amounts in default at the same rate, compounded semi-annually. For certainty, the first interest payment will include interest accrued from and including the date of issue of the Initial Debentures to, but excluding, September 30, 2013. Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. The record dates for the payment of interest on the Initial Debentures will be the fifth Business Day prior to the applicable Interest Payment Date.

(d)     In the event the Corporation completes an aggregate of $20,000,000 or more in any equity financing(s) between the date of issue of the Initial Debentures and the Maturity Date, the Corporation shall, subject to providing not less than 60 days prior notice to each then holder, redeem the Initial Debentures in whole in accordance with the terms of Article 4 at the Redemption Price equal to their principal amount plus accrued and unpaid interest thereon up to (but excluding) the Redemption Date (such requirement to redeem being, the "Mandatory Redemption"). The Redemption Notice for the Initial Debentures shall be substantially in the form of Schedule "B". The Redemption Price, including any accrued and unpaid interest on such Initial Debentures to be redeemed, will be paid in cash.

(e)     The Corporation may at its option, at any time on or after two years from the date of issue of the Initial Debentures, redeem in whole or in part from time to time in accordance with the terms of Article 4 the principal amount of the Initial Debentures without penalty at the Redemption Price equal to their principal amount plus accrued and unpaid interest thereon up to (but excluding) the Redemption Date. The Corporation will be required to provide the holders of the Initial Debentures not more than 60 and not less than 30 days' notice of the Redemption Date and the holders will have the right to accept the repayment or convert the principal amount of the Initial Debentures at any time prior to the Redemption Date in accordance Section 2.4(g). The Redemption Notice for the Initial Debentures shall be substantially in the form of Schedule "B". The Redemption Price, including any accrued and unpaid interest on such Initial Debentures to be redeemed, will be paid in cash.

(f)     The Guarantee Liabilities will rank in priority to any other obligations of Crailar US to the extent the Guaranteed Liabilities are secured by the Security Interest constituted by the Security Documents and otherwise will be subordinated to the Senior Indebtedness of Crailar US in accordance with the provisions of Article 5. In accordance with Section 2.11, and except to the extent the Guarantee Liabilities are secured by the Security Interest, the Initial Debentures will rank pari passu with each other series of Debentures issued under this Indenture or under indentures supplemental to this Indenture (regardless of their actual date or terms of issue) and, except as prescribed by law, with all other existing and future unsecured indebtedness of the Corporation other than Senior Indebtedness.

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(g)      Upon and subject to the provisions and conditions of Article 6 and Section 3.7, the holder of each Initial Debenture shall have the right at such holder's option, at any time prior to the close of business on the earlier of: (i) the Maturity Date of the Initial Debentures; and (ii) the Business Day immediately preceding the Redemption Date if the Initial Debentures are called for redemption by notice to the holders of Initial Debentures in accordance with Sections 2.4(d), 2.4(e) and 4.3 (the earlier of which will be the "Time of Expiry" for the purposes of Article 6 in respect of the Initial Debentures), to convert any part, being $1,000 or an integral multiple thereof, of the principal amount of a Debenture into Common Shares at the Conversion Price in effect on the Date of Conversion. To the extent a redemption is a redemption in part only of the Initial Debentures under Section 2.4(e), such right to convert, if not exercised prior to the applicable Time of Expiry, shall survive as to any Initial Debentures not redeemed or converted and be applicable to the next succeeding Time of Expiry.

The Conversion Price in effect on the date hereof for each Common Share to be issued upon the conversion of Initial Debentures shall be equal to $1.25 such that approximately 800 Common Shares shall be issued for each $1,000 principal amount of Initial Debentures so converted. Except as provided below, no adjustment in the number of Common Shares to be issued upon conversion will be made for dividends or distributions on Common Shares issuable upon conversion, the record date for the payment of which precedes the date upon which the holder becomes a holder of Common Shares in accordance with Article 6, or for interest accrued on Initial Debentures surrendered. No fractional Common Shares will be issued, and holders will receive a cash payment in satisfaction of any fractional interest based on the Current Market Price as of the Date of Conversion, provided, however, that the Corporation shall not be required to make any payment of less than $5.00. The Conversion Price applicable to, and the Common Shares, securities or other property receivable on the conversion of, the Initial Debentures is subject to adjustment pursuant to the provisions of Section 6.5.

Holders converting Debentures shall receive accrued and unpaid interest thereon from the period of the last Interest Payment Date prior to the Date of Conversion to the date that is one Business Day prior to the Date of Conversion.

Notwithstanding any other provisions of this Indenture, if a Debenture is surrendered for conversion on an Interest Payment Date or during the five preceding Business Days, the person or persons entitled to receive Common Shares in respect of the Debenture so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date.

(h)     The Initial Debentures shall be issued in denominations of $1,000 and integral multiples of $1,000. Each Initial Debenture and the certificate of the Trustee endorsed

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thereon shall be issued in substantially the form set out in Schedule "A" (provided that Initial Debentures, which shall all be initially issued in the form of Definitive Debentures, shall be issued without the Global Debenture Legend), with such insertions, omissions, substitutions or other variations as shall be required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto or with any rules or regulations of any securities exchange or securities regulatory authority or to conform with general usage, all as may be determined by the Board of Directors executing such Initial Debenture in accordance with Section 2.7, as conclusively evidenced by their execution of an Initial Debenture. Each Initial Debenture shall additionally bear such distinguishing letters and numbers as the Trustee shall approve. Notwithstanding the foregoing, an Initial Debenture may be in such other form or forms as may, from time to time, be approved by a resolution of the Board of Directors, or as specified in an Officers' Certificate.

The Initial Debentures may be engraved, lithographed, printed, mimeographed or typewritten or partly in one form and partly in another.

The Initial Debentures shall be issued in the form of one or more Definitive Debentures, shall bear the U.S. Legend, and shall not be initially issued in the form of one or more Global Debentures.

Any Global Debentures will be registered in the name of the Depository which, as of the date hereof, shall be CDS (or any nominee of the Depository). No Beneficial Holder will receive definitive certificates representing their interest in Debentures except as provided in this Section 2.4(h) and Section 3.2. A Global Debenture may be exchanged for Definitive Debentures, or transferred to and registered in the name of a person other than the Depository for such Global Debentures or a nominee thereof, as provided in Section 3.2.

The Definitive Debentures will be registered in the names of each holder thereof as provided in Section 3.1. A Definitive Debenture may be exchanged, or transferred to and registered in the name of a person other than the registered holder thereof, as provided in Section 3.2.

2.5     Certification and Delivery of Additional Debentures

The Corporation may from time to time request the Trustee to certify and deliver Additional Debentures of any series by delivering to the Trustee the documents referred to below in this Section 2.5 whereupon the Trustee shall certify such Debentures and cause the same to be delivered in accordance with the Written Direction of the Corporation referred to below or pursuant to such procedures acceptable to the Trustee as may be specified from time to time by a Written Direction of the Corporation. The maturity date, issue date, interest rate (if any) and any other terms of the Debentures of such series shall be set forth in or determined by or pursuant to such Written Direction of the Corporation and procedures. In certifying such Debentures, the Trustee shall be entitled to receive and shall be fully protected in relying upon, unless and until such documents have been superseded or revoked:

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(a)     an Officers' Certificate and/or executed supplemental indenture by or pursuant to which the form and terms of such Additional Debentures were established;

(b)     a Written Direction of the Corporation requesting certification and delivery of such Additional Debentures and setting forth delivery instructions, provided that, with respect to Additional Debentures of a series subject to a Periodic Offering:

(i)     such Written Direction of the Corporation may be delivered by the Corporation to the Trustee prior to the delivery to the Trustee of such Additional Debentures of such series for certification and delivery;

(ii)     the Trustee shall certify and deliver Additional Debentures of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount, if any, established for such series, pursuant to a Written Direction of the Corporation or pursuant to procedures acceptable to the Trustee as may be specified from time to time by a Written Direction of the Corporation;

(iii)     the maturity date or dates, issue date or dates, interest rate or rates (if any) and any other terms of Additional Debentures of such series shall be determined by an executed supplemental indenture or by Written Direction of the Corporation or pursuant to such procedures; and

(iv)     if provided for in such procedures, such Written Direction of the Corporation may authorize certification and delivery pursuant to oral or electronic instructions from the Corporation which oral or electronic instructions shall be promptly confirmed in writing;

(c)     an opinion of Counsel, in form and substance satisfactory to the Trustee, acting reasonably, to the effect that all requirements imposed by this Indenture and by law in connection with the proposed issue of Additional Debentures have been complied with, subject to the delivery of certain documents or instruments specified in such opinion;

(d)     an Officers' Certificate (which Officers' Certificate shall be in such form that satisfies all applicable laws) certifying that the Corporation is not in default under this Indenture, that the terms and conditions for the certification and delivery of Additional Debentures (including those set forth in Section 13.5), have been complied with subject to the delivery of any documents or instruments specified in such Officers' Certificate and that no Event of Default exists or will exist upon such certification and delivery; and

(e)     a certificate of good standing of the Corporation.

2.6     Issue of Global Debentures

(a)     The Corporation may specify that the Debentures of a series are to be issued in whole or in part as one or more Global Debentures registered in the name of a Depository, or its nominee, designated by the Corporation in the Written

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Direction of the Corporation delivered to the Trustee at the time of issue of such Debentures, and in such event the Corporation shall execute and the Trustee shall certify and deliver one or more Global Debentures that shall:

(i)     represent an aggregate amount equal to the principal amount of the outstanding Debentures of such series to be represented by one or more Global Debentures;

(ii)     be delivered by the Trustee to such Depository or pursuant to such Depository's instructions; and

(iii)     bear a legend substantially to the following effect:

"THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREIN REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO Crailar Technologies Inc. (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.

TRANSFERS OF THIS DEBENTURE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CDS & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE."

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(b)      Each Depository designated for a Global Debenture must, at the time of its designation and at all times while it serves as such Depository, be a clearing agency registered or designated under the securities legislation of the jurisdiction where the Depository has its principal offices.

2.7     Execution of Debentures

All Debentures shall be manually signed by any one authorized director or officer of the Corporation holding office at the time of signing.

Notwithstanding that any person whose signature appears on a Debenture as a director or officer may no longer hold such office at the date of the Debenture or at the date of the certification and delivery thereof, such Debenture shall be valid and binding upon the Corporation and entitled to the benefits of this Indenture.

2.8     Certification

No Debenture shall be issued or, if issued, shall be obligatory or shall entitle the holder to the benefits of this Indenture, until it has been manually certified by or on behalf of the Trustee substantially in the form set out in this Indenture, in the relevant supplemental indenture, or in some other form approved by the Trustee. Such certification on any Debenture shall be conclusive evidence that such Debenture is duly issued, is a valid obligation of the Corporation and the holder is entitled to the benefits hereof.

The certificate of the Trustee signed on the Debentures shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Debentures or as to the issuance of the Debentures and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or any of them or the proceeds thereof. The certificate of the Trustee on the Debentures shall, however, be a representation and warranty by the Trustee that the Debentures have been duly certified by or on behalf of the Trustee pursuant to the provisions of this Indenture.

2.9     Mutilation, Loss, Theft or Destruction

In case any of the Debentures issued hereunder shall become mutilated or be lost, stolen or destroyed, the Corporation, in its discretion, may issue, and thereupon the Trustee shall certify and deliver, a new Debenture upon surrender and cancellation of the mutilated Debenture, or in the case of a lost, stolen or destroyed Debenture, in lieu of and in substitution for the same, and the substituted Debenture shall be in a form approved by the Trustee and shall be entitled to the benefits of this Indenture and rank equally in accordance with its terms with all other Debentures of such series issued or to be issued hereunder. In case of loss, theft or destruction the applicant for a substituted Debenture shall furnish to the Corporation and to the Trustee such evidence of the loss, theft or destruction of the Debenture as shall be satisfactory to them in their discretion and shall also furnish an indemnity and surety bond satisfactory to them in their discretion. The applicant shall pay all reasonable expenses incidental to the issuance of any substituted Debenture.

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2.10     Concerning Interest

(a)     All Debentures issued hereunder, whether originally or upon exchange or in substitution for previously issued Debentures which are interest bearing, shall bear interest (i) from and including their issue date, or (ii) from and including the last Interest Payment Date to which interest shall have been paid or made available for payment on the outstanding Debentures of that series, whichever shall be the later, or, in respect of Debentures subject to a Periodic Offering, from and including their issue date or from and including the last Interest Payment Date to which interest shall have been paid or made available for payment on such Debentures, in all cases, to and excluding the next Interest Payment Date.

(b)     Unless otherwise specifically provided in the terms of the Debentures of any series, interest for any period shall be computed on the basis of a year of 365 days and the actual number of days elapsed in such period. With respect to any series of Debentures, for the purposes of disclosure under the Interest Act (Canada), whenever interest is computed on the basis of a year (the "deemed year") which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in such calendar year of calculation and dividing it by the number of days in the deemed year.

2.11     Rank

The Debentures will be direct unsecured obligations of the Corporation. Each Debenture of the same series of Debentures will rank pari passu with each other Debenture of the same series (regardless of their actual date or terms of issue) and, subject to statutory preferred exceptions, with all other present and future indebtedness of the Corporation, other than Senior Indebtedness. The Guarantee Liabilities will rank in priority to any other obligations of Crailar US to the extent the Guarantee Obligations are secured by the Security Interest constituted by the Security Documents and otherwise will be subordinated to the Senior Indebtedness of Crailar US in accordance with the provisions of Article 5.

2.12     Payments of Amounts Due on Maturity

Except as may otherwise be provided herein or in any supplemental indenture in respect of any series of Debentures, payments of amounts due upon maturity of the Debentures will be made in the following manner. The Corporation will establish and maintain with the Trustee a Maturity Account for each series of Debentures. Each such Maturity Account shall be maintained by and be subject to the control of the Trustee for the purposes of this Indenture. On or before 11:00 a.m. (Vancouver time) on the Business Day immediately prior to each Maturity Date for Debentures outstanding from time to time under this Indenture, the Corporation will deliver to the Trustee a certified cheque or wire transfer for deposit in the applicable Maturity Account in an amount sufficient to pay the cash amount payable in respect of such Debentures (including the principal amount together with any accrued and unpaid interest thereon). The Trustee, on behalf of the Corporation, will pay to each holder entitled to receive payment the principal amount of and premium (if any) and accrued and unpaid interest on the Debenture, upon surrender of the Debenture at any branch of the Trustee designated for such purpose from

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time to time by the Corporation and the Trustee. The delivery of such funds to the Trustee for deposit to the applicable Maturity Account will satisfy and discharge the liability of the Corporation for the Debentures to which the delivery of funds relates to the extent of the amount delivered and such Debentures will thereafter to that extent not be considered as outstanding under this Indenture and such holder will have no other right in regard thereto other than to receive out of the money so delivered or made available the amount to which it is entitled.

2.13     U.S. Legend on the Debentures and Common Shares

(a)     The Debentures and the Common Shares issuable upon conversion thereof have not been registered under the U.S. Securities Act or under the securities laws of any U.S. States. As of January 1, 2013, the Corporation ceases to qualify as a "foreign issuer" as such term is defined under Regulation S. As such, any Debentures issued will be "restricted securities" as defined in Rule 144(a)(3) under the U.S. Securities Act, and shall be issued in definitive (not global) form, and the certificates or other instruments representing such Debentures, and the stock certificates representing any Common Shares issued upon conversion of such Debentures, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

U.S. Legend for Debentures and Common Shares issued to Non-U.S. Persons and not for the account or benefit of a U.S. Person or a person in the United States:

"THE SECURITIES REPRESENTED HEREBY [for Debentures insert: AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT."

U.S. Legend for Debentures and Common Shares issued to U.S. Persons or in the United States:

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"THE SECURITIES REPRESENTED HEREBY [for Debentures insert: AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

(b)     Notwithstanding Section 2.13(a), provided that the Debentures or the Common Shares issuable upon conversion, redemption or maturity thereof are being sold in compliance with the requirements of Rule 904 of Regulation S, and provided that the Corporation is a "foreign issuer" within the meaning of Regulation S at the time of sale (it being understood that as of the date hereof, the Corporation is not a "foreign issuer" within the meaning of Regulation S), the U.S. Legend may be removed by providing a declaration to the Trustee substantially as set forth in Schedule "E" hereto (or as the Corporation may prescribe from time to time); together with any other evidence reasonably requested by the Corporation or Trustee, which evidence may include an opinion of Counsel of recognized standing, in form and substance reasonably satisfactory to the Corporation or the Trustee, to the effect that the U.S. Legend is no longer required pursuant to the requirements of the U.S. Securities Act or applicable state securities laws; and provided, further, that if the Securities are being sold under Rule 144 of the U.S. Securities Act, the U.S. Legend may be removed by delivery to the Trustee of an opinion of Counsel, of recognized standing or other evidence reasonably satisfactory to the Corporation, that the U.S. Legend is no longer required under the U.S. Securities Act or applicable state securities laws. Provided that the Trustee obtains confirmation from the Corporation that such Counsel is satisfactory to it, the Trustee shall be entitled to rely on such opinion of Counsel without further inquiry.

2.14     Payment of Interest

The following provisions shall apply to Debentures, except as otherwise provided in Section 2.4(c) or specified in a resolution of the Board of Directors, an Officers' Certificate or a supplemental indenture relating to a particular series of Additional Debentures:

(a)     As interest becomes due on each Debenture (except, subject to certain exceptions set forth herein including in Section 2.4, on conversion or on redemption, when interest may at the option of the Corporation be paid upon surrender of such Debenture), the Corporation, through the Trustee or any agent of the Trustee, shall send or forward by prepaid ordinary mail, electronic transfer of funds or such other means as may be agreed to by the Trustee, payment of such interest to the order of the registered holder of such Debenture appearing on the registers maintained by the Trustee at the close of business on the fifth Business Day prior to the applicable Interest Payment Date and addressed to the holder at the holder's last address appearing on the register, unless such holder otherwise directs. If payment is made by cheque, such cheque shall be forwarded at least three days prior to each date on which interest becomes due and if payment is made by other

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means (such as electronic transfer of funds, provided the Trustee must receive confirmation of receipt of funds prior to being able to wire funds to holders), such payment shall be made in a manner whereby the holder receives credit for such payment on the date such interest on such Debenture becomes due. The mailing of such cheque or the making of such payment by other means shall, to the extent of the sum represented thereby, plus the amount of any tax withheld as aforesaid, satisfy and discharge all liability for interest on such Debenture, unless in the case of payment by cheque, such cheque is not paid at par on presentation. In the event of non-receipt of any cheque for or other payment of interest by the person to whom it is so sent as aforesaid, the Corporation will issue to such person a replacement cheque or other payment for a like amount upon being furnished with such evidence of non-receipt as it shall reasonably require and upon being indemnified to its satisfaction. Notwithstanding the foregoing, if the Corporation is prevented by circumstances beyond its control (including, without limitation, any interruption in mail service) from making payment of any interest due on each Debenture in the manner provided above, the Corporation may make payment of such interest or make such interest available for payment in any other manner acceptable to the Trustee, acting reasonably, with the same effect as though payment had been made in the manner provided above.

(b)     All payments of interest on the Global Debenture shall be made by electronic funds transfer or certified cheque made payable to the Depository or its nominee on the day interest is payable for subsequent payment to Beneficial Holders of the applicable Global Debenture, unless the Corporation, the Trustee and the Depository otherwise agree. None of the Corporation, the Trustee or any agent of the Trustee for any Debenture issued as a Global Debenture will be liable or responsible to any person for any aspect of the records related to or payments made on account of beneficial interests in any Global Debenture or for maintaining, reviewing, or supervising any records relating to such beneficial interests.

2.15     Additional Amounts

(a)     All payments of interest by the Corporation in respect of the Initial Debentures will be made free and clear of, and without withholding or deduction for or on account of any taxes or similar imposts ("Taxes") imposed, levied, collected, withheld or assessed by or on behalf of the Government of Canada or of any province or territory thereof or by any authority or agency therein having power to tax ("Taxing Jurisdiction"), unless such withholding or deduction is so required by law or by the interpretation or administration thereof by the relevant governmental authority or agency. If any such withholding or deduction is so required, the Corporation will pay as additional interest such additional amounts ("Additional Amounts") as will result in receipt by the holders of Initial Debentures of such amounts as would have been received by them had no such withholding or deduction been required, except that no Additional Amounts will be payable with respect to a payment made to a holder of Initial Debentures for or in respect of:

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(i)     Taxes that would not have been imposed but for:

(A)     the holder or Beneficial Holder of Initial Debentures being a resident, domicile or national of, or engaged in business or maintaining an establishment or other presence in, or otherwise having some present or former connection with, the Taxing Jurisdiction (including, without limitation, by virtue of the holder or Beneficial Holder carrying on a business or having a place of business in such jurisdiction), other than merely holding or ownership of such Initial Debenture; or

(B)     the holder or Beneficial Holder not dealing at arm's length, within the meaning of the Tax Act, with the Corporation at the relevant time; or

(C)     all or any portion of the payment being deemed to be a dividend paid to the holder or Beneficial Holder pursuant to proposed subsection 214(16) of the Tax Act or any amended or successor provision substantially similar thereto;

(ii)     any estate, inheritance, gift, sales, transfer, personal property or similar Taxes; or

(iii)     any Taxes, deduction or withholding imposed by reason of the failure of the holder or Beneficial Holder of a Initial Debenture to comply with certification, information or other reporting requirements if such compliance is required or imposed by a statute, treaty or regulation or is in accordance with administrative practice of the relevant Taxing Jurisdiction as a precondition to exemption from or reduction in all or part of such Taxes, deduction or withholding.

(b)      If any such withholding or deduction is so required, the Corporation will (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.

(c)     Whenever in this Indenture there is mentioned, in any context, the payment of amounts based upon interest payable under or with respect to any Initial Debenture, such mention will be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

(d)     If the Corporation fails to make any payment required by this Section 2.15, the Trustee shall in no circumstances be required to make any such payment.

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ARTICLE 3
REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

3.1     Definitive Debentures

(a)     With respect to each series of Debentures issuable as Definitive Debentures, the Corporation shall cause to be kept by and at the principal office of the Trustee in Vancouver, British Columbia or such other registrar as the Corporation, with the approval of the Trustee, may appoint at such other place or places, if any, as may be specified in the Debentures of such series or as the Corporation may designate with the approval of the Trustee, a register in which shall be entered the names and addresses of the holders of Definitive Debentures and particulars of the Debentures held by them respectively and of all transfers of Definitive Debentures. Such registration shall be noted on the Debentures by the Trustee or other registrar unless a new Debenture shall be issued upon such transfer.

(b)     No transfer of a Definitive Debenture shall be valid unless made on such register referred to in Section 3.1 by the registered holder or such holder's executors, administrators or other legal representatives or an attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee or other registrar upon surrender of the Debentures together with a duly executed form of assignment, including the acknowledgement by the transferee, and which forms part of the Definitive Debenture, acceptable to the Corporation and the Trustee and upon compliance with such other reasonable requirements as the Trustee or other registrar may prescribe, or unless the name of the transferee shall have been noted on the Debenture by the Trustee or other registrar.

3.2     Global Debentures

(a)     With respect to each series of Debentures issuable in whole or in part as one or more Global Debentures, the Corporation shall cause to be kept by and at the principal offices of the Trustee in Vancouver, British Columbia or such other registrar as the Corporation, with the approval of the Trustee, may appoint at such other place or places, if any, as the Corporation may designate with the approval of the Trustee, a register in which shall be entered the name and address of the holder of each such Global Debenture (being the Depository, or its nominee, for such Global Debenture) as holder thereof and particulars of the Global Debenture held by it, and of all transfers thereof.

(b)     Notwithstanding any other provision of this Indenture, a Global Debenture may not be transferred by the registered holder thereof and accordingly, no definitive certificates shall be issued to Beneficial Holders except in the following circumstances or as otherwise specified in a resolution of the Trustee, a resolution of the Board of Directors, Officers' Certificate or supplemental indenture relating to a particular series of Additional Debentures:

(i)     Global Debentures may be transferred by a Depository to a nominee of such Depository or by a nominee of a Depository to such Depository or to another nominee of such Depository or by a Depository or its nominee to a successor Depository or its nominee;

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(ii)     Global Debentures may be transferred at any time after the Depository for such Global Debentures (i) has notified the Trustee, or the Corporation has notified the Trustee, that it is unwilling or unable to continue as Depository for such Global Debentures, or (ii) ceases to be eligible to be a Depository under Section 2.6(b), provided that at the time of such transfer the Corporation has not appointed a successor Depository for such Global Debentures;

(iii)     Global Debentures may be transferred at any time after the Corporation has determined, in its sole discretion, to terminate the book-entry only registration system in respect of such Global Debentures and has communicated such determination to the Trustee in writing;

(iv)     Global Debentures may be transferred at any time after the Trustee has determined that an Event of Default has occurred and is continuing with respect to the Debentures of the series issued as a Global Debenture, provided that Beneficial Holders representing, in the aggregate, not less than 25% of the aggregate principal amount of the Debentures of such series advise the Depository in writing, through the Depository Participants, that the continuation of the book-entry only registration system for such series of Debentures is no longer in their best interest and also provided that at the time of such transfer the Trustee has not waived the Event of Default pursuant to Section 8.3;

(v)     Global Debentures may be transferred or exchanged for definitive certificates at any time after a Depository has determined, in its sole discretion, that such transfer or exchange is required to effect conversion and/or redemption rights in accordance with the terms hereof and has communicated such determination to the Trustee in writing;

(vi)     Global Debentures may be transferred if required by applicable law;

(vii)     Global Debentures may be transferred if the book-entry only registration system ceases to exist; or

(viii)     Global Debentures may be transferred if it is determined that they must bear a U.S. Legend (in which case they must be transferred or exchanged for Definitive Debentures).

(c)     With respect to the Global Debentures, unless and until definitive certificates have been issued to Beneficial Holders pursuant to Section 3.2(b):

(i)     the Corporation and the Trustee may deal with the Depository for all purposes (including paying interest on the Debentures) as the sole holder of such series of Debentures and the authorized representative of the Beneficial Holders;

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(ii)     the rights of the Beneficial Holders shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Beneficial Holders and the Depository or the Depository Participants;

(iii)     the Depository will make book-entry transfers among the Depository Participants; and

(iv)     whenever this Indenture requires or permits actions to be taken based upon instruction or directions of Debentureholders evidencing a specified percentage of the outstanding Debentures, the Depository shall be deemed to be counted in that percentage only to the extent that it has received instructions to such effect from the Beneficial Holders or the Depository Participants, and has delivered such instructions to the Trustee.

(d)     Whenever a notice or other communication is required to be provided to Debentureholders, unless and until definitive certificate(s) have been issued to Beneficial Holders pursuant to this Section 3.2, the Trustee shall provide all such notices and communications to the Depository and the Depository shall deliver such notices and communications to such Beneficial Holders in accordance with all applicable laws and Applicable Securities Legislation. Upon the termination of the book-entry only registration system on the occurrence of one or more of the conditions specified in Section 3.2(b) with respect to a series of Debentures issued hereunder, the Trustee shall notify all applicable Depository Participants and Beneficial Holders, through the Depository, of the availability of Definitive Debenture certificates. Upon surrender by the Depository of the certificate(s) representing the Global Debentures and receipt of new registration instructions from the Depository, the Trustee shall deliver the Definitive Debenture certificates for such Debentures to the holders thereof in accordance with the new registration instructions and thereafter, the registration and transfer of such Debentures will be governed by Section 3.1 and the remaining Sections of this Article 3.

3.3      Transferee Entitled to Registration

The transferee of a Debenture shall be entitled, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all other conditions in that regard required by this Indenture or by law, to be entered on the register as the owner of such Debenture free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Debenture, save in respect of equities of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

3.4     No Notice of Trusts

Neither the Corporation nor the Trustee nor any registrar shall be bound to take notice of or see to the execution of any trust (other than that created by this Indenture) whether express, implied or constructive, in respect of any Debenture, and may transfer the same on the direction of the person registered as the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.

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3.5     Registers Open for Inspection

The registers referred to in Sections 3.1 and 3.2 shall at all reasonable times be open for inspection by the Corporation, the Trustee or any Debentureholder. Every registrar, including the Trustee, shall from time to time when requested so to do by the Corporation or by the Trustee, in writing, furnish the Corporation or the Trustee, as the case may be, with a list of names and addresses of holders of registered Debentures entered on the register kept by them and showing the principal amount and serial numbers of the Debentures held by each such holder, provided the Trustee shall be entitled to charge a reasonable fee to provide such a list.

3.6     Exchanges of Debentures

(a)     Subject to Sections 3.1, 3.2 and 3.7, Debentures in any authorized form or denomination, other than Global Debentures, may be exchanged for Debentures in any other authorized form or denomination, of the same series and date of maturity, bearing the same interest rate and of the same aggregate principal amount as the Debentures so exchanged.

(b)     In respect of exchanges of Debentures permitted by Section 3.6(a), Debentures of any series may be exchanged only at the principal office of the Trustee in the city of Vancouver, British Columbia or at such other place or places, if any, as may be specified in the Debentures of such series and at such other place or places as may from time to time be designated by the Corporation with the approval of the Trustee. Any Debentures tendered for exchange shall be surrendered to the Trustee. The Corporation shall execute and the Trustee shall certify all Debentures necessary to carry out exchanges as aforesaid. All Debentures surrendered for exchange shall be cancelled.

(c)     Debentures issued in exchange for Debentures which at the time of such issue have been selected or called for redemption at a later date shall be deemed to have been selected or called for redemption in the same manner and shall have noted thereon a statement to that effect.

3.7     Closing of Registers

(a)     Neither the Corporation nor the Trustee nor any registrar shall be required to:

(i)     make transfers or exchanges of, or convert any Definitive Debentures on any Interest Payment Date for such Debentures or during the five preceding Business Days;

(ii)      make transfers or exchanges of, or convert any Debentures on the day of any selection by the Trustee of Debentures to be redeemed or during the five preceding Business Days; or

(iii)     make exchanges of any Debentures which will have been selected or called for redemption unless upon due presentation thereof for redemption such Debentures shall not be redeemed.

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(b)     Subject to any restriction herein provided, the Corporation with the approval of the Trustee may at any time close any register for any series of Debentures, other than those kept at the principal office of the Trustee in Vancouver, British Columbia and transfer the registration of any Debentures registered thereon to another register (which may be an existing register) and thereafter such Debentures shall be deemed to be registered on such other register. Notice of such transfer shall be given to the holders of such Debentures.

3.8     Charges for Registration, Transfer and Exchange

For each Debenture exchanged, registered, transferred or discharged from registration, the Trustee or other registrar, except as otherwise herein provided, may make a reasonable charge for its services and in addition may charge a reasonable sum for each new Debenture issued (such amounts to be agreed upon from time to time by the Trustee and the Corporation), and payment of such charges and reimbursement of the Trustee or other registrar for any stamp taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange, registration, transfer or discharge from registration as a condition precedent thereto. Notwithstanding the foregoing provisions, no charge shall be made to a Debentureholder hereunder:

(a)      for any exchange of a Global Debenture as contemplated in Section 3.2; or

(b)     for any exchange of any Debenture resulting from a partial redemption under Section 4.2.

3.9     Ownership of Debentures

(a)     Unless otherwise required by law, the person in whose name any registered Debenture is registered shall for all purposes of this Indenture be and be deemed to be the owner thereof and payment of or on account of the principal of and premium, if any, on such Debenture and interest thereon shall be made to such registered holder.

(b)     The registered holder for the time being of any registered Debenture shall be entitled to the principal, premium, if any, and/or interest evidenced by such instruments, respectively, free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt of any such registered holder for any such principal, premium, if any, or interest shall be a good discharge to the Trustee, any registrar and to the Corporation for the same and none shall be bound to inquire into the title of any such registered holder.

(c)     Where Debentures are registered in more than one name, the principal, premium, if any, and interest from time to time payable in respect thereof may be paid to the order of all such holders, failing written instructions from them to the contrary, and the receipt of any one of such holders therefor shall be a valid discharge, to the Trustee, any registrar and to the Corporation.

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(d)     In the case of the death of one or more joint holders of any Debenture the principal, premium, if any, and interest from time to time payable thereon may be paid to the order of the survivor or survivors of such registered holders and the receipt of any such survivor or survivors therefor shall be a valid discharge to the Trustee and any registrar and to the Corporation.

ARTICE 4
REDEMPTION AND PURCHASE OF DEBENTURES

4.1     Applicability of Article

Subject to regulatory approval, Section 2.4(d) and Article 5, in the event the Corporation completes an aggregate of $20,000,000 or more in any equity financing(s) between the date of issue of the Initial Debentures and the Maturity Date, the Corporation shall redeem the Debentures in whole by payment of money (subject, however, to any applicable restriction on the redemption of Debentures of such series) at such rates or rates of premium, if any, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debentures and as shall have been expressed in this Indenture, in the Debentures, in an Officer's Certificate, or in a supplemental indenture authorizing or providing for the issue thereof, or in the case of Additional Debentures issued pursuant to a Periodic Offering, in the Written Direction of the Corporation requesting the certification and delivery thereof.

Subject to regulatory approval, Section 2.4(d) and Article 5, the Corporation shall have the right at its option to redeem, either in whole at any time or in part from time to time before maturity, by payment of money, any Debentures issued hereunder of any series which by their terms are made so redeemable (subject, however, to any applicable restriction on the redemption of Debentures of such series) at such rate or rates of premium, if any, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debentures and as shall have been expressed in this Indenture, in the Debentures, in an Officers' Certificate, or in a supplemental indenture authorizing or providing for the issue thereof, or in the case of Additional Debentures issued pursuant to a Periodic Offering, in the Written Direction of the Corporation requesting the certification and delivery thereof.

Subject to regulatory approval and Article 5, the Corporation shall also have the right at its option to repay, either in whole or in part, on maturity, by payment of money in accordance with Section 2.12, any Debentures issued hereunder of any series which by their terms are made so repayable on maturity (subject however, to any applicable restriction on the repayment of the principal amount of the Debentures of such series) at such rate or rates of premium, if any, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debenture and shall have been expressed in this Indenture, in the Debentures, in an Officers' Certificate, or in a supplemental indenture authorizing or providing for the issue thereof, or in the case of Additional Debentures issued pursuant to a Periodic Offering, in the Written Direction of the Corporation requesting the certification and delivery thereof.

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4.2     Partial Redemption

If less than all the Debentures of any series for the time being outstanding are at any time to be redeemed under Section 2.4(f), the Debentures to be so redeemed shall be selected by the Trustee on a pro rata basis to the nearest multiple of $1,000 in accordance with the principal amount of the Debentures registered in the name of each holder or in such other manner as the Trustee deems equitable, subject to the approval of any exchange on which the Debentures may be listed, if any, as may be required from time to time. Unless otherwise specifically provided in the terms of any series of Debentures, no Debenture shall be redeemed in part unless the principal amount redeemed is $1,000 or a multiple thereof. For this purpose, the Trustee may make, and from time to time vary, regulations with respect to the manner in which such Debentures may be drawn for redemption and regulations so made shall be valid and binding upon all holders of such Debentures notwithstanding that as a result thereof one or more of such Debentures may become subject to redemption in part only or for cash only. In the event that one or more of such Debentures becomes subject to redemption in part only, upon surrender of any such Debentures for payment of the Redemption Price, together with interest accrued to but excluding the Redemption Date, the Corporation shall execute and the Trustee shall certify and deliver without charge to the holder thereof or upon the holder's order one or more new Debentures for the unredeemed part of the principal amount of the Debenture or Debentures so surrendered or, with respect to a Global Debenture, the Trustee shall make notations on the Global Debenture of the principal amount thereof so redeemed. Unless the context otherwise requires, the terms "Debenture" or "Debentures" as used in this Article 4 shall be deemed to mean or include any part of the principal amount of any Debenture which in accordance with the foregoing provisions has become subject to redemption.

4.3     Notice of Redemption

For purposes of a Mandatory Redemption under Section 2.4(d), notice of redemption (the "Redemption Notice") of any series of Debentures shall be given to the holders of the Debentures and to the Trustee so to be redeemed not less than 60 days prior to the date fixed for redemption (the "Redemption Date") in the manner provided in Section 12.2. For purposes of a redemption under Section 2.4(e), the Redemption Notice of any series of Debentures shall be given to the holders of the Debentures so to be redeemed not more than 60 days nor less than 30 days prior to the Redemption Date in the manner provided in Section 12.2. Every such notice shall specify the aggregate principal amount of Debentures called for redemption, the Redemption Date, the Redemption Price and the places of payment and shall state that interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date. In addition, unless all the outstanding Debentures are to be redeemed, the Redemption Notice shall specify:

(a)     the distinguishing letters and numbers of the registered Debentures which are to be redeemed (or of such thereof as are registered in the name of such Debentureholder);

(b)     in the case of a published notice, the distinguishing letters and numbers of the Debentures which are to be redeemed or, if such Debentures are selected by terminal digit or other similar system, such particulars as may be sufficient to identify the Debentures so selected;

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(c)     in the case of a Global Debenture, that the redemption will take place in such manner as may be agreed upon by the Depository, the Trustee and the Corporation; and

(d)     in all cases, the principal amounts of such Debentures or, if any such Debenture is to be redeemed in part only, the principal amount of such part.

In the event that all Debentures to be redeemed are registered Debentures, publication shall not be required.

4.4     Debentures Due on Redemption Dates

Notice having been given as aforesaid, all the Debentures so called for redemption shall thereupon be and become due and payable at the Redemption Price, together with accrued interest to but excluding the Redemption Date, on the Redemption Date specified in such notice, in the same manner and with the same effect as if it were the date of maturity specified in such Debentures, anything therein or herein to the contrary notwithstanding, and from and after such Redemption Date, if the monies necessary to redeem such Debentures shall have been deposited as provided in Section 4.5 and affidavits or other proof satisfactory to the Trustee as to the publication and/or mailing of such notices shall have been lodged with it, interest upon the Debentures shall cease. If any question shall arise as to whether any notice has been given as above provided and such deposit made, such question shall be decided by the Trustee whose decision shall be final and binding upon all parties in interest.

4.5     Deposit of Redemption Monies

Redemption of Debentures shall be provided for by the Corporation depositing with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m. (Vancouver time) on the Business Day immediately prior to the Redemption Date specified in such notice, such sums of money as may be sufficient to pay the Redemption Price of the Debentures so called for redemption, plus accrued and unpaid interest thereon up to but excluding the Redemption Date, provided the Corporation may elect to satisfy this requirement by providing the Trustee with a certified cheque or wire transfer for such amounts required under this Section 4.5 post-dated to the Redemption Date. The Corporation shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection with such redemption. Every such deposit shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid, to the holders of such Debentures so called for redemption, upon surrender of such Debentures, the principal, premium (if any) and interest (if any) to which they are respectively entitled on redemption.

4.6     Failure to Surrender Debentures Called for Redemption

In case the holder of any Debenture so called for redemption shall fail on or before the Redemption Date to so surrender such holder's Debenture, or shall not within such time accept payment of the redemption monies payable, or give such receipt therefor, if any, as the Trustee may require, such redemption monies may be set aside in trust, either in the deposit department of the Trustee or in a chartered bank, and such setting aside shall for all purposes be deemed a payment to the Debentureholder of the sum so set aside and, to that extent, the Debenture shall thereafter not be considered as outstanding hereunder and the Debentureholder shall have no

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other right except to receive payment out of the monies so paid and deposited, upon surrender and delivery of such holder's Debenture, plus any accrued but unpaid interest thereon to but excluding the Redemption Date. In the event that any money required to be deposited hereunder with the Trustee or any depository or paying agent on account of principal, premium, if any, or interest, if any, on Debentures issued hereunder shall remain so deposited for a period of six years from the Redemption Date, then such monies, together with any accumulated interest thereon, shall at the end of such period be paid over or delivered over by the Trustee or such depository or paying agent to the Corporation on its demand, and thereupon the Trustee shall not be responsible to Debentureholders for any amounts owing to them and, subject to applicable law, thereafter the holder of a Debenture in respect of which such money was so repaid to the Corporation shall have no rights in respect thereof except to obtain payment of the money due from the Corporation, subject to any limitation period provided by the laws of British Columbia.

4.7     Cancellation of Debentures Redeemed

Subject to the provisions of Sections 4.2 as to Debentures redeemed or purchased in part, all Debentures redeemed and paid under this Article 4 shall forthwith be delivered to the Trustee and cancelled and no Debentures shall be issued in substitution for those redeemed.

4.8     Purchase of Debentures by the Corporation

Unless otherwise specifically provided with respect to a particular series of Debentures, the Corporation may, if it is not at the time in default hereunder, at any time and from time to time, purchase Debentures in the market (which shall include purchases from or through an investment dealer or a firm holding membership on a recognized stock exchange) or by tender or by contract, at any price. All Debentures so purchased will be delivered to the Trustee and shall be cancelled and no Debentures shall be issued in substitution therefor.

If, upon an invitation for tenders, more Debentures are tendered at the same lowest price than the Corporation is prepared to accept, the Debentures to be purchased by the Corporation shall be selected by the Trustee on a pro rata basis or in such other manner as consented to by any exchange on which the Debentures are then listed which the Trustee considers appropriate, from the Debentures tendered by each tendering Debentureholder who tendered at such lowest price. For this purpose the Trustee may make, and from time to time amend, regulations with respect to the manner in which Debentures may be so selected, and regulations so made shall be valid and binding upon all Debentureholders, notwithstanding the fact that as a result thereof one or more of such Debentures become subject to purchase in part only.

The holder of a Debenture of which a part only is purchased, upon surrender of such Debenture for payment, shall be entitled to receive, without expense to such holder, one or more new Debentures for the unpurchased part so surrendered, and the Trustee shall certify and deliver such new Debenture or Debentures upon receipt of the Debenture so surrendered or, with respect to a Global Debenture, the Trustee shall make notations on the Global Debenture of the principal amount thereof so purchased.

4.9     Deposit of Maturity Monies

Payment on maturity of Debentures shall be provided for by the Corporation depositing with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m.

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(Vancouver time) on the Business Day immediately prior to the Maturity Date such sums of money as may be sufficient to pay the principal amount of the Debentures, together with a sum of money sufficient to pay all accrued and unpaid interest thereon up to but excluding the Maturity Date, provided the Corporation may elect to satisfy this requirement by providing the Trustee with one or more certified cheques or with funds by electronic transfer, for such amounts required under this Section 4.9. The Corporation shall also deposit with the Debenture Trustee a sum of money sufficient to pay any charges or expenses which may be incurred by the Trustee in connection therewith. Every such deposit shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid to the holders of such Debentures, upon surrender of such Debentures, the principal and interest to which they are respectively entitled on the Maturity Date.

ARTICLE 5
Security For and SUBORDINATION OF DEBENTURES

5.1     Crailar US Amended and Restated Guaranty and Security Agreement

The Corporation shall cause Crailar US to execute and deliver to the Trustee for the benefit of the Trustee and the Debentureholders, the Crailar US Amended and Restated Guaranty and Security Agreement.

5.2     Registration of Security

The Corporation shall, at the Corporation's expense, ensure that the Security Documents and all documents, caveats, security notices, financing statements and financing change statements in respect thereof, are promptly filed and re-filed and registered as often as may be required by applicable law or as may be necessary or desirable to perfect and preserve the Security Interest created by the Security Documents and to ensure that such Security Interest is first ranking, subject only to Permitted Priority Encumbrances, and will promptly provide the Trustee with evidence (satisfactory to the Trustee) of such filing, registration and deposit after the making thereof. The Corporation shall, if and when requested to do so by the Trustee, furnish to the Trustee an opinion of Counsel to establish compliance with the provisions of this Section 5.2.

5.3     Permitted Dispositions of Secured Assets Before Default

Until an Event of Default has occurred, Crailar US, without the consent of the Trustee, shall be entitled:

(a)     to transfer or sell any item of Secured Assets only as expressly permitted pursuant to the terms of this Indenture; and

(b)     to sell, assign, transfer, abandon, surrender or otherwise dispose of Secured Assets which have become worn out, unserviceable, obsolete, unsuitable or unnecessary in the conduct of its business or in the operation of any of the Secured Assets, free of the Security Interest constituted by the Security Documents, provided that there shall have been or shall be substituted for the same other fixtures, equipment, machinery, tools, implements, apparatus, facilities or appliances not necessarily of the same character but at least of equal utility at

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the date of such substitution or replacement (which forthwith shall become subject to the Security Interest of the Crailar US Amended and Restated Guaranty and Security Agreement) of and to the extent that such replacement or substitution is necessary or desirable for the proper and efficient conduct of the business of Crailar US or in the operation of the Secured Assets;

and the Trustee will, at the expense of the Corporation, execute and deliver from time to time releases and discharges necessary or required as advised by Counsel with respect to the foregoing Subsections. Except as specifically permitted above, Crailar US will not dispose of any of the Secured Assets to any Person.

5.4     Applicability of Article

The indebtedness, liabilities and obligations of Crailar US under the Crailar US Amended and Restated Guaranty and Security Agreement (collectively, the "Guarantee Liabilities") and the Corporation hereunder or under the Debentures (whether on account of principal, premium, if any, interest, or otherwise but excluding the issuance of Common Shares on any conversion pursuant to Article 6), shall be, except to the extent the Debentures are secured by the Security Interest constituted by the Security Documents, subordinated and postponed and subject in right of payment, to the extent and in the manner hereinafter set forth in the following Sections of this Article 5, to the full and final payment of all Senior Indebtedness, and each holder of any such Debenture by his acceptance thereof agrees to and shall be bound by the provisions of this Article 5.

5.5     Order of Payment - Crailar US

In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings relative to Crailar US, or to its property or assets (including, without limitation, the Secured Assets) or in the event of any proceedings for voluntary liquidation, dissolution or voluntary winding-up of Crailar US, whether or not involving insolvency or bankruptcy, or any marshalling of the assets (including, without limitation, the Secured Assets) and liabilities of Crailar US:

(a)     to extent of the security interest constituted by the Security Documents, any payment or distribution of the Secured Assets to which the holders of the Debentures or the Trustee on behalf of the holders would be entitled pursuant to the Guarantee Liabilities pursuant to the provisions of this Article 5 shall be paid or delivered by the trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other liquidating agent making such payment or distribution, directly to the Trustee on behalf of the holders of the Debentures;

(b)     subject to 5.5(a), all Senior Indebtedness of Crailar US shall be paid in full, or provision made for such payment, before any payment is made on account of Guarantee Liabilities;

(c)     subject to 5.5(a), any payment or distribution of assets of Crailar US, whether in cash, property or securities, to which the holders of the Debentures or the Trustee on behalf of such holders would be entitled, except for the provisions of this Article 5, shall be paid or delivered by the trustee in bankruptcy, receiver,

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assignee for the benefit of creditors, or other liquidating agent making such payment or distribution, directly to the holders of Senior Indebtedness of Crailar US or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness of Crailar US may have been issued, to the extent necessary to pay all Senior Indebtedness of Crailar US in full after giving effect to any concurrent payment or distribution, or provision therefor, to the holders of such Senior Indebtedness of Crailar US;

(d)     the Senior Creditors or a receiver or a receiver-manager of Crailar US or of all or part of its assets or any other enforcement agent may sell, mortgage or otherwise dispose of Crailar US's assets, other than the Secured Assets, in whole or in part, free and clear of all Guarantee Liabilities, and without the approval of the Debentureholders or the Trustee or any requirement to account to the Trustee or the Debentureholders; and

(e)     the rights and priority of the Senior Indebtedness of Crailar US and the subordination pursuant hereto shall not be affected by:

(i)     the time, sequence or order of creating, granting, executing, delivering of, or registering, perfecting or failing to register or perfect any security notice, caveat, financing statement or other notice in respect of the Senior Security;

(ii)     the time or order of the attachment, perfection or crystallization of any security constituted by the Senior Security;

(iii)     the taking of any collection, enforcement or realization proceedings pursuant to the Senior Security;

(iv)     the date of obtaining of any judgment or order of any bankruptcy court or any court administering bankruptcy, insolvency or similar proceedings as to the entitlement of the Senior Creditors, or any of them or the Debentureholders or any of them to any money or property of Crailar US;

(v)     the failure to exercise any power or remedy reserved to the Senior Creditors under the Senior Security or to insist upon a strict compliance with any terms thereof;

(vi)     the date of giving or failing to give notice to or making demand upon Crailar US; or

(vii)     any other fact or circumstance whatsoever.

5.6     Order of Payment - The Corporation

In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings relative to the Corporation, or to its property or assets or in the event of any proceedings for voluntary liquidation, dissolution or voluntary winding-up of the Corporation, whether or not involving insolvency or bankruptcy, or any marshalling of the assets and liabilities of the Corporation:

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(a)     all Senior Indebtedness of the Corporation shall be paid in full, or provision made for such payment, before any payment is made on account of the Debentures;

(b)     any payment or distribution of assets of the Corporation, whether in cash, property or securities, to which the holders of the Debentures or the Trustee on behalf of such holders would be entitled, except for the provisions of this Article 5, shall be paid or delivered by the trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other liquidating agent making such payment or distribution, directly to the holders of Senior Indebtedness of the Corporation or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness of the Corporation may have been issued, to the extent necessary to pay all Senior Indebtedness of the Corporation in full after giving effect to any concurrent payment or distribution, or provision therefor, to the holders of such Senior Indebtedness of the Corporation;

(c)     the Senior Creditors or a receiver or a receiver-manager of the Corporation or of all or part of its assets or any other enforcement agent may sell, mortgage or otherwise dispose of the Corporation's assets in whole or in part, free and clear of all Debentures, and without the approval of the Debentureholders or the Trustee to the extent necessary to pay all Senior Indebtedness of the Corporation in full after giving effect to any concurrent payment or distribution, or provision therefor, to the holders of such Senior Indebtedness of the Corporation; and

(d)     the rights and priority of the Senior Indebtedness of the Corporation and the subordination pursuant hereto shall not be affected by:

(i)     the time, sequence or order of creating, granting, executing, delivering of, or registering, perfecting or failing to register or perfect any security notice, caveat, financing statement or other notice in respect of the Senior Security;

(ii)     the time or order of the attachment, perfection or crystallization of any security constituted by the Senior Security;

(iii)     the taking of any collection, enforcement or realization proceedings pursuant to the Senior Security;

(iv)     the date of obtaining of any judgment or order of any bankruptcy court or any court administering bankruptcy, insolvency or similar proceedings as to the entitlement of the Senior Creditors, or any of them or the Debentureholders or any of them to any money or property of the Corporation;

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(v)     the failure to exercise any power or remedy reserved to the Senior Creditors under the Senior Security or to insist upon a strict compliance with any terms thereof;

(vi)     the date of giving or failing to give notice to or making demand upon the Corporation; or

(vii)     any other fact or circumstance whatsoever.

5.7     Subrogation to Rights of Holders of Senior Indebtedness

Subject to the Security Interest constituted by the Security Documents and prior payment in full of all Senior Indebtedness, the holders of the Debentures shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Corporation and Crailar US, as the case may be, to the extent of the application thereto of such payments or other assets which would have been received by the holders of the Debentures but for the provisions hereof until the principal of, premium, if any, and interest on the Debentures shall be paid in full, and no such payments or distributions to the holders of the Debentures of cash, property or securities, which otherwise would be payable or distributable to the holders of the Senior Indebtedness, shall, as between Crailar US and the Corporation, their creditors other than the holders of Senior Indebtedness, and the holders of Debentures, be deemed to be a payment by the Corporation or Crailar US, as applicable, to the holders of the Senior Indebtedness or on account of the Senior Indebtedness, it being understood that the provisions of this Article 5 are and are intended solely for the purpose of defining the relative rights of the holders of the Debentures, on the one hand, and the holders of Senior Indebtedness, on the other hand.

The Trustee, for itself and on behalf of each of the Debentureholders, hereby waives any and all rights to require a Senior Creditor to pursue or exhaust any rights or remedies with respect to the Corporation, Crailar US or any property and assets subject to any Senior Security or in any other manner to require the orderly disposition of property, assets or security in connection with the exercise by the Senior Creditors of any rights, remedies or recourses available to them.

5.8     Obligation to Pay Not Impaired

Nothing contained in this Article 5 or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Corporation, its creditors, and the holders of the Debentures, the obligation of the Corporation, which is absolute and unconditional, to pay to the holders of the Debentures the principal of, premium, if any, and interest on the Debentures, as and when the same shall become due and payable in accordance with their terms, or affect the relative rights of the holders of the Debentures and creditors of the Corporation, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture.

Nothing contained in this Article 5 or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between Crailar US, its creditors other than the holders of Senior Indebtedness, and the holders of the Debentures, the obligation of Crailar US, which is absolute and unconditional, to pay to the holders of the Debentures the Guarantee Liabilities, as and when

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the same shall become due and payable in accordance with their terms, or affect the relative rights of the holders of the Debentures and creditors of Crailar US other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 5 of the holders of Senior Indebtedness.

5.9    No Payment if Senior Indebtedness in Default

Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, or any other enforcement of any Senior Indebtedness, then, except as provided in Section 5.12, all such Senior Indebtedness of Crailar US shall first be paid in full, or shall first have been duly provided for, before any payment is made by Crailar US under the Crailar US Amended and Restated Guaranty and Security Agreement and all such Senior Indebtedness of the Corporation shall first be paid in full, or shall first have been duly provided for, before any payment is made by the Corporation under the Debentures.

In case of a circumstance constituting a default or event of default with respect to any Senior Indebtedness of the Corporation permitting (whether at that time or upon notice, lapse of time, or satisfaction of any other condition precedent) a Senior Creditor to demand payment or accelerate the maturity thereof where the notice of such default or event of default has been given by or on behalf of the holders of Senior Indebtedness to the Corporation or the Corporation otherwise has knowledge thereof, unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, no payment (by purchase of Debentures or otherwise) shall be made by the Corporation (except as provided in Section 5.12) under the Debentures and neither the Trustee nor the holders of Debentures shall be entitled to demand, institute proceedings for the collection of (which shall, for certainty include proceedings related to an adjudication or declaration as to the insolvency or bankruptcy of the Corporation and other similar creditor proceedings), or receive any payment or benefit (including without limitation by set-off, combination of accounts or otherwise in any manner whatsoever) on account of the Debentures after the happening of such a default or event of default (except as provided in Section 5.12), and unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, such payments shall be held in trust for the benefit of, and, if and when such Senior Indebtedness shall have become due and payable, shall be paid over to, the holders of the Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing an amount of the Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. For greater certainty, this Section 5.9 shall not restrict the Debentureholders or the Trustee from demanding or instituting proceedings in respect of the guarantee of Crailar US or the Secured Assets or receiving any payment or benefit on account of the proceeds thereof provided that any such proceeds are distributed in accordance with Section 5.5.

The fact that any payment hereunder is prohibited by this Section 5.9 shall not prevent the failure to make such payment from being an Event of Default hereunder.

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5.10     Payment on Debentures Permitted

Nothing contained in this Article 5 or elsewhere in this Indenture, or in any of the Debentures, shall affect the obligation of the Corporation to make, or prevent the Corporation from making, at any time except as prohibited by Sections 5.6 or 5.9, any payment of principal of or, premium, if any, or interest on the Debentures. The fact that any such payment is prohibited by Sections 5.6 or 5.9 shall not prevent the failure to make such payment from being an Event of Default hereunder. Nothing contained in this Article 5 or elsewhere in this Indenture, or in any of the Debentures, shall prevent the conversion of the Debentures, or, except as prohibited by Sections 5.5, 5.6 or 5.9, the application by the Trustee of any monies deposited with the Trustee hereunder for the purpose, to the payment of or on account of the Debentures or the Guarantee Liabilities.

5.11     Confirmation of Subordination

Each holder of Debentures by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effect the subordination as provided in this Article 5 and appoints the Trustee his attorney-in-fact for any and all such purposes. Upon request of the Corporation or Crailar US, and upon being furnished an Officers' Certificate stating that one or more named persons are Senior Creditors and specifying the amount and nature of the Senior Indebtedness of such Senior Creditor, the Trustee shall enter into a written agreement or agreements with the Corporation or Crailar US, as the case may be, and the person or persons named in such Officers' Certificate providing that such person or persons are entitled to all the rights and benefits of this Article 5 as a Senior Creditor and for such other matters, such as an agreement not to amend the provisions of this Article 5 and the definitions herein without the consent of such Senior Creditor, as the Senior Creditor may reasonably request. Such agreement shall be conclusive evidence that the indebtedness specified therein is Senior Indebtedness, however, nothing herein shall impair the rights of any Senior Creditor who has not entered into such an agreement.

5.12     Knowledge of Trustee

Notwithstanding the provisions of this Article 5 or any provision in this Indenture or in the Debentures contained, the Trustee will not be charged with knowledge of any Senior Indebtedness or of any default in the payment thereof, or of the existence of any Event of Default or any other fact that would prohibit the making of any payment of monies to or by the Trustee, or the taking of any other action by the Trustee, unless and until the Trustee has received written notice thereof from the Corporation, Crailar US any Debentureholder or any Senior Creditor.

5.13     Trustee May Hold Senior Indebtedness

The Trustee is entitled to all the rights set forth in this Article 5 with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture deprives the Trustee of any of its rights as such holder.

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5.14     Rights of Holders of Senior Indebtedness Not Impaired

No right of any present or future holder of any Senior Indebtedness to enforce the subordination herein will at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or Crailar US or by any non-compliance by the Corporation with the terms, provisions and covenants of this Indenture or Crailar US with the terms, provisions and covenants of the Crailar US Amended and Restated Guaranty and Security Agreement, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.

5.15     Altering the Senior Indebtedness

The holders of the Senior Indebtedness have the right to extend, renew, modify or amend the terms of the Senior Indebtedness or any security therefor and to release, sell or exchange such security and otherwise to deal freely with the Corporation or Crailar US, as the case may be, all without notice to or consent of the Debentureholders or the Trustee and without affecting the liabilities and obligations of the parties to this Indenture or the Debentureholders.

5.16     Additional Indebtedness

This Indenture does not restrict the Corporation or Crailar US from incurring additional indebtedness for borrowed money or other obligations or liabilities (including Senior Indebtedness) or mortgaging, pledging or charging its properties to secure any indebtedness or obligations or liabilities.

5.17     Right of Debentureholder to Convert Not Impaired

The subordination of the Debentures to the Senior Indebtedness and the provisions of this Article 5 do not impair in any way the right of a Debentureholder to convert its Debentures pursuant to Article 6.

5.18      Invalidated Payments

In the event that any of the Senior Indebtedness shall be paid in full and subsequently, for whatever reason, such formerly paid or satisfied Senior Indebtedness becomes unpaid or unsatisfied, the terms and conditions of this Article 5 shall be reinstated and the provisions of this Article 5 shall again be operative until all Senior Indebtedness is repaid in full, provided that such reinstatement shall not give the Senior Creditors any rights or recourses against the Trustee or the Debentureholders for amounts paid to the Debentureholders subsequent to such payment or satisfaction in full and prior to such reinstatement.

5.19     Contesting Security

The Trustee, for itself and on behalf of the Debentureholders, agrees that it shall not contest or bring into question the validity, perfection or enforceability of any of the Senior Indebtedness, the Senior Security, or the relative priority of the Senior Security.

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5.20     Subordination to Security Interest

The Corporation hereby grants to the Trustee, for the benefit of the Trustee and the Debentureholders, and the Security Interest priority over any interest, lien, claim, encumbrance, mortgage, charge, or security interest that the Corporation may now or hereafter have in or to the Secured Assets such that the Security Interest shall have a prior claim to the Secured Assets. The Corporation hereby postpones all its right, title and interest in and to the Secured Assets with and to the intent that the interest of the Corporation therein and thereto shall be subordinate to and shall rank subsequent and subject in all respects to the rights of the Trustee in and to the Secured Assets. The priorities and postponements granted herein shall be effective notwithstanding the respective dates of crystallization of any security, the priorities or rights that might otherwise apply at law or by virtue of the respective dates or times of execution, registration, attachment, perfection, default or enforcement of the respective security or any notice or filing with respect thereto, any priority granted by any principle of law or any statute, including any legislation dealing with personal property security, and the order of any bankruptcy court having jurisdiction over Crailar US or the Secured Assets.

ARTICLE 6
CONVERSION OF DEBENTURES

6.1     Applicability of Article

Any Debentures issued hereunder of any series which by their terms are convertible (subject, however, to any applicable restriction of the conversion of Debentures of such series) will be convertible into Common Shares or other securities of the Corporation, at such conversion rate or rates, and on such date or dates and in accordance with such other provisions as shall have been determined at the time of issue of such Debentures and shall have been expressed in this Indenture (including Sections 2.4(g) and 3.7 hereof), in such Debentures, in an Officers' Certificate, or in a supplemental indenture authorizing or providing for the issue thereof.

Such right of conversion shall extend only to the maximum number of whole Common Shares into which the aggregate principal amount of the Debenture or Debentures surrendered for conversion at any one time by the holder thereof may be converted. Fractional interests in Common Shares shall be adjusted for in the manner provided in Section 6.6.

6.2     Notice of Expiry of Conversion Privilege

Notice of the expiry of the conversion privileges of the Debentures shall be given by or on behalf of the Corporation, not more than 60 days and not less than 30 days prior to the date fixed for the Time of Expiry, in the manner provided in Section 12.2.

6.3     Revival of Right to Convert

If the redemption of any Debenture called for redemption by the Corporation is not made or the payment of the purchase price of any Debenture which has been tendered in acceptance of an offer by the Corporation to purchase Debentures for cancellation is not made, in the case of a redemption upon due surrender of such Debenture or in the case of a purchase on the date on which such purchase is required to be made, as the case may be, then the right to convert such

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Debentures shall revive and continue as if such Debenture had not been called for redemption or tendered in acceptance of the Corporation's offer, respectively.

6.4     Manner of Exercise of Right to Convert

(a)     The holder of a Debenture desiring to convert such Debenture in whole or in part into Common Shares shall surrender such Debenture to the Trustee at its principal office in the City of Vancouver, British Columbia together with the conversion notice attached hereto as Schedule "C" or any other written notice in a form satisfactory to the Trustee, in either case duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in accordance with the provisions of this Article 6; provided that with respect to a Global Debenture, the obligation to surrender a Debenture to the Trustee shall be satisfied if the Trustee makes notation on the Global Debenture of the principal amount thereof so converted and the Trustee is provided with all other documentation which it may request. Thereupon such Debentureholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in Section 6.4(b)) as the holder of the number of Common Shares into which such Debenture is convertible in accordance with the provisions of this Article 6 and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares.

(b)     For the purposes of this Article, a Debenture shall be deemed to be surrendered for conversion on the date (herein called the "Date of Conversion") on which it is so surrendered when the register of the Trustee is open and in accordance with the provisions of this Article 6 or, in the case of a Global Debenture which the Trustee received notice of and all necessary documentation in respect of the exercise of the conversion rights and, in the case of a Debenture so surrendered by post or other means of transmission, on the date on which it is received by the Trustee at one of its offices specified in Section 6.4(a); provided that if a Debenture is surrendered for conversion on a day on which the register of Common Shares or Debentures is closed, the person or persons entitled to receive Common Shares shall become the holder or holders of record of such Common Shares as at the date on which such registers are next reopened.

(c)     Any part, being $1,000 or an integral multiple thereof, of a Debenture in a denomination in excess of $1,000 may be converted as provided in this Article 6 and all references in this Indenture to conversion of Debentures shall be deemed to include conversion of such parts.

(d)     The holder of any Debenture of which only a part is converted shall, upon the exercise of his right of conversion surrender such Debenture to the Trustee in

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accordance with Section 6.4(a), and the Trustee shall cancel the same and shall without charge forthwith certify and deliver to the holder a new Debenture or Debentures in an aggregate principal amount equal to the unconverted part of the principal amount of the Debenture so surrendered or, with respect to a Global Debenture, the Trustee shall make notations on the Global Debentures of the principal amount thereof so converted.

(e)     Holders converting Debentures shall receive accrued and unpaid interest thereon from the period of the last Interest Payment Date prior to the Date of Conversion to the date that is one Business Day prior to the Date of Conversion. The Common Shares issued upon such conversion shall rank only in respect of distributions or dividends declared in favour of shareholders of record on and after the Date of Conversion or such later date as such holder shall become the holder of record of such Common Shares pursuant to Section 6.4(b), from which applicable date they will for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.

6.5     Adjustment of Conversion Price

Subject to the requirements of any exchange on which the Debentures are then listed, the Conversion Price in effect at any date shall be subject to adjustment from time to time as set forth below.

(a)     If and whenever at any time prior to the Time of Expiry the Corporation shall (i) subdivide or redivide the outstanding Common Shares into a greater number of shares, (ii) reduce, combine or consolidate the outstanding Common Shares into a smaller number of shares, or (iii) issue Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a dividend in the ordinary course, distribution (other than the issue of Common Shares to holders of Common Shares who have elected to receive dividends or distributions in the form of Common Shares in lieu of cash dividends or cash distributions paid in the ordinary course on the Common Shares), or otherwise, the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Common Shares by way of a dividend or distribution, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or dividend, or shall, in the case of any of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this Section 6.5(a) shall occur. Any such issue of Common Shares by way of a dividend or distribution shall be deemed to have been made on the record date for the dividend or distribution for the purpose of calculating the number of outstanding Common Shares under subsections (c) and (d) of this Section 6.5.

(b)     If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the payment of a cash dividend or distribution to the holders of all or substantially all of the outstanding Common Shares in respect of any

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Applicable Period, the Conversion Price shall be adjusted immediately after such record date so that it shall be equal to the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the denominator shall be the Current Market Price per Common Share on such record date and of which the numerator shall be the Current Market Price per Common Share on such record date minus the amount in cash per Common Share distributed to holders of Common Shares, provided that the Conversion Price so adjusted is not less than $1.25, which represents the Market Price of the Common Shares on the TSXV at closing on July 2, 2013, the date prior to the date the Corporation filed a news release with respect to the Offering, in accordance with the policies of the TSXV. Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such cash dividend or distribution is not paid, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed.

(c)     If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the issuance of options, rights or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible into Common Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Current Market Price of a Common Share on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing 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 securities so offered) by such Current Market Price per Common Share, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such a record date is fixed. To the extent that any such options, rights or warrants are not so issued or any such options, rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such options, rights or warrants were included in such fraction, as the case may be.

(d)     If and whenever at any time prior to the Time of Expiry, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 6.5(a) or a consolidation, amalgamation, arrangement, binding share exchange, merger of the Corporation with or into any other Person

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or other entity or acquisition of the Corporation or other combination pursuant to which the Common Shares are converted into or acquired for cash, securities or other property; or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other Person (other than a direct or indirect wholly-owned subsidiary of the Corporation) or other entity or a liquidation, dissolution or winding-up of the Corporation, any holder of a Debenture who has not exercised its right of conversion prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, upon the exercise of such right thereafter, shall, subject to the immediately following paragraph, be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, such amount of cash or the number of shares or other securities or property of the Corporation or of the Person or other entity resulting from such merger, amalgamation, arrangement, acquisition, combination or consolidation, or to which such sale or conveyance may be made or which holders of Common Shares receive pursuant to such liquidation, dissolution or winding-up, as the case may be, that such holder of a Debenture would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, if, on the record date or the effective date thereof, as the case may be, the holder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the conversion right. If determined appropriate by the Board of Directors, to give effect to or to evidence the provisions of this Section 6.5(d), the Corporation, its successor, or such purchasing Person or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, share exchange, acquisition, combination, sale or conveyance or liquidation, dissolution or winding-up, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the holder of Debentures to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any cash, shares or other securities or property to which a holder of Debentures is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Trustee pursuant to the provisions of this Section 6.5(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 14. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing Person or other entity and the Trustee shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 6.5(d) and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, share exchanges, acquisitions, combinations, sales or conveyances. Notice of any transaction to which this Section 6.5(d) applies shall be given in accordance with Section 6.10.

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Notwithstanding any other provision in this Indenture or in the form of any Debenture, if a holder would otherwise become entitled to receive, upon conversion of a Debenture, any property or securities (herein, "Ineligible Consideration") that would not constitute prescribed securities for the purposes of Section 212(1)(b)(vii)(E) of the Tax Act as it applied on December 31, 2007 ("Prescribed Securities"), such holder shall not be entitled to receive such Ineligible Consideration upon conversion of the Debenture, but shall instead be entitled to receive Prescribed Securities of the Corporation (or a successor, as the case may be) with a fair market value equal to the fair market value of such Ineligible Consideration, as reasonably determined by the Board of Directors (which determination shall be conclusive and shall be evidenced by an Officer's Certificate delivered to the Trustee); provided, however, that the Corporation or a successor, as the case may be, shall have the right (at the sole option of the Corporation or the successor, as the case may be) but not the obligation to deliver such Ineligible Consideration to the holder upon the conversion of the Debenture in lieu of such Prescribed Securities. At least 30 days prior to the effective date of a transaction that would otherwise cause holders of Debentures to become entitled to receive Ineligible Consideration upon a conversion of the Debentures, the Corporation will give notice to such holders of the consideration into which the Debentures will be convertible following such transaction.

(e)     If the Corporation shall make a distribution to all or substantially all of the holders of Common Shares of shares in the capital of the Corporation, other than Common Shares, or evidences of indebtedness or other assets of the Corporation, including securities (but excluding (x) any issuance of rights or warrants for which an adjustment was made pursuant to Section 6.5(c) and (y) any dividend or distribution paid exclusively in cash for which an adjustment was made pursuant to Section 6.5(b)) (the "Distributed Securities"), then in each such case (unless the Corporation at its option chooses to distribute such Distributed Securities to the holders of Debentures on such dividend or distribution date (as if each holder had converted such Debenture into Common Shares immediately preceding the record date with respect to such distribution)) the Conversion Price in effect immediately preceding the record date fixed for the dividend or distribution shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately preceding such record date by a fraction of which the denominator shall be the Current Market Price for the Common Shares immediately prior to the record date and of which the numerator shall be the Current Market Price per Common Share on such record date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers' Certificate delivered to the Trustee, all subject to the approval of the TSXV, if required) on such record date of the portion of the Distributed Securities so distributed applicable to one Common Share (determined on the basis of the number of Common Shares outstanding at the close of business on such record date). Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if such dividend or distribution had not been declared.

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Notwithstanding the foregoing, if the securities distributed by the Corporation to all holders of its Common Shares consist of capital stock of, or similar equity interests in, a Subsidiary or other business of the Corporation (the "Spinoff Securities"), the Conversion Price shall be adjusted, unless the Corporation at its option chooses to make an equivalent distribution to the holders of Debentures, so that the same shall be equal to the rate determined by multiplying the Conversion Price in effect on the record date fixed for the determination of shareholders entitled to receive such distribution by a fraction, the denominator of which shall be the sum of (A) the weighted average trading price of one Common Share over the 20 consecutive trading day period (the "Spinoff Valuation Period") commencing on and including the fifth trading day after the date on which ex-dividend trading commences for such distribution on the TSXV, or such other national or regional exchange or market on which the Common Shares are then listed or quoted and (B) the product of (i) the weighted average trading price (calculated in substantially the same way as the Current Market Price is calculated for the Common Shares) over the Spinoff Valuation Period of the Spinoff Securities or, if no such prices are available, the fair market value of the Spinoff Securities as reasonably determined by the Board of Directors (which determination shall be conclusive and shall be evidenced by an Officers' Certificate delivered to the Trustee but shall be subject to the approval of the TSXV, if required) multiplied by (ii) the number of Spinoff Securities distributed in respect of one Common Share and the numerator of which shall be the weighted average trading price of one Common Share over the Spinoff Valuation Period, such adjustment to become effective immediately preceding the opening of business on the 25th trading day after the date on which ex-dividend trading commences; provided, however, that the Corporation may in lieu of the foregoing adjustment elect to make adequate provision so that each holder of Debentures shall have the right to receive upon conversion thereof the amount of such Spinoff Securities that such holder of Debentures would have received if such Debentures had been converted on the record date with respect to such distribution.

(f)     In any case in which this Section 6.5 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Debenture converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such holder would, but for the provisions of this Section 6.5(f), have become the holder of record of such additional Common Shares pursuant to Section 6.4(b).

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(g)     The adjustments provided for in this Section 6.5 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 6.5, provided that, notwithstanding any other provision of this Section 6.5, no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this Section 6.5(g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(h)     For the purpose of calculating the number of Common Shares outstanding, Common Shares owned by or for the benefit of the Corporation shall not be counted.

(i)     In the event of any question arising with respect to the adjustments provided in this Section 6.5, such question shall be conclusively determined by a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation); such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation, the Trustee and the Debentureholders.

(j)     In case the Corporation shall take any action affecting the Common Shares other than action described in this Section 6.5, which in the opinion of the Board of Directors, would materially affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time, by action of the Board of Directors, subject to the prior written consent of any exchange on which the Debentures are then listed, as the Board of Directors in their sole discretion may determine to be equitable in the circumstances. Failure of the directors to make such an adjustment shall be conclusive evidence that they have determined that it is equitable to make no adjustment in the circumstances.

(k)     Subject to the prior written consent of any exchange on which the Debentures are then listed, no adjustment in the Conversion Price shall be made in respect of any event described in Sections 6.5(a), 6.5(b), 6.5(c) or 6.5(e) other than the events described in Section 6.5(a)(i) or (a)(ii) if the holders of the Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective date or record date, as the case may be, of such event.

(l)     Except as stated above in this Section 6.5, no adjustment will be made in the Conversion Price for any Debentures as a result of the issuance of Common Shares at less than the Current Market Price for such Common Shares on the date of issuance or the then applicable Conversion Price.

6.6     No Requirement to Issue Fractional Common Shares

The Corporation shall not be required to issue fractional Common Shares upon the conversion of Debentures pursuant to this Article. If more than one Debenture shall be

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surrendered for conversion at one time by the same holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of such Debentures to be converted. If any fractional interest in a Common Share would, except for the provisions of this Section, be deliverable upon the conversion of any principal amount of Debentures, the Corporation shall, in lieu of delivering any certificate representing such fractional interest, make a cash payment to the holder of such Debenture of an amount equal to the fractional interest which would have been issuable multiplied by the Current Market Price, provided, however, that the Corporation shall not be required to make any payment of less than $5.00.

6.7     Corporation to Reserve Common Shares

The Corporation covenants with the Trustee that it will at all times reserve and keep available out of its authorized Common Shares (if the number thereof is or becomes limited), solely for the purpose of issue upon conversion of Debentures as in this Article 6 provided, and conditionally allot to Debentureholders who may exercise their conversion rights hereunder, such number of Common Shares as shall then be issuable upon the conversion of all outstanding Debentures. The Corporation covenants with the Trustee that all Common Shares which shall be so issuable shall be duly and validly issued as fully-paid and non-assessable.

6.8     Cancellation of Converted Debentures

Subject to the provisions of Section 6.4 as to Debentures converted in part, all Debentures converted in whole or in part under the provisions of this Article 6 shall be forthwith delivered to and cancelled by the Trustee and no Debenture shall be issued in substitution for those converted.

6.9     Certificate as to Adjustment

The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 6.5, deliver an Officers' Certificate to the Trustee specifying the nature of the event requiring the same and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate and the amount of the adjustment specified therein shall be verified by an opinion of a firm of nationally recognized chartered accountants appointed by the Corporation and acceptable to the Trustee (who may be the Auditors of the Corporation) and shall be conclusive and binding on all parties in interest. When so approved, the Corporation shall, except in respect of any subdivision, redivision, reduction, combination or consolidation of the Common Shares, forthwith give notice to the Debentureholders in the manner provided in Section 12.2 specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Conversion Price; provided that, if the Corporation has given notice under this Section 6.9 covering all the relevant facts in respect of such event and if the Trustee approves, no such notice need be given under this Section 6.9.

6.10     Notice of Special Matters

The Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner

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provided in Section 12.2, of its intention to fix a record date for any event referred to in Sections 6.5(a), 6.5(b), 6.5(c) or 6.5(e) (other than the subdivision, redivision, reduction, combination or consolidation of its Common Shares) which may give rise to an adjustment in the Conversion Price, and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; provided that the Corporation shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days in each case prior to such applicable record date.

In addition, the Corporation covenants with the Trustee that so long as any Debenture remains outstanding, it will give notice to the Trustee, and to the Debentureholders in the manner provided in Section 12.2, at least 40 days prior to the effective date of any transaction referred to in Section 6.5(d) stating the consideration into which the Debentures will be convertible after the effective date of such transaction.

6.11     Protection of Trustee

The Trustee:

(a)     shall not at any time be under any duty or responsibility to any Debentureholder to determine whether any facts exist which may require any adjustment in the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;

(b)     shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the conversion of any Debenture; and

(c)     shall not be responsible for any failure of the Corporation to make any cash payment or to issue, transfer or deliver Common Shares or share certificates upon the surrender of any Debenture for the purpose of conversion, or to comply with any of the covenants contained in this Article 6.

6.12     U.S. Legend on Common Shares

Each certificate representing Common Shares issued to a U.S. Person, a person in the United States, or for the account or benefit of a U.S. Person or a person in the United States, upon conversion of Debentures shall have imprinted or otherwise reproduced thereon such legend or legends in substantially the form of Schedule "D" attached hereto (subpart 1).

For so long as the Corporation is not a "foreign issuer" under Regulation S, each certificate representing Common Shares issued outside of the United States to or for the account or benefit of a non-U.S. Person or a person not in the United States, upon conversion of Debentures shall have imprinted or otherwise reproduced thereon such legend or legends in substantially the form of Schedule "D" attached hereto (subpart 2).

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ARTICLE 7
COVENANTS OF THE CORPORATION

7.1      To Pay Principal, Premium (if any) and Interest

The Corporation will duly and punctually pay or cause to be paid to every Debentureholder the principal of, premium (if any) and interest accrued on the Debentures of which it is the holder on the dates, at the places and in the manner mentioned herein and in the Debentures.

7.2      To Pay Trustee's Remuneration

The Corporation will pay the Trustee reasonable remuneration for its services as Trustee hereunder and will repay to the Trustee on demand all monies which shall have been paid by the Trustee in connection with the execution of the trusts hereby created and such monies including the Trustee's remuneration, shall be payable out of any funds coming into the possession of the Trustee in priority to payment of any principal of the Debentures or interest or premium thereon. Such remuneration shall continue to be payable until the trusts hereof be finally wound up and whether or not the trusts of this Indenture shall be in the course of administration by or under the direction of a court of competent jurisdiction.

7.3     To Give Notice of Default

The Corporation shall notify the Trustee immediately upon obtaining knowledge of any Event of Default hereunder.

7.4     Preservation of Existence, etc.

Subject to the express provisions hereof, the Corporation will carry on and conduct its activities, and cause its Subsidiaries to carry on and conduct their businesses, in a business-like manner and in accordance with good business practices; and, subject to the express provisions hereof, it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights.

7.5     Keeping of Books

The Corporation will keep or cause to be kept proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Corporation in accordance with generally accepted accounting principles.

7.6     Certificate of Compliance

The Corporation shall deliver to the Trustee, within 120 days after the end of each calendar year or at any other time within one Business Day of receipt of a request from the Trustee, an Officers' Certificate as to the knowledge of such officers of the Corporation who execute the Officers' Certificate of the Corporation's compliance with all conditions and covenants in this Indenture certifying that after reasonable investigation and inquiry, the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which could, with the giving of notice, lapse of time or

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otherwise, constitute an Event of Default hereunder, or if such is not the case, setting forth with reasonable particulars the circumstances of any failure to comply and steps taken or proposed to be taken to eliminate such circumstances and remedy such Event of Default, as the case may be.

7.7     Performance of Covenants by Trustee

If the Corporation shall fail to perform any of its covenants contained in this Indenture, the Trustee may notify the Debentureholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Debentureholders. All sums so expended or advanced by the Trustee shall be repayable as provided in Section 7.2. No such performance, expenditure or advance by the Trustee shall be deemed to relieve the Corporation of any default hereunder.

7.8     SEC Notice

The Corporation confirms that it has a class of securities registered pursuant to Section 12 of the U.S. Securities Exchange Act or has a reporting obligation pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act and has provided the Trustee with an Officers' Certificate (in a form provided by the Trustee) certifying such reporting obligation and other information as requested by the Trustee. The Corporation covenants that in the event that any such registration or reporting obligation shall be terminated by the Corporation in accordance with the U.S. Securities Exchange Act, the Corporation shall promptly notify the Trustee of such termination and such other information as the Trustee may require at the time. The Corporation acknowledges that Computershare is relying upon the foregoing representation and covenants in order to meet certain SEC obligations with respect to those clients who are filing with the SEC.

7.9     No Dividends on Common Shares if Event of Default

The Corporation shall not declare or pay any dividend to the holders of its issued and outstanding Common Shares after the occurrence of an Event of Default unless and until such default shall have been cured or waived or shall have ceased to exist.

7.10     Maintain Listing

The Corporation will use reasonable commercial efforts to maintain the listing of the Common Shares on the TSXV, and to maintain the Corporation's status as a "reporting issuer" not in default of the requirements of the Applicable Securities Legislation; provided that the foregoing covenant shall not prevent or restrict the Corporation from carrying out a transaction to which Article 10 would apply if carried out in compliance with Article 10 even if as a result of such transaction the Corporation ceases to be a "reporting issuer" in all or any of the provinces of Canada or the Common Shares cease to be listed on the TSXV or any other stock exchange.

7.11     Covenants as to Security

The Corporation will, and will cause Crailar US to:

(a)     ensure that each of the Security Documents will at all times constitute valid and perfected first ranking security on the Secured Assets, subject only to Permitted Priority Encumbrances, and at all times take all actions necessary or desirable to

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create, perfect and maintain the Security Interests granted pursuant to the Security Documents as perfected first ranking security over the Secured Assets, subject only to Permitted Priority Encumbrances;

(b)     at all times do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such acts, deeds, mortgages, hypothecs, transfers, assignments and assurances in law (including consents, approvals or waivers from third parties under applicable documents or applicable legislation) as may be necessary or desirable to ensure that the Trustee (for itself and the Debentureholders) has a first priority (subject only to Permitted Priority Encumbrances) and perfected Security Interest upon the Secured Assets;

(c)     cause all necessary and proper steps to be taken diligently to protect and defend the Secured Assets and the proceeds thereof against any adverse claims or demands, including without limitation, the employment or use of counsel for the prosecution or defence of litigation and the contest, settlement, release or discharge of any such claim or demand; and

(d)     if the Security Interests created by the Security Documents shall have become enforceable and the Trustee shall have become bound to enforce or has commenced enforcing the same, it shall from time to time execute and do all such assurances and things as the Trustee may reasonably require for facilitating the realization of the Security Interests created by the Security Documents and for exercising all the powers, authorities and discretions conferred upon the Trustee under this Indenture and for confirming to any purchaser of the Secured Assets, whether sold by the Trustee hereunder or by judicial proceedings, the title to the Secured Assets so sold, and will give all notices and directions as the Trustee may consider expedient.

ARTICLE 8
DEFAULT

8.1     Events of Default

Each of the following events constitutes, and is herein sometimes referred to as, an "Event of Default":

(a)     failure for 15 days to pay interest on the Debentures when due;

(b)     failure to pay principal or premium, if any, when due on the Debentures whether at maturity, upon redemption, by declaration or otherwise;

(c)     default in the delivery, when due, of all cash and any Common Shares or other consideration, if any, payable on conversion with respect to the Debentures, which default continues for 15 days;

(d)     default in the observance or performance of any covenant or condition of the Indenture by the Corporation, or of the Crailar US Amended and Restated Guaranty and Security Agreement by Crailar US, and the failure to cure (or obtain

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a waiver for) such default for a period of 60 days after notice in writing has been given by the Trustee or from holders of not less than 66-2/3% in aggregate principal amount of the Debentures to the Corporation specifying such default and requiring the Corporation or Crailar US, as applicable, to rectify such default or obtain a waiver for same;

(e)     if a decree or order of a Court having jurisdiction is entered adjudging the Corporation or Crailar US a bankrupt or insolvent under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Corporation or Crailar US, or appointing a receiver of, or of any substantial part of, the property of the Corporation or the Secured Assets or ordering the winding-up or liquidation of either one's, and any such decree or order continues unstayed and in effect for a period of 60 days;

(f)     if the Corporation or Crailar US institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada) or any other bankruptcy, insolvency or analogous laws, or consents to the filing of any such petition or to the appointment of a receiver of, or of any substantial part of, the property of the Corporation or the Secured Assets or makes a general assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due; or

(g)     if a resolution is passed for the winding-up or liquidation of the Corporation or Crailar US except in the course of carrying out or pursuant to a transaction in respect of which the conditions of Section 10.1 are duly observed and performed;

then in each and every such event listed above, the Trustee may, in its discretion, and shall, upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding, subject to the provisions of Section 8.3, by notice in writing to the Corporation declare the principal of and interest and premium, if any, on all Debentures then outstanding and all other monies outstanding hereunder to be due and payable and the same shall thereupon forthwith become immediately due and payable to the Trustee, and upon such amounts becoming due and payable, the Corporation shall forthwith pay to the Trustee for the benefit of the Debentureholders such principal, accrued and unpaid interest and premium, if any, and interest on amounts in default on such Debenture and all other monies outstanding hereunder, together with subsequent interest at the rate borne by the Debentures on such principal, interest, premium and such other monies from the date of such declaration or event until payment is received by the Trustee, such subsequent interest to be payable at the times and places and in the manner mentioned in and according to the tenor of the Debentures. Such payment when made shall be deemed to have been made in discharge of the Corporation's obligations hereunder and any monies so received by the Trustee shall be applied in the manner provided in Section 8.6.

For greater certainty, for the purposes of this Section 8.1, a series of Debentures shall be in default in respect of an Event of Default if such Event of Default relates to a default in

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the payment of principal, premium, if any, or interest on the Debentures of such series in which case references to Debentures in this Section 8.1 refer to Debentures of that particular series.

For purposes of this Article 8, where the Event of Default refers to an Event of Default with respect to a particular series of Debentures as described in this Section 8.1, then this Article 8 shall apply mutatis mutandis to the Debentures of such series and references in this Article 8 to the Debentures shall mean Debentures of the particular series and references to the Debentureholders shall refer to the Debentureholders of the particular series, as applicable.

8.2     Notice of Events of Default

If an Event of Default shall occur and be continuing the Trustee shall, within 30 days after it receives written notice of the occurrence of such Event of Default, give notice of such Event of Default to the Debentureholders in the manner provided in Section 12.2, provided that notwithstanding the foregoing, unless the Trustee shall have been requested to do so by the holders of at least 25% of the principal amount of the Debentures then outstanding, the Trustee shall not be required to give such notice if the Trustee in good faith shall have determined that the withholding of such notice is in the best interests of the Debentureholders and shall have so advised the Corporation in writing.

8.3     Waiver of Default

Upon the occurrence of any Event of Default hereunder:

(a)     the holders of the Debentures shall have the power (in addition to the powers exercisable by Extraordinary Resolution as hereinafter provided) by requisition in writing by the holders of more than 50% of the principal amount of Debentures then outstanding, to instruct the Trustee to waive any Event of Default and to cancel any declaration made by the Trustee pursuant to Section 8.1 and the Trustee shall thereupon waive the Event of Default and cancel such declaration, or either, upon such terms and conditions as shall be prescribed in such requisition; provided that notwithstanding the foregoing if the Event of Default has occurred by reason of the non-observance or non-performance by the Corporation of any covenant applicable only to one or more series of Debentures, then the holders of more than 50% of the principal amount of the outstanding Debentures of that series shall be entitled to exercise the foregoing power and the Trustee shall so act and it shall not be necessary to obtain a waiver from the holders of any other series of Debentures; and

(b)     the Trustee, so long as it has not become bound to declare the principal and interest on the Debentures then outstanding to be due and payable, or to obtain or enforce payment of the same, shall have power to waive any Event of Default if, in the Trustee's opinion, the same shall have been cured or adequate satisfaction made therefor, and in such event to cancel any such declaration theretofore made by the Trustee in the exercise of its discretion, upon such terms and conditions as the Trustee may deem advisable.

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No such act or omission either of the Trustee or of the Debentureholders shall extend to or be taken in any manner whatsoever to affect any subsequent Event of Default or the rights resulting therefrom.

8.4     Enforcement by the Trustee

(a)     Subject to the provisions of Section 8.3 and to the provisions of any Extraordinary Resolution that may be passed by the Debentureholders, if the Corporation shall fail to pay to the Trustee, forthwith after the same shall have been declared (or have been deemed to be declared) to be due and payable under Section 8.1, the principal of and premium (if any) and interest on all Debentures then outstanding, together with any other amounts due hereunder, the Trustee may in its discretion and shall upon receipt of a request in writing signed by the holders of not less than 25% in principal amount of the Debentures then outstanding and upon being funded and indemnified to its reasonable satisfaction against all costs, expenses and liabilities to be incurred, proceed in its name as trustee hereunder to obtain or enforce payment of such principal of and premium (if any) and interest on all the Debentures then outstanding together with any other amounts due hereunder by such proceedings authorized by this Indenture or by law or equity as the Trustee in such request shall have been directed to take, or if such request contains no such direction, or if the Trustee shall act without such request, then by such proceedings authorized by this Indenture or by suit at law or in equity as the Trustee shall deem expedient.

(b)     The Trustee shall be entitled and empowered, either in its own name or as trustee of an express trust, or as attorney-in-fact for the holders of the Debentures, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the holders of the Debentures allowed in any insolvency, bankruptcy, liquidation or other judicial proceedings relative to the Corporation or its creditors or relative to or affecting its property. The Trustee is hereby irrevocably appointed (and the successive respective holders of the Debentures by taking and holding the same shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective holders of the Debentures with authority to make and file in the respective names of the holders of the Debentures or on behalf of the holders of the Debentures as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the holders of the Debentures themselves, any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceedings and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such holders of the Debentures, as may be necessary or advisable in the opinion of the Trustee, in order to have the respective claims of the Trustee and of the holders of the Debentures against the Corporation or its property allowed in any such proceeding, and to receive payment of or on account of such claims; provided, however, that subject to Section 8.3, nothing contained in this Indenture shall be deemed to give to the Trustee, unless so authorized by Extraordinary

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Resolution, any right to accept or consent to any plan of reorganization or otherwise by action of any character in such proceeding to waive or change in any way any right of any Debentureholder.

(c)     The Trustee shall also have the power at any time and from time to time to institute and to maintain such suits and proceedings as it may be advised shall be necessary or advisable to preserve and protect its interests and the interests of the Debentureholders.

(d)     All rights of action hereunder may be enforced by the Trustee without the possession of any of the Debentures or the production thereof on the trial or other proceedings relating thereto. Any such suit or proceeding instituted by the Trustee shall be brought in the name of the Trustee as trustee of an express trust, and any recovery of judgment shall be for the rateable benefit of the holders of the Debentures subject to the provisions of this Indenture. In any proceeding brought by the Trustee (and also any proceeding in which a declaratory judgment of a court may be sought as to the interpretation or construction of any provision of this Indenture, to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceeding.

8.5     No Suits by Debentureholders

No holder of any Debenture shall have any right to institute any action, suit or proceeding at law or in equity for the purpose of enforcing payment of the principal of or interest on the Debentures or for the execution of any trust or power hereunder or for the appointment of a liquidator or receiver or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to have the Corporation wound up or to file or prove a claim in any liquidation or bankruptcy proceeding or for any other remedy hereunder, unless: (a) such holder shall previously have given to the Trustee written notice of the happening of an Event of Default hereunder; and (b) the Debentureholders by Extraordinary Resolution or by written instrument signed by the holders of at least 66-2/3% in principal amount of the Debentures then outstanding shall have made a request to the Trustee and the Trustee shall have been afforded reasonable opportunity either itself to proceed to exercise the powers hereinbefore granted or to institute an action, suit or proceeding in its name for such purpose; and (c) the Debentureholders or any of them shall have furnished to the Trustee, when so requested by the Trustee, sufficient funds and security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby; and (d) the Trustee shall have failed to act within a reasonable time after such notification, request, receipt of sufficient funds, security and offer of indemnity and such notification, request, receipt of sufficient funds, security and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to any such proceeding or for any other remedy hereunder by or on behalf of the holder of any Debentures.

8.6     Application of Monies by Trustee

Except as herein otherwise expressly provided, any monies received by the Trustee from the Corporation pursuant to the foregoing provisions of this Article 8, or as a result of legal or other proceedings or from any trustee in bankruptcy or liquidator of the Corporation, shall be applied, together with any other monies in the hands of the Trustee available for such purpose, as follows:

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(a)     first, if and to the extent that the Debenture Trustee deems it in the interest of the Debentureholders generally, in payment of all liens, Security Interests and other encumbrances (if any) on the Secured Assets ranking or capable of ranking in priority to the Security Interest granted pursuant to the Security Documents or to keep in good standing any such prior encumbrances, including without limitation the Permitted Priority Encumbrances (if applicable);

(b)     second, in payment or in reimbursement to the Trustee or the Receiver of its compensation, costs, charges, expenses, borrowings, advances or other monies furnished or provided by or at the instance of the Trustee or the Receiver in or about the execution of its trusts under, or otherwise in relation to, this Indenture, with interest thereon as herein provided;

(c)     third, but subject as hereinafter in this Section 8.6 provided, in payment, rateably and proportionately to the holders of Debentures, of the principal of and premium (if any) and accrued and unpaid interest and interest on amounts in default on the Debentures which shall then be outstanding in the priority of principal first and then premium and then accrued and unpaid interest and interest on amounts in default unless otherwise directed by Extraordinary Resolution and in that case in such order or priority as between principal, premium (if any) and interest as may be directed by such resolution; and

(d)     fourth, in payment of the amount owing on any mortgages, charges, liens, Security Interests and other encumbrances ranking junior to the Security Interest pursuant to the Security Documents; and

(e)     fifth, in payment of the surplus, if any, of such monies to the Corporation or its assigns;

provided, however, that no payment shall be made pursuant to clause (iii) above in respect of the principal, premium, if any, or interest on any Debenture held, directly or indirectly, by or for the benefit of the Corporation or any Subsidiary (other than any Debenture pledged for value and in good faith to a person other than the Corporation or any Subsidiary but only to the extent of such person's interest therein) except subject to the prior payment in full of the principal, premium (if any) and interest (if any) on all Debentures which are not so held.

8.7     Notice of Payment by Trustee

Not less than 15 days' notice shall be given in the manner provided in Section 12.2 by the Trustee to the Debentureholders of any payment to be made under this Article 8. Such notice shall state the time when and place where such payment is to be made and also the liability under this Indenture to which it is to be applied. After the day so fixed, unless payment shall have been duly demanded and have been refused, the Debentureholders will be entitled to interest only on the balance (if any) of the principal monies, premium (if any) and interest due (if any) to them, respectively, on the Debentures, after deduction of the respective amounts payable in respect thereof on the day so fixed.

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8.8     Trustee May Demand Production of Debentures

The Trustee shall have the right to demand production of the Debentures in respect of which any payment of principal, interest or premium required by this Article 8 is made and may cause to be endorsed on the same a memorandum of the amount so paid and the date of payment, but the Trustee may, in its discretion, dispense with such production and endorsement, upon such indemnity being given to it and to the Corporation and such surety bond being posted, as the Trustee shall deem sufficient.

8.9     Remedies Cumulative

No remedy herein conferred upon or reserved to the Trustee, or upon or to the holders of Debentures is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now existing or hereafter to exist by law or by statute.

8.10     Judgment Against the Corporation

The Corporation covenants and agrees with the Trustee that, in case of any judicial or other proceedings to enforce the rights of the Debentureholders, judgment may be rendered against it in favour of the Debentureholders or in favour of the Trustee as trustee for the Debentureholders for any amount which may remain due in respect of the Debentures and premium (if any) and the interest thereon and any other monies owing hereunder.

8.11     Immunity of Directors, Officers and Others

The Debentureholders and the Trustee hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any past, present or future officer, director or employee of the Corporation or holder of Common Shares of the Corporation or of any successor for the payment of the principal of or premium, if any, or interest on any of the Debentures or on any covenant, agreement, representation or warranty by the Corporation contained herein or in the Debentures.

ARTICLE 9
SATISFACTION AND DISCHARGE

9.1     Cancellation and Destruction

All Debentures shall forthwith after payment thereof be delivered to the Trustee and cancelled by it. All Debentures cancelled or required to be cancelled under this or any other provision of this Indenture shall be destroyed by the Trustee and, if required by the Corporation, the Trustee shall furnish to it a destruction certificate setting out the designating numbers of the Debentures so destroyed.

9.2     Non-Presentation of Debentures

In case the holder of any Debenture shall fail to present the same for payment on the date on which the principal of, premium (if any) or the interest thereon or represented thereby

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becomes payable either at maturity or otherwise or shall not accept payment on account thereof and give such receipt therefor, if any, as the Trustee may require:

(a)     the Corporation shall be entitled to pay or deliver to the Trustee and direct it to set aside; or

(b)     in respect of monies or Common Shares in the hands of the Trustee which may or should be applied to the payment of the Debentures, the Corporation shall be entitled to direct the Trustee to set aside; or

if the redemption was pursuant to notice given by the Trustee, the Trustee may itself set aside, the principal, premium (if any) or the interest, as the case may be, in trust to be paid to the holder of such Debenture upon due presentation or surrender thereof in accordance with the provisions of this Indenture; and thereupon the principal of, premium (if any) or the interest payable on or represented by each Debenture in respect whereof such monies have been set aside shall be deemed to have been paid and the holder thereof shall thereafter have no right in respect thereof except that of receiving delivery and payment of the monies so set aside by the Trustee upon due presentation and surrender thereof, subject always to the provisions of Section 9.3.

9.3     Repayment of Unclaimed Monies

Subject to applicable law, any monies set aside under Section 9.2 and not claimed by and paid to holders of Debentures as provided in Section 9.2 within six years after the date of such setting aside shall be repaid and delivered to the Corporation by the Trustee and thereupon the Trustee shall be released from all further liability with respect to such monies and thereafter the holders of the Debentures in respect of which such monies were so repaid to the Corporation shall have no rights in respect thereof except to obtain payment and delivery of the monies from the Corporation subject to any limitation provided by the laws of the Province of British Columbia.

9.4     Discharge

The Trustee shall at the written request of the Corporation release and discharge this Indenture and the Security Documents and the Security Interest constituted thereby and execute and deliver such instruments as it shall be advised by Counsel are requisite for that purpose and to release the Corporation from its covenants herein contained (other than the provisions relating to the indemnification of the Trustee), upon proof being given to the reasonable satisfaction of the Trustee that the principal of, premium (if any) and interest (including interest on amounts in default, if any), on all the Debentures and all other monies payable hereunder have been paid, satisfied or delivered or that all the Debentures having matured or having been duly called for redemption, payment of the principal of and interest (including interest on amounts in default, if any) on such Debentures and of all other monies payable hereunder has been duly and effectually provided for in accordance with the provisions hereof.

9.5     Satisfaction

(a)     The Corporation shall be deemed to have fully paid, satisfied and discharged all of the outstanding Debentures of any series and the Trustee, at the expense of the

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Corporation, shall execute and deliver proper instruments acknowledging the full payment, satisfaction and discharge of such Debentures, when, with respect to all of the outstanding Debentures or all of the outstanding Debentures of any series, as applicable:

(i)     the Corporation has deposited or caused to be deposited with the Trustee as trust funds or property in trust for the purpose of making payment on such Debentures, an amount in money or Common Shares, if applicable, sufficient to pay, satisfy and discharge the entire amount of principal of, premium, if any, and interest, if any, to maturity, or any repayment date or Redemption Dates, or upon conversion or otherwise as the case may be, of such Debentures;

(ii)     the Corporation has deposited or caused to be deposited with the Trustee as trust property in trust for the purpose of making payment on such Debentures:

(A)     if the Debentures are issued in Canadian dollars, such amount in Canadian dollars of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of Canada or Common Shares, if applicable; or

(B)     if the Debentures are issued in a currency or currency unit other than Canadian dollars, cash in the currency or currency unit in which the Debentures are payable and/or such amount in such currency or currency unit of direct obligations of, or obligations the principal and interest of which are guaranteed by, the Government of Canada or the government that issued the currency or currency unit in which the Debentures are payable,

as will, together with the income to accrue thereon and reinvestment thereof, be sufficient to pay and discharge the entire amount of principal of, premium, if any, and accrued and unpaid interest to maturity or any repayment date, as the case may be, of all such Debentures; or

(iii)     all Debentures authenticated and delivered (other than (A) Debentures which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9 and (B) Debentures for whose payment has been deposited in trust and thereafter repaid to the Corporation as provided in Section 9.3) have been delivered to the Trustee for cancellation;

so long as in any such event:

(iv)     the Corporation has paid, caused to be paid or made provisions to the satisfaction of the Trustee for the payment of all other sums payable or which may be payable with respect to all of such Debentures (together with all applicable expenses of the Trustee in connection with the payment of such Debentures); and

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(v)     the Corporation has delivered to the Trustee an Officers' Certificate stating that all conditions precedent herein provided relating to the payment, satisfaction and discharge of all such Debentures have been complied with.

Any deposits with the Trustee referred to in this Section 9.5 shall be irrevocable, subject to Section 9.6, and shall be made under the terms of an escrow and/or trust agreement in form and substance satisfactory to the Trustee and which provides for the due and punctual payment of the principal of, premium, if any, and interest on the Debentures being satisfied.

(b)     Upon the satisfaction of the conditions set forth in this Section 9.5 with respect to all the outstanding Debentures, or all the outstanding Debentures of any series, as applicable, the terms and conditions of the Debentures, including the terms and conditions with respect thereto set forth in this Indenture (other than those contained in Article 2 and Article 4 and the provisions of Article 1 pertaining to Article 2 and Article 4) shall no longer be binding upon or applicable to the Corporation.

(c)     Any funds or obligations deposited with the Trustee pursuant to this Section 9.5 shall be denominated in the currency or denomination of the Debentures in respect of which such deposit is made.

(d)     If the Trustee is unable to apply any money or securities in accordance with this Section 9.5 by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Corporation's obligations under this Indenture and the affected Debentures shall be revived and reinstated as though no money or securities had been deposited pursuant to this Section 9.5 until such time as the Trustee is permitted to apply all such money or securities in accordance with this Section 9.5, provided that if the Corporation has made any payment in respect of principal of, premium, if any, or interest on Debentures or, as applicable, other amounts because of the reinstatement of its obligations, the Corporation shall be subrogated to the rights of the holders of such Debentures to receive such payment from the money or securities held by the Trustee.

9.6     Continuance of Rights, Duties and Obligations

(a)     Where trust funds or trust property have been deposited pursuant to Section 9.5, the holders of Debentures and the Corporation shall continue to have and be subject to their respective rights, duties and obligations under Article 2 and Article 4.

(b)     In the event that, after the deposit of trust funds or trust property pursuant to Section 9.5 in respect of a series of Debentures (the "Defeased Debentures"), any holder of any of the Defeased Debentures from time to time converts its Debentures to Common Shares or other securities of the Corporation in accordance with Section 2.4(g) (in respect of Initial Debentures or the comparable provision of any other series of Debentures), Article 6 or any other provision of

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this Indenture, the Trustee shall upon receipt of a Written Direction of the Corporation return to the Corporation from time to time the proportionate amount of the trust funds or other trust property deposited with the Trustee pursuant to Section 9.5 in respect of the Defeased Debentures which is applicable to the Defeased Debentures so converted (which amount shall be based on the applicable principal amount of the Defeased Debentures being converted in relation to the aggregate outstanding principal amount of all the Defeased Debentures).

ARTICLE 10
SUCCESSORS

10.1     Corporation may Consolidate, Etc., Only on Certain Terms

(a)     The Corporation may not, without the consent of the holders, consolidate with or amalgamate or merge with or into any Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) or sell, convey, transfer or lease all or substantially all of the properties and assets of the Corporation to another Person (other than a directly or indirectly wholly-owned Subsidiary of the Corporation) unless:

(i)     the Person formed by such consolidation or into which the Corporation is amalgamated or merged, or the Person which acquires by sale, conveyance, transfer or lease all or substantially all of the properties and assets of the Corporation is a corporation, organized and existing under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof and such corporation (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the obligations of the Corporation under the Debentures and this Indenture and the performance or observance of every covenant and provision of this Indenture and the Debentures required on the part of the Corporation to be performed or observed and the conversion rights shall be provided for in accordance with Article 6, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Corporation or the continuing corporation resulting from the amalgamation of the Corporation with another corporation under the laws of Canada or any province or territory thereof) formed by such consolidation or into which the Corporation shall have been merged or by the Person which shall have acquired the Corporation's assets;

(ii)     after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

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(iii)     if the Corporation or the continuing corporation resulting from the amalgamation or merger of the Corporation with another Person under the laws of Canada or any province or territory thereof or the laws of the United States or any state thereof will not be the resulting, continuing or surviving corporation, the Corporation shall have, at or prior to the effective date of such consolidation, amalgamation, merger or sale, conveyance, transfer or lease, delivered to the Trustee an Officers' Certificate and an opinion of Counsel, each stating that such consolidation, merger or transfer complies with this Article and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article, and that all conditions precedent herein provided for relating to such transaction have been complied with.

(b)     For purposes of the foregoing, the sale, conveyance, transfer or lease (in a single transaction or a series of related transactions) of the properties or assets of one or more Subsidiaries of the Corporation (other than to the Corporation or another wholly-owned Subsidiary of the Corporation), which, if such properties or assets were directly owned by the Corporation, would constitute all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation.

10.2     Successor Substituted

Upon any consolidation of the Corporation or the Trustee with, or amalgamation or merger of the Corporation or the Trustee into, any other Person or any sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Corporation and its Subsidiaries, taken as a whole, in accordance with Section 10.1, the successor Person formed by such consolidation or into which the Corporation or the Trustee is amalgamated or merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation or the Trustee, as the case may be, under this Indenture with the same effect as if such successor Person had been named as the Corporation or the Trustee, as the case may be, herein, and thereafter, except in the case of a lease, and except for obligations the predecessor Person may have under a supplemental indenture entered into pursuant to Section 10.1(a)(iii), the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Debentures.

ARTICLE 11
MEETINGS OF DEBENTUREHOLDERS

11.1     Right to Convene Meeting

The Trustee or the Corporation may at any time and from time to time, and the Trustee shall, on receipt of a Written Direction of the Corporation or a written request signed by the holders of not less than 25% of the principal amount of the Debentures then outstanding and upon receiving funding and being indemnified to its reasonable satisfaction by the Corporation or by the Debentureholders signing such request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the

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Debentureholders. In the event of the Trustee failing, within 30 days after receipt of any such request and such funding of indemnity, to give notice convening a meeting, the Corporation or such Debentureholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Vancouver, British Columbia or at such other place as may be approved or determined by the Trustee.

11.2     Notice of Meetings

(a)     At least 21 days' notice of any meeting shall be given to the Debentureholders in the manner provided in Section 12.2 and a copy of such notice shall be sent by post to the Trustee, unless the meeting has been called by it. Such notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article. The accidental omission to give notice of a meeting to any holder of Debentures shall not invalidate any resolution passed at any such meeting. A holder may waive notice of a meeting either before or after the meeting.

(b)     If the business to be transacted at any meeting by Extraordinary Resolution or otherwise, or any action to be taken or power exercised by instrument in writing under Section 11.15, especially affects the rights of holders of Debentures of one or more series in a manner or to an extent differing in any material way from that in or to which the rights of holders of Debentures of any other series are affected (determined as provided in Sections 11.2(c) and (d)), then:

(i)     a reference to such fact, indicating each series of Debentures in the opinion of the Trustee so especially affected (hereinafter referred to as the "especially affected series") shall be made in the notice of such meeting, and in any such case the meeting shall be and be deemed to be and is herein referred to as a "Serial Meeting"; and

(ii)     the holders of Debentures of an especially affected series shall not be bound by any action taken at a Serial Meeting or by instrument in writing under Section 11.15 unless in addition to compliance with the other provisions of this Article 11:

(A)     at such Serial Meeting: (I) there are Debentureholders present in person or by proxy and representing at least 25% in principal amount of the Debentures then outstanding of such series, subject to the provisions of this Article 11 as to quorum at adjourned meetings; and (II) the resolution is passed by the affirmative vote of the holders of more than 50% (or in the case of an Extraordinary Resolution not less than 66-2/3%) of the principal amount of the Debentures of such series then outstanding voted on the resolution; or

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(B)     in the case of action taken or power exercised by instrument in writing under Section 11.15, such instrument is signed in one or more counterparts by the holders of not less than 66-2/3% in principal amount of the Debentures of such series then outstanding.

(c)     Subject to Section 11.2(d), the determination as to whether any business to be transacted at a meeting of Debentureholders, or any action to be taken or power to be exercised by instrument in writing under Section 11.15, especially affects the rights of the Debentureholders of one or more series in a manner or to an extent differing in any material way from that in or to which it affects the rights of Debentureholders of any other series (and is therefore an especially affected series) shall be determined by an opinion of Counsel, which shall be binding on all Debentureholders, the Trustee and the Corporation for all purposes hereof.

(d)     A proposal:

(i)     to extend the maturity of Debentures of any particular series or to reduce the principal amount thereof, the rate of interest or redemption premium thereon or to impair any conversion right thereof;

(ii)     to modify or terminate any covenant or agreement which by its terms is effective only so long as Debentures of a particular series are outstanding; or

(iii)     to reduce with respect to Debentureholders of any particular series any percentage stated in this Section 11.2 or Sections 11.4, 11.12 or 11.15;

shall be deemed to especially affect the rights of the Debentureholders of such series in a manner differing in a material way from that in which it affects the rights of holders of Debentures of any other series, whether or not a similar extension, reduction, modification or termination is proposed with respect to Debentures of any or all other series.

11.3     Chairman

Some person, who need not be a Debentureholder, nominated in writing by the Trustee shall be chairman of the meeting and if no person is so nominated, or if the person so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, a majority of the Debentureholders present in person or by proxy shall choose some person present to be chairman.

11.4     Quorum

Subject to the provisions of Section 11.12, at any meeting of the Debentureholders a quorum shall consist of Debentureholders present in person or by proxy and representing at least 25% in principal amount of the outstanding Debentures and, if the meeting is a Serial Meeting, at least 25% of the Debentures then outstanding of each especially affected series. If a quorum of the Debentureholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Debentureholders or pursuant to a request of the Debentureholders, shall be dissolved, but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day in which case it shall be

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adjourned to the next following Business Day thereafter) at the same time and place and no notice shall be required to be given in respect of such adjourned meeting. At the adjourned meeting, the Debentureholders present in person or by proxy shall, subject to the provisions of Section 11.12, constitute a quorum and may transact the business for which the meeting was originally convened notwithstanding that they may not represent 25% of the principal amount of the outstanding Debentures or of the Debentures then outstanding of each especially affected series. Any business may be brought before or dealt with at an adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless the required quorum is present at the commencement of business.

11.5     Power to Adjourn

The chairman of any meeting at which a quorum of the Debentureholders is present may, with the consent of the holders of a majority in principal amount of the Debentures represented thereat, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

11.6     Show of Hands

Every question submitted to a meeting shall, subject to Section 11.7, be decided in the first place by a majority of the votes given on a show of hands except that votes on Extraordinary Resolutions shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Debentures, if any, held by him.

11.7     Poll

On every Extraordinary Resolution, and on any other question submitted to a meeting when demanded by the chairman or by one or more Debentureholders or proxies for Debentureholders, a poll shall be taken in such manner and either at once or after an adjournment as the chairman shall direct. Questions other than Extraordinary Resolutions shall, if a poll be taken, be decided by the votes of the holders of a majority in principal amount of the Debentures and of each especially affected series, if applicable, represented at the meeting and voted on the poll.

11.8     Voting

On a show of hands every person who is present and entitled to vote, whether as a Debentureholder or as proxy for one or more Debentureholders or both, shall have one vote. On a poll each Debentureholder present in person or represented by a proxy duly appointed by an instrument in writing shall be entitled to one vote in respect of each $1,000 principal amount of Debentures of which he shall then be the holder. In the case of any Debenture denominated in a currency or currency unit other than Canadian dollars, the principal amount thereof for these purposes shall be computed in Canadian dollars on the basis of the conversion of the principal amount thereof at the applicable spot buying rate of exchange for such other currency or currency unit as reported by the Bank of Canada at the close of business on the Business Day

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preceding the meeting. Any fractional amounts resulting from such conversion shall be rounded to the nearest $100. A proxy need not be a Debentureholder. In the case of joint holders of a Debenture, any one of them present in person or by proxy at the meeting may vote in the absence of the other or others but in case more than one of them be present in person or by proxy, they shall vote together in respect of the Debentures of which they are joint holders.

11.9     Proxies

A Debentureholder may be present and vote at any meeting of Debentureholders by an authorized representative. The Corporation (in case it convenes the meeting) or the Trustee (in any other case) for the purpose of enabling the Debentureholders to be present and vote at any meeting without producing their Debentures, and of enabling them to be present and vote at any such meeting by proxy and of lodging instruments appointing such proxies at some place other than the place where the meeting is to be held, may from time to time make and vary such regulations as it shall think fit providing for and governing any or all of the following matters:

(a)     the form of the instrument appointing a proxy, which shall be in writing, and the manner in which the same shall be executed and the production of the authority of any person signing on behalf of a Debentureholder;

(b)     the deposit of instruments appointing proxies at such place as the Trustee, the Corporation or the Debentureholder convening the meeting, as the case may be, may, in the notice convening the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same must be deposited; and

(c)     the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed, faxed, cabled, telegraphed or sent by other electronic means before the meeting to the Corporation or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting.

Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as the holders of any Debentures, or as entitled to vote or be present at the meeting in respect thereof, shall be Debentureholders and persons whom Debentureholders have by instrument in writing duly appointed as their proxies.

11.10     Persons Entitled to Attend Meetings

The Corporation and the Trustee, by their respective officers and directors, the Auditors of the Corporation and the legal advisors of the Corporation, the Trustee or any Debentureholder may attend any meeting of the Debentureholders, but shall have no vote as such.

11.11     Powers Exercisable by Extraordinary Resolution

In addition to the powers conferred upon them by any other provisions of this Indenture or by law, a meeting of the Debentureholders shall have the following powers exercisable from

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time to time by Extraordinary Resolution, subject in the case of the matters in paragraphs (a), (b), (c), (d) and (1) to receipt of the prior approval of any exchange on which the Debentures are then listed:

(a)     power to authorize the Trustee to grant extensions of time for payment of any principal, premium or interest on the Debentures, whether or not the principal, premium, or interest, the payment of which is extended, is at the time due or overdue;

(b)      power to sanction any modification, abrogation, alteration, compromise or arrangement of the rights of the Debentureholders or the Trustee against the Corporation, or against its property, whether such rights arise under this Indenture or the Debentures or the Security Documents or otherwise;

(c)     power to assent to any modification of or change in or addition to or omission from the provisions contained in this Indenture or any Debenture which shall be agreed to by the Corporation and consented to by the Trustee, relying on an opinion of Counsel, such consent not to be unreasonably withheld, to authorize the Trustee to concur in and execute any indenture supplemental hereto embodying any modification, change, addition or omission, and to consent to the assignment by the Corporation of its rights or obligations pursuant to any Security Document;

(d)     power to sanction any scheme for the reconstruction, reorganization or recapitalization of the Corporation or for the consolidation, amalgamation, arrangement, combination or merger of the Corporation with any other Person or for the sale, leasing, transfer or other disposition of all or substantially all of the undertaking, property and assets of the Corporation or any part thereof, provided that no such sanction shall be necessary in respect of any such transaction if the provisions of Section 10.1 shall have been complied with;

(e)     power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Indenture in any manner specified in any such Extraordinary Resolution or to refrain from exercising any such power, right, remedy or authority;

(f)     power to waive, and direct the Trustee to waive, any default hereunder and/or cancel any declaration made by the Trustee pursuant to Section 8.1 either unconditionally or upon any condition specified in such Extraordinary Resolution;

(g)     power to restrain any Debentureholder from taking or instituting any suit, action or proceeding for the purpose of enforcing payment of the principal, premium or interest on the Debentures, or for the execution of any trust or power hereunder;

(h)     power to direct any Debentureholder who, as such, has brought any action, suit or proceeding to stay or discontinue or otherwise deal with the same upon payment, if the taking of such suit, action or proceeding shall have been permitted by Section 8.5, of the costs, charges and expenses reasonably and properly incurred by such Debentureholder in connection therewith;

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(i)     power to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation;

(j)     power to appoint a committee with power and authority (subject to such limitations, if any, as may be prescribed in the resolution) to exercise, and to direct the Trustee to exercise, on behalf of the Debentureholders, such of the powers of the Debentureholders as are exercisable by Extraordinary Resolution or other resolution as shall be included in the resolution appointing the committee. The resolution making such appointment may provide for payment of the expenses and disbursements of and compensation to such committee. Such committee shall consist of such number of persons as shall be prescribed in the resolution appointing it and the members need not be themselves Debentureholders. Every such committee may elect its chairman and may make regulations respecting its quorum, the calling of its meetings, the filling of vacancies occurring in its number and its procedure generally. Such regulations may provide that the committee may act at a meeting at which a quorum is present or may act by minutes signed by the number of members thereof necessary to constitute a quorum. All acts of any such committee within the authority delegated to it shall be binding upon all Debentureholders. Neither the committee nor any member thereof shall be liable for any loss arising from or in connection with any action taken or omitted to be taken by them in good faith;

(k)     power to remove the Trustee from office and to appoint a new Trustee or Trustees provided that no such removal shall be effective unless and until a new Trustee or Trustees shall have become bound by this Indenture;

(l)     power to sanction the exchange of the Debentures for or the conversion thereof into shares, bonds, debentures or other securities or obligations of the Corporation or of any other Person formed or to be formed;

(m)     power to authorize the distribution in specie of any shares or securities received pursuant to a transaction authorized under the provisions of Section 11.11(l); and

(n)     power to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Debentureholders or by any committee appointed pursuant to Section 11.11(j).

Except as otherwise provided in this Indenture, all other powers of and matters to be determined by the Debentureholders may be exercised or determined from time to time by Ordinary Resolution.

The expression "Ordinary Resolution" when used in this Indenture means, except as otherwise provided in this Indenture, a resolution proposed to be passed as an ordinary resolution at a meeting of Debentureholders duly convened for the purpose and held in accordance with the provisions of this Article 11 at which a quorum of the Debentureholders is present and passed by the affirmative votes of Debentureholders present in person or represented by proxy at the meeting who hold more than 50% of the principal amount of the Debentures voted in respect of such resolution

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Notwithstanding the foregoing provisions of this Section 11.11 none of such provisions shall in any manner allow or permit any amendment, modification, abrogation or addition to the provisions of Article 5 which could reasonably be expected to detrimentally affect the rights, remedies or recourse of the priority of the Senior Creditors.

11.12     Meaning of "Extraordinary Resolution"

(a)     The expression "Extraordinary Resolution" when used in this Indenture means, subject as hereinafter in this Article provided, a resolution proposed to be passed as an Extraordinary Resolution at a meeting of Debentureholders (including an adjourned meeting) duly convened for the purpose and held in accordance with the provisions of this Article at which the holders of not less than 25% of the principal amount of the Debentures then outstanding, and if the meeting is a Serial Meeting, at which holders of not less than 25% of the principal amount of the Debentures then outstanding of each especially affected series, are present in person or by proxy and passed by the favourable votes of the holders of not less than 66-2/3% of the principal amount of the Debentures, and if the meeting is a Serial Meeting by the affirmative vote of the holders of not less than 66-2/3% of each especially affected series, in each case present or represented by proxy at the meeting and voted upon on a poll on such resolution.

(b)     If, at any such meeting, the holders of not less than 25% of the principal amount of the Debentures then outstanding and, if the meeting is a Serial Meeting, 25% of the principal amount of the Debentures then outstanding of each especially affected series, in each case are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by or on the requisition of Debentureholders, shall be dissolved but in any other case it shall stand adjourned to such date, being not less than 14 nor more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 10 days' notice shall be given of the time and place of such adjourned meeting in the manner provided in Section 12.2. Such notice shall state that at the adjourned meeting the Debentureholders present in person or by proxy shall form a quorum. At the adjourned meeting the Debentureholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed thereat by the affirmative vote of holders of not less than 66-2/3% of the principal amount of the Debentures and, if the meeting is a Serial Meeting, by the affirmative vote of the holders of not less than 66-2/3% of the principal amount of the Debentures of each especially affected series, in each case present or represented by proxy at the meeting voted upon on a poll shall be an Extraordinary Resolution within the meaning of this Indenture, notwithstanding that the holders of not less than 25% in principal amount of the Debentures then outstanding, and if the meeting is a Serial Meeting, holders of not less than 25% of the principal amount of the Debentures then outstanding of each especially affected series, are not present in person or by proxy at such adjourned meeting.

(c)     Votes on an Extraordinary Resolution shall always be given on a poll and no demand for a poll on an Extraordinary Resolution shall be necessary.

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11.13     Powers Cumulative

Any one or more of the powers in this Indenture stated to be exercisable by the Debentureholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers from time to time shall not be deemed to exhaust the rights of the Debentureholders to exercise the same or any other such power or powers thereafter from time to time.

11.14     Minutes

Minutes of all resolutions and proceedings at every meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee at the expense of the Corporation, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Debentureholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made, shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings taken thereat to have been duly passed and taken.

11.15     Instruments in Writing

All actions which may be taken and all powers that may be exercised by the Debentureholders at a meeting held as hereinbefore in this Article provided may also be taken and exercised by the holders of 66-2/3% of the principal amount of all the outstanding Debentures and, if the meeting at which such actions might be taken would be a Serial Meeting, by the holders of 66-2/3% of the principal amount of the Debentures then outstanding of each especially affected series, by an instrument in writing signed in one or more counterparts and the expression "Extraordinary Resolution" when used in this Indenture shall include an instrument so signed.

11.16     Binding Effect of Resolutions

Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Article at a meeting of Debentureholders shall be binding upon all the Debentureholders, whether present at or absent from such meeting, and every instrument in writing signed by Debentureholders in accordance with Section 11.15 shall be binding upon all the Debentureholders, whether signatories thereto or not, and each and every Debentureholder and the Trustee (subject to the provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.

11.17     Evidence of Rights Of Debentureholders

(a)     Any request, direction, notice, consent or other instrument which this Indenture may require or permit to be signed or executed by the Debentureholders may be in any number of concurrent instruments of similar tenor signed or executed by such Debentureholders.

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(b)     The Trustee may, in its discretion, require proof of execution in cases where it deems proof desirable and may accept such proof as it shall consider proper.

11.18     Concerning Serial Meetings

If in the opinion of Counsel any business to be transacted at any meeting, or any action to be taken or power to be exercised by instrument in writing under Section 11.15, does not adversely affect the rights of the holders of Debentures of one or more series, the provisions of this Article 11 shall apply as if the Debentures of such series were not outstanding and no notice of any such meeting need be given to the holders of Debentures of such series. Without limiting the generality of the foregoing, a proposal to modify or terminate any covenant or agreement which is effective only so long as Debentures of a particular series are outstanding shall be deemed not to adversely affect the rights of the holders of Debentures of any other series.

ARTICLE 12
NOTICES

12.1     Notice to Corporation

Any notice to the Corporation under the provisions of this Indenture shall be valid and effective if delivered to the Corporation at: 4420 Chatterton Way, Suite 305, Victoria, British Columbia, Canada, V8X 5ZJ2, Attention: Chief Financial Officer, and a copy delivered to McMillan LLP, 1055 West Georgia Street, Suite 1500, PO Box 11117, Vancouver, British Columbia, Canada, V6E 4N7, Attention: Thomas Deutsch, or if given by registered letter, postage prepaid, to such offices and so addressed and if mailed, shall be deemed to have been effectively given three days following the mailing thereof. The Corporation may from time to time notify the Trustee in writing of a change of address which thereafter, until changed by like notice, shall be the address of the Corporation for all purposes of this Indenture.

12.2     Notice to Debentureholders

All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the holders thereof if sent by first class mail, postage prepaid, by letter or circular addressed to such holders at their post office addresses appearing in any of the registers hereinbefore mentioned and shall be deemed to have been effectively given three days following the day of mailing. Accidental error or omission in giving notice or accidental failure to mail notice to any Debentureholder or the inability of the Corporation to give or mail any notice due to anything beyond the reasonable control of the Corporation shall not invalidate any action or proceeding founded thereon.

If any notice given in accordance with the foregoing paragraph would be unlikely to reach the Debentureholders to whom it is addressed in the ordinary course of post by reason of an interruption in mail service, whether at the place of dispatch or receipt or both, the Corporation shall give such notice by publication at least once in the city of Vancouver, British Columbia and each such publication to be made in a daily newspaper of general circulation in the designated city.

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Any notice given to Debentureholders by publication shall be deemed to have been given on the day on which publication shall have been effected at least once in each of the newspapers in which publication was required.

All notices with respect to any Debenture may be given to whichever one of the holders thereof (if more than one) is named first in the registers hereinbefore mentioned, and any notice so given shall be sufficient notice to all holders of any persons interested in such Debenture.

12.3     Notice to Trustee

Any notice to the Trustee under the provisions of this Indenture shall be valid and effective if delivered to the Trustee at: 510 Burrard Street, 2^nd Floor, Vancouver, British Columbia, Canada, V6C 3B9, Attention: Manager, Corporate Trust, Facsimile No: 604-661-9549 or if given by registered letter, postage prepaid, to such office and so addressed and, if mailed, shall be deemed to have been effectively given three days following the mailing thereof.

12.4     Mail Service Interruption

If by reason of any interruption of mail service, actual or threatened, any notice to be given to the Trustee would reasonably be unlikely to reach its destination by the time notice by mail is deemed to have been given pursuant to Section 12.3, such notice shall be valid and effective only if delivered at the appropriate address in accordance with Section 12.3.

ARTICLE 13
CONCERNING THE TRUSTEE

13.1     No Conflict of Interest

The Trustee represents to the Corporation that at the date of execution and delivery by it of this Indenture there exists no material conflict of interest between the role of the Trustee as a fiduciary hereunder and its role in any other capacity but if, notwithstanding the provisions of this Section 13.1, such a material conflict of interest exists, or hereafter arises, the validity and enforceability of this Indenture, and the Debentures issued hereunder, shall not be affected in any manner whatsoever by reason only that such material conflict of interest exists or arises but the Trustee shall, within 30 days after ascertaining that it has a material conflict of interest, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 13.2. The Debentureholders acknowledge that the Trustee is also the trustee under two other indentures with the Corporation dated September 20, 2012 and February 25, 2013 and confirm that no inherent conflict exists as a result of the Trustee acting in such capacity.

13.2     Replacement of Trustee

The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder by giving to the Corporation 90 days' notice in writing or such shorter notice as the Corporation may accept as sufficient. If at any time a material conflict of interest exists in the Trustee's role as a fiduciary hereunder the Trustee shall, within 30 days after ascertaining that such a material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in this Section 13.2. The validity and enforceability of this Indenture and of the Debentures issued hereunder shall not be affected in

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any manner whatsoever by reason only that such a material conflict of interest exists. In the event of the Trustee resigning or being removed or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new Trustee unless a new Trustee has already been appointed by the Debentureholders. Failing such appointment by the Corporation, the retiring Trustee or any Debentureholder may apply to an British Columbia Court, on such notice as such Court may direct at the Corporation's expense, for the appointment of a new Trustee but any new Trustee so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Debentureholders and the appointment of such new Trustee shall be effective only upon such new Trustee becoming bound by this Indenture. Any new Trustee appointed under any provision of this Section 13.2 shall be a corporation authorized to carry on the business of a trust company in all of the Provinces of Canada. On any new appointment the new Trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee.

Any company into which the Trustee may be merged or, with or to which it may be consolidated, amalgamated or sold, or any company resulting from any merger, consolidation, sale or amalgamation to which the Trustee shall be a party, shall be the successor trustee under this Indenture without the execution of any instrument or any further act. Nevertheless, upon the written request of the successor Trustee or of the Corporation, the Trustee ceasing to act shall execute and deliver an instrument assigning and transferring to such successor Trustee, upon the trusts herein expressed, all the rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver all property and money held by such Trustee to the successor Trustee so appointed in its place.

Should any deed, conveyance or instrument in writing from the Corporation be required by any new Trustee for more fully and certainly vesting in and confirming to it such estates, properties, rights, powers and trusts, then any and all such deeds, conveyances and instruments in writing shall on request of said new Trustee, be made, executed, acknowledged and delivered by the Corporation.

13.3     Duties of Trustee

In the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Trustee shall act honestly and in good faith with a view to the best interests of the Debentureholders and exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

13.4     Reliance Upon Declarations, Opinions, etc.

In the exercise of its rights, duties and obligations hereunder the Trustee may, if acting in good faith, rely, as to the truth of the statements and accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports or certificates furnished pursuant to any covenant, condition or requirement of this Indenture or required by the Trustee to be furnished to it in the exercise of its rights and duties hereunder, if the Trustee examines such statutory declarations, opinions, reports or certificates and determines that they comply with Section 13.5, if applicable, and with any other applicable requirements of this Indenture. The Trustee may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Without restricting the foregoing, the Trustee may rely on an opinion of Counsel satisfactory to the Trustee notwithstanding that it is delivered by a solicitor or firm which acts as solicitors for the Corporation.

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13.5     Evidence and Authority to Trustee, Opinions, etc.

The Corporation shall furnish to the Trustee evidence of compliance with the conditions precedent provided for in this Indenture relating to any action or step required or permitted to be taken by the Corporation or the Trustee under this Indenture or as a result of any obligation imposed under this Indenture, including without limitation, the certification and delivery of Debentures hereunder, the satisfaction and discharge of this Indenture and the taking of any other action to be taken by the Trustee at the request of or on the application of the Corporation, forthwith if and when (a) such evidence is required by any other Section of this Indenture to be furnished to the Trustee in accordance with the terms of this Section 13.5, or (b) written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice.

Such evidence shall consist of:

(a)     a certificate made by any two officers or directors of the Corporation, stating that any such condition precedent has been complied with in accordance with the terms of this Indenture;

(b)     in the case of a condition precedent compliance with which is, by the terms of this Indenture, made subject to review or examination by a solicitor, an opinion of Counsel that such condition precedent has been complied with in accordance with the terms of this Indenture; and

(c)     in the case of any such condition precedent compliance with which is subject to review or examination by auditors or accountants, an opinion or report of the Auditors of the Corporation whom the Trustee for such purposes hereby approves, that such condition precedent has been complied with in accordance with the terms of this Indenture.

Whenever such evidence relates to a matter other than the certificates and delivery of Debentures and the satisfaction and discharge of this Indenture, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, auditor, accountant, engineer or appraiser or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a trustee, officer or employee of the Corporation it shall be in the form of a statutory declaration. Such evidence shall be, so far as appropriate, in accordance with the immediately preceding paragraph of this Section.

Each statutory declaration, certificate, opinion or report with respect to compliance with a condition precedent provided for in the Indenture shall include (a) a statement by the person giving the evidence that he has read and is familiar with those provisions of this Indenture relating to the condition precedent in question, (b) a brief statement of the nature and scope of the examination or investigation upon which the statements or opinions contained in such evidence are based, (c) a statement that, in the belief of the person giving such evidence, he has made such examination or investigation as is necessary to enable him to make the statements or give the opinions contained or expressed therein, and (d) a statement whether in the opinion of such person the conditions precedent in question have been complied with or satisfied.

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The Corporation shall furnish or cause to be furnished to the Trustee at any time if the Trustee reasonably so requires, its certificate that the Corporation has complied with all covenants, conditions or other requirements contained in this Indenture, the non-compliance with which would, with the giving of notice or the lapse of time, or both, or otherwise, constitute an Event of Default, or if such is not the case, specifying the covenant, condition or other requirement which has not been complied with and giving particulars of such non-compliance. The Corporation shall, whenever the Trustee so requires, furnish the Trustee with evidence by way of statutory declaration, opinion, report or certificate as specified by the Trustee as to any action or step required or permitted to be taken by the Corporation or as a result of any obligation imposed by this Indenture.

13.6     Officers' Certificates Evidence

Except as otherwise specifically provided or prescribed by this Indenture, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, the Trustee, if acting in good faith, may rely upon an Officers' Certificate.

13.7     Experts, Advisers and Agents

The Trustee may:

(a)     employ or retain and act and rely on the opinion or advice of or information obtained from any solicitor, auditor, valuer, engineer, surveyor, appraiser or other expert, whether obtained by the Trustee or by the Corporation, or otherwise, and shall not be liable for acting, or refusing to act, in good faith on any such opinion or advice and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; and

(b)     employ such agents and other assistants as it may reasonably require for the proper discharge of its duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the trusts hereof and any solicitors employed or consulted by the Trustee may, but need not be, solicitors for the Corporation.

13.8     Trustee May Deal in Debentures

Subject to Sections 13.1 and 13.3, the Trustee may, in its personal or other capacity, buy, sell, lend upon and deal in the Debentures and generally contract and enter into financial transactions with the Corporation or otherwise, without being liable to account for any profits made thereby.

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13.9     Investment of Monies Held by Trustee

Unless otherwise provided in this Indenture, any monies held by the Trustee, which, under the trusts of this Indenture, may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee, may be invested and reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of British Columbia, trustees are authorized to invest trust monies, provided that such securities are expressed to mature within two years or such shorter period selected to facilitate any payments expected to be made under this Indenture, after their purchase by the Trustee, and unless and until the Trustee shall have declared the principal of and interest on the Debentures to be due and payable, the Trustee shall so invest such monies at the Written Direction of the Corporation given in a reasonably timely manner. Pending the investment of any monies as hereinbefore provided, such monies may be deposited in the name of the Trustee in any chartered bank of Canada or, with the consent of the Corporation, in the deposit department of the Trustee or any other loan or trust company authorized to accept deposits under the laws of Canada or any Province thereof at the rate of interest, if any, then current on similar deposits.

Unless and until the Trustee shall have declared the principal of and interest on the Debentures to be due and payable, the Trustee shall pay over to the Corporation all interest received by the Trustee in respect of any investments or deposits made pursuant to the provisions of this Section.

13.10     Trustee Not Ordinarily Bound

Except as provided in Section 8.2 and as otherwise specifically provided herein, the Trustee shall not, subject to Section 13.3, be bound to give notice to any person of the execution hereof, nor to do, observe or perform or see to the observance or performance by the Corporation of any of the obligations herein imposed upon the Corporation or of the covenants on the part of the Corporation herein contained, nor in any way to supervise or interfere with the conduct of the Corporation's business, unless the Trustee shall have been required to do so in writing by the holders of not less than 25% of the aggregate principal amount of the Debentures then outstanding or by any Extraordinary Resolution of the Debentureholders passed in accordance with the provisions contained in Article 11, and then only after it shall have been funded and indemnified to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all costs, charges, damages and expenses which it may incur by so doing.

13.11     Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts and powers of this Indenture or otherwise in respect of the premises.

13.12     Trustee Not Bound to Act on Corporation's Request

Except as in this Indenture otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of the Corporation until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.

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13.13     Conditions Precedent to Trustee's Obligations to Act Hereunder

The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing the rights of the Trustee and of the Debentureholders hereunder shall be conditional upon the Debentureholders furnishing when required by notice in writing by the Trustee, sufficient funds to commence or continue such act, action or proceeding and indemnity reasonably satisfactory to the Trustee to protect and hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified as aforesaid.

The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding require the Debentureholders at whose instance it is acting to deposit with the Trustee the Debentures held by them for which Debentures the Trustee shall issue receipts.

13.14    Authority to Carry on Business

The Trustee represents to the Corporation that at the date of execution and delivery by it of this Indenture it is authorized to carry on the business of a trust company in each of the provinces of Canada but if, notwithstanding the provisions of this Section 13.4, it ceases to be so authorized to carry on business, the validity and enforceability of this Indenture and the securities issued hereunder shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any of the provinces of Canada, either become so authorized or resign in the manner and with the effect specified in Section 13.2.

13.15     Compensation and Indemnity

(a)     The Corporation shall pay to the Trustee from time to time compensation for its services hereunder as agreed separately by the Corporation and the Trustee, and shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of its duties under this Indenture (including the reasonable and documented compensation and disbursements of its Counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee under this Indenture shall be finally and fully performed. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust.

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(b)     The Corporation hereby indemnifies and saves harmless the Trustee and its directors, officers and employees from and against any and all loss, damages, charges, expenses, claims, demands, actions or liability whatsoever which may be brought against the Trustee or which it may suffer or incur as a result of or arising out of the performance of its duties and obligations hereunder, or under any Security Documents, save only in the event of the gross negligence, wilful misconduct or fraud of the Trustee. This indemnity will survive the termination or discharge of this Indenture and the resignation or removal of the Trustee. The Trustee shall notify the Corporation promptly of any claim for which it may seek indemnity. The Corporation shall defend the claim and the Trustee shall co-operate in the defence. The Trustee may have separate Counsel and the Corporation shall pay the reasonable fees and expenses of such Counsel. The Corporation need not pay for any settlement made without its consent, which consent must not be unreasonably withheld. This indemnity shall survive the resignation or removal of the Trustee or the discharge of this Indenture. Without limiting the generality of the foregoing and for greater certainty, the indemnity provided by the Corporation in favour of the Trustee pursuant to this Section 13.15(b) includes an indemnity in respect of any interest payments that are required to be made to non-residents of Canada pursuant to Section 2.15.

(c)     The Corporation need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through gross negligence, wilful misconduct or fraud.

13.16     Acceptance of Trust

The Trustee hereby accepts the trusts in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Debentureholders, subject to all the terms and conditions herein set forth.

13.17     Third Party Interests

Each party to this Indenture (in this paragraph referred to as a "representing party") hereby represents to the Trustee that any account to be opened by, or interest to held by, the Trustee in connection with this Indenture, for or to the credit of such representing party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such representing party hereby agrees to complete, execute and deliver forthwith to the Trustee a declaration, in the Trustee's prescribed form or in such other form as may be satisfactory to it, as to the particulars of such third party.

13.18     Privacy Laws

The parties acknowledge that the Trustee may, in the course of providing services hereunder, collect or receive financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:

(a)     to provide the services required under this Indenture and other services that may be requested from to time;

(b)     to help the Trustee manage its servicing relationships with such individuals;

(c)     to meet the Trustee's legal and regulatory requirements; and

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(d)     if Social Insurance Numbers are collected by the Trustee, to perform tax reporting and to assist in verification of any individual's identity for security purposes.

Each party acknowledges and agrees that the Trustee may receive, collect, use and disclose personal information provided to it or acquired by it in the course of this Indenture for the purposes described above and, generally, in the manner and on the terms described in its Privacy Code, which the Trustee shall make available on its website or upon request, including revisions thereto. The Trustee may transfer some of that personal information to service providers in the United States for data processing and/or storage. Further, each party agrees that it shall not provide or cause to be provided to the Trustee any personal information relating to an individual who is not a party to this Indenture unless that parry has assured itself that such individual understands and has consented to the aforementioned uses and discloses.

13.19     Force Majeure

Neither the Trustee nor the Corporation shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.

13.20     Anti-Money Laundering

The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment and acting reasonably, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment and acting reasonably, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days' prior written notice sent to the Corporation or any shorter period of time as agreed to by the Corporation provided that:

(a)     the Trustee's written notice shall describe the circumstances of such non-compliance; and

(b)     if such circumstances are rectified to the Trustee's satisfaction within such 10-day period, then such resignation shall not be effective.

ARTICLE 14
SUPPLEMENTAL INDENTURES

14.1     Supplemental Indentures

From time to time the Trustee and, when authorized by a resolution of the directors of Corporation, the Corporation, may, and they shall when required by this Indenture, execute, acknowledge and deliver by their proper officers deeds or indentures supplemental hereto which thereafter shall form part hereof, for any one or more of the following purposes, in each case, subject to the approval of the TSXV, if required:

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(a)     providing for the issuance of Additional Debentures under this Indenture;

(b)     adding to the covenants of the Corporation herein contained for the protection of the Debentureholders, or of the Debentures of any series, or providing for events of default, in addition to those herein specified;

(c)     making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder, including the making of any modifications in the form of the Debentures which do not affect the substance thereof and which in the opinion of the Trustee relying on an opinion of Counsel will not be prejudicial to the interests of the Debentureholders;

(d)     evidencing the succession, or successive successions, of others to the Corporation and the covenants of and obligations assumed by any such successor in accordance with the provisions of this Indenture;

(e)     giving effect to any Extraordinary Resolution passed as provided in Article 11; and

(f)     for any other purpose not inconsistent with the terms of this Indenture.

Unless the supplemental indenture requires the consent or concurrence of Debentureholders or the holders of a particular series of Debentures, as the case may be, by Extraordinary Resolution, the consent or concurrence of Debentureholders or the holders of a particular series of Debentures, as the case may be, shall not be required in connection with the execution, acknowledgement or delivery of a supplemental indenture. The Corporation and the Trustee may amend any of the provisions of this Indenture related to matters of United States law or the issuance of Debentures into the United States in order to ensure that such issuances can be made in accordance with applicable law in the United States without the consent or approval of the Debentureholders. Further, the Corporation and the Trustee may without the consent or concurrence of the Debentureholders or the holders of a particular series of Debentures, as the case may be, by supplemental indenture or otherwise, make any changes or corrections in this Indenture which it shall have been advised by Counsel are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or clerical omissions or mistakes or manifest errors contained herein or in any indenture supplemental hereto or any Written Direction of the Corporation provided for the issue of Debentures, providing that in the opinion of the Trustee (relying upon an opinion of Counsel) the rights of the Debentureholders are in no way prejudiced thereby.

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ARTICLE 15
EXECUTION AND FORMAL DATE

15.1     Execution

This Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.

15.2     Formal Date

For the purpose of convenience this Indenture may be referred to as bearing the formal date of July 26, 2013 irrespective of the actual date of execution hereof.

[The remainder of this page is intentionally blank.]

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IN WITNESS WHEREOF the parties hereto have executed this Convertible Debenture Indenture by the hands of their proper officers in that behalf.

Crailar Technologies Inc.

By:  /s/ Ken Barker
Name: Ken Barker
Title: CEO

COMPUTERSHARE TRUST COMPANY OF CANADA

By:  /s/ Gabriel Ducharme
Name: Gabriel Ducharme
Title: Corporate Trust Officer

By:  /s/ Derek Lim
Name: Derek Lim
Title: Associate Trust Officer

SCHEDULE A - FORM OF DEBENTURE

[GLOBAL DEBENTURE LEGEND]

THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREIN REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE TRANSFERRED TO OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO Crailar Technologies Inc. (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.

TRANSFERS OF THIS DEBENTURE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CDS & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.

[INITIAL DEBENTURES LEGENDS]

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE  , 2013.

WITHOUT PRIOR WRITTEN APPROVAL OF 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 TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL  , 2013.

[U.S. LEGEND (RULE 506) - TO BE INCLUDED ON ALL INITIAL DEBENTURES ISSUED TO U.S. PERSONS OR IN THE UNITED STATES PURSUANT TO RULE 506]

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. Securities Act"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

[U.S. LEGEND (REGULATION S) - TO BE INCLUDED ON ALL INITIAL DEBENTURES ISSUED OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS PURSUANT TO REGULATION S]

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

THIS CONVERTIBLE DEBENTURE MAY NOT BE CONVERTED BY OR FOR THE ACCOUNT OR BENEFIT OF A "U.S. PERSON" OR A PERSON IN THE UNITED STATES UNLESS THE CONVERTIBLE DEBENTURE AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE, OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

No. [l ]

Crailar Technologies Inc.

(A corporation formed under the laws of British Columbia)

10% CONVERTIBLE SECURED DEBENTURES

Crailar Technologies Inc. (the "Corporation") for value received hereby acknowledges itself indebted and, subject to the provisions of the Debenture Indenture (the "Indenture") dated as of July u , 2013 between the Corporation and Computershare Trust Company of Canada (the "Trustee"), promises to pay to the registered holder hereof on July 26, 2016 or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture (any such date, the "Maturity Date") the principal sum of [ ] Dollars [$ ] in lawful money of Canada on presentation and surrender of this Initial Debenture at the main branch of the Trustee in Vancouver, British Columbia in accordance with the terms of the Indenture and, subject as hereinafter provided, to pay interest on the principal amount hereof from the date hereof, or from the last Interest Payment Date to which interest shall have been paid or made available for payment hereon, whichever is later, at the rate of 10% per annum (based on a 365-day year and the actual number of days elapsed in that period), in like money, in arrears in equal (with the exception of the first interest payment which will include interest from July 26, 2013 as set forth below, and the last interest payment, which will include interest from March 31, 2016 to July 26, 2016, if not redeemed or converted prior to the Maturity Date) semi-annual instalments on March 31 and September 30 in each year commencing on September 30, 2013 and the last payment (representing interest payable from the last Interest Payment Date to, but excluding, the Maturity Date) to fall due on the Maturity Date and, should the Corporation at any time make default in the payment of any principal, premium, if any, or interest, to pay interest on the amount in default at the same rate, in like money and on the same dates. For certainty, the first interest payment will include interest accrued from July 26, 2013 to, but excluding September 30, 2013. For the purposes of disclosure under the Interest Act (Canada), whenever interest is computed under this Initial Debenture on the basis of a year (the "deemed year") which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate by multiplying such rate of interest by the actual number of days in such calendar year of calculation and dividing it by the number of days in the deemed year.

This Initial Debenture is one of the 10% Convertible Secured Debentures (referred to herein as the "Initial Debentures") of the Corporation issued or issuable in one or more series under the provisions of the Indenture. The Initial Debentures authorized for issue immediately are limited to an aggregate principal amount of $5,000,000 in lawful money of Canada. Reference is hereby expressly made to the Indenture for a description of the terms and conditions upon which the Initial Debentures are or are to be issued and held and the rights and remedies of the holders of the Initial Debentures and of the Corporation and of the Trustee, all to the same effect as if the provisions of the Indenture were herein set forth to all of which provisions the holder of this Initial Debenture by acceptance hereof assents.

The Initial Debentures are issuable only in denominations of $1,000 and integral multiples thereof. Upon compliance with the provisions of the Indenture, Debentures of any denomination may be exchanged for an equal aggregate principal amount of Debentures in any other authorized denomination or denominations.

Any part, being $1,000 or an integral multiple thereof, of the principal of this Initial Debenture, provided that the principal amount of this Initial Debenture is in a denomination in excess of $1,000, is convertible, at the option of the holder hereof, upon surrender of this Initial Debenture at the principal office of the Trustee in Vancouver, British Columbia, at any time prior to the close of business on the Maturity Date or, if this Initial Debenture is called for redemption on or prior to such date, then, to the extent so called for redemption, up to but not after the close of business on the last Business Day immediately preceding the date specified for redemption of this Initial Debenture, into Common Shares (without adjustment for interest accrued hereon or for dividends or distributions on Common Shares issuable upon conversion) at a conversion price of $1.25 (the "Conversion Price") per Common Share, being a rate of 800 Common Shares for each $1,000 principal amount of Initial Debentures, all subject to the terms and conditions and in the manner set forth in the Indenture. No Initial Debentures may be converted during the ten Business Days preceding and including March 31 and September 30 in each year, commencing September 30, 2013, as the registers of the Trustee will be closed during such periods. The Indenture makes provision for the adjustment of the Conversion Price in the events therein specified. No fractional Common Shares will be issued on any conversion but in lieu thereof, the Corporation will satisfy such fractional interest by a cash payment equal to the market price of such fractional interest determined in accordance with the Indenture. Holders converting Debentures shall receive accrued and unpaid interest thereon from the period of the last Interest Payment Date prior to the Date of Conversion to the date that is one Business Day prior to the Date of Conversion. If a Debenture is surrendered for conversion on an Interest Payment Date or during the five preceding Business Days, the person or persons entitled to receive Common Shares in respect of the Debentures so surrendered for conversion shall not become the holder or holders of record of such Common Shares until the Business Day following such Interest Payment Date.

The holder acknowledges that the Debenture may not be converted by the holder by or for the account or benefit of a U.S. Person or a person in the United States unless the Debenture and Common Shares issuable upon conversion of the Debenture are registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, or unless an exemption is available from the registration requirements of such laws, and the holder has furnished an opinion of counsel satisfactory to the Corporation to such effect; provided that in the case of a holder who delivers the Certification of U.S. Purchaser attached as Schedule "F" to the Secured Convertible Debenture Subscription Agreement in connection with its purchase of the Debenture pursuant to this private placement, the holder will not be required to deliver an opinion of counsel in connection with the due conversion of the Debenture by the holder provided that no commission or other remuneration is paid or given directly or indirectly for soliciting such conversion.

This Initial Debenture may be redeemed at the option of the Corporation on the terms and conditions set out in the Indenture at the redemption price therein and herein set out provided that this Initial Debenture is not redeemable before July 26, 2015. On and after July 26, 2015 and at any time prior to the Maturity Date of the Initial Debentures, the Initial Debentures are redeemable at the option of the Corporation at a price equal to the principal amount of the Initial Debentures plus accrued and unpaid interest thereon up to (but excluding) the date specified for redemption of the Initial Debentures and otherwise on the terms and conditions described in the Indenture.

In the event the Corporation completes an aggregate of $20,000,000 or more in any equity financing(s) between the date of issue of the Initial Debentures and the Maturity Date, the Corporation shall redeem the Initial Debentures on the terms and conditions set out in the Indenture at the redemption price equal to the principal amount of the Initial Debentures plus accrued and unpaid interest thereon up to (but excluding) the date specified for redemption of the Initial Debentures.

The indebtedness evidenced by this Initial Debenture, and by all other Initial Debentures now or hereafter certified and delivered under the Indenture, is a direct unsecured obligation of the Corporation. Each Debenture of the same series of Debentures will rank pari passu with each other Debenture of the same series (regardless of their actual date or terms of issue) and, subject to statutory preferred exceptions, with all other present and future indebtedness of the Corporation, other than Senior Indebtedness as set out in the Indenture.

The indebtedness evidenced by this Initial Debenture, and by all other Initial Debentures now or hereafter certified and delivered under the Indenture shall be guaranteed by Crailar US with recourse under the guarantee limited to certain Secured Assets of Crailar US as set out in the Indenture. Crailar US shall provide a security interest over the Secured Assets as security for its guarantee obligations which shall rank in priority to all other indebtedness of Crailar US except statutory preferred exceptions in accordance with the provisions of the Indenture.

The principal hereof may become or be declared due and payable before the stated maturity in the events, in the manner, with the effect and at the times provided in the Indenture.

The Indenture contains provisions making binding upon all holders of Debentures outstanding thereunder (or in certain circumstances specific series of Debentures) resolutions passed at meetings of such holders held in accordance with such provisions and instruments signed by the holders of a specified majority of Debentures outstanding (or specific series), which resolutions or instruments may have the effect of amending the terms of this Initial Debenture or the Indenture.

The Indenture contains provisions disclaiming any personal liability on the part of holders of Common Shares and officers, directors and employees of the Corporation in respect of any obligation or claim arising out of the Indenture or this Initial Debenture.

This Initial Debenture and the Common Shares issuable upon conversion of this Debenture have not been and will not be registered under the United States Securities Act of 1933, as amended, or under the securities laws of any state of the United States; as such, each certificate representing this Debenture or Common Shares issuable upon conversion of this Debenture shall bear a U.S. restrictive legend.

This Initial Debenture may only be transferred, upon compliance with the conditions prescribed in the Indenture, in one of the registers to be kept at the principal office of the Trustee in the City of Vancouver, British Columbia and in such other place or places and/or by such other registrars (if any) as the Corporation with the approval of the Trustee may designate. No transfer of this Initial Debenture shall be valid unless made on the register by the registered holder hereof or his executors or administrators or other legal representatives, or his or their attorney duly appointed by an instrument in form and substance satisfactory to the Trustee or other registrar, and upon

compliance with such reasonable requirements as the Trustee and/or other registrar may prescribe and upon surrender of this Initial Debenture for cancellation. Thereupon a new Initial Debenture or Initial Debentures in the same aggregate principal amount shall be issued to the transferee in exchange hereof.

This Initial Debenture shall not become obligatory for any purpose until it shall have been certified by the Trustee under the Indenture.

Capitalized words or expressions used in this Initial Debenture shall, unless otherwise defined herein, have the meaning ascribed thereto in the Indenture.

IN WITNESS WHEREOF Crailar Technologies Inc. has caused this Debenture to be signed by its authorized representatives as of July 26, 2013.

Crailar Technologies Inc.
By:
	Name:  l
	Title:  l

(FORM OF TRUSTEE'S CERTIFICATE)

This Initial Debenture is one of the 10% Convertible Secured Debentures due July 26, 2016 referred to in the Indenture within mentioned.

COMPUTERSHARE TRUST COMPANY OF CANADA
By:
	(Authorized Officer)

(FORM OF REGISTRATION PANEL)

(No writing hereon except by Trustee or other registrar)

Date of Registration In Whose Name Registered Signature of Trustee or Registrar

FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned (the "Transferor") hereby sells, assigns and transfers unto _________________________ (the "Transferee"), whose address and social insurance number, if applicable, are set forth below, this Initial Debenture (or $_____________________________ principal amount hereof) of Crailar Technologies INC. standing in the name(s) of the undersigned in the register maintained by the Corporation with respect to such Initial Debenture and does hereby irrevocably authorize and direct the Trustee to transfer such Initial Debenture in such register, with full power of substitution in the premises.

Dated: ________________________________________________________________________

Address of Transferee: ___________________________________________________________
                       (Street Address, City, Province and Postal Code)

Social Insurance Number of Transferee, if applicable: __________________________________

*If less than the full principal amount of the within Initial Debenture is to be transferred, indicate in the space provided the principal amount (which must be $1,000 or an integral multiple thereof).

1.     The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Initial Debenture in every particular without alteration or any change whatsoever. The signature(s) must be guaranteed by a Canadian chartered bank or trust company or by a member of an acceptable Medallion Guarantee Program. Notarized or witnessed signatures are not acceptable as guaranteed signatures. The Guarantor must affix a stamp bearing the actual words: "SIGNATURE GUARANTEED".

2.     The registered holder of this Initial Debenture is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Debenture.

In connection with the transfer of this Initial Debenture, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer.

The Transferor hereby certifies that (check either A or B):

____     (A)     if the Transferee is (i) a U.S. person, (ii) a person in the United States, or (ii) any person who is acting for the account or benefit of a U.S. person or a person in the United States, the transfer of the Debenture is being completed pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), in which case the Transferor has delivered or caused to be delivered by the Transferee a written opinion of U.S. legal counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that the transfer of the Debenture is exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws; or

____     (B)     the transfer of the Debenture is being made in reliance on Rule 904 of Regulation S ("Regulation S") under the U.S. Securities Act, and the Transferor certifies that:

(1)     the undersigned is not an "affiliate" (as defined in Rule 405 under the U.S. Securities Act) of the Corporation or a "distributor", as defined in Regulation S, or an affiliate of a "distributor";

(2)     the offer of such securities was not made in the United States, or to or for the benefit or account of a U.S. person or a person in the United States and at the time the offer was accepted, the Transferor and any person acting on its behalf reasonably believed that the Transferee was outside the United States and not a U.S. person;

(3)     neither the Transferor nor any person acting on its behalf engaged in any "directed selling efforts" (as such term is defined in Regulation S) in connection with the offer and sale of the Debenture;

(4)     the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the Debentures are "restricted securities" (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act);

(5)     the Transferor does not intend to replace the securities sold in reliance on Rule 904 of the U.S. Securities Act with fungible unrestricted securities; and

(6)     the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or a scheme to evade the registration provisions of the U.S. Securities Act;

and, if requested by the Corporation or its transfer agent, the undersigned has delivered or caused to be delivered an opinion of legal counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that the transfer of the Debenture is exempt from the registration requirements of the U.S. Securities Act.

"United States" and "U.S. person" are as defined in Regulation S under the U.S. Securities Act.

If none of the foregoing boxes is checked, the Trustee shall not be obligated to register this Initial Debenture in the name of any Person other than the holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Indenture shall have been satisfied.

DATED this _______ day of ___________________, 20___.

Signature of Transferor guaranteed by:

                                             
Medallion Signature Guarantee Stamp                                                                          Authorized Officer                                             
Name of Institution                                                                           
Signature of Transferor
                                                                        
(print name of Transferor)                                                                         
(if applicable, print name of signatory and office)                                                                         
                                                                        
Address of Transferor

The Debenture will only be transferable in accordance with applicable laws. The Debenture and the Common Shares issuable upon conversion thereof have not been registered under the U.S. Securities Act, or under the securities laws of any state of the United States, and may not be transferred to or for the account or benefit of a U.S. person or any person in the United States without registration under the U.S. Securities Act and applicable state securities laws, or compliance with the requirements of an exemption from registration.

TRANSFEREE ACKNOWLEDGMENT

The undersigned transferee (the "Transferee") acknowledges and agrees that the Debenture may not be offered, sold, pledged or otherwise transferred in the absence of: (a) an effective registration statement under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and the applicable laws of any such state, relating thereto; or (b) an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. Each Debenture, and each certificate representing Common Shares issuable upon conversion thereof, shall contain a legend on the face thereof, in the appropriate form, setting forth the restrictions on transfer referred to in the Debenture Certificate, unless in the opinion of counsel for the holder thereof (which is in form and substance satisfactory to the Corporation), the securities represented thereby are not, at such time, required by law to bear such legend, or in the case of the Common Shares, are transferred pursuant to an effective registration statement under the U.S. Securities Act and the applicable state securities laws. The holder acknowledges and agrees that the Debenture represented by this Debenture Certificate, and the Common Shares issuable upon conversion thereof, constitute "restricted securities" under the U.S. Securities Act.

If the Transferee acquires the Debenture pursuant to a resale transaction pursuant to Rule 904 of Regulation S under the U.S. Securities Act, then the Transferee acknowledges that the Debenture still continues to be deemed restricted securities and will continue to bear a restrictive legend.

Any certificate issued at any time in exchange or substitution for any certificate bearing a restrictive legend shall also bear such legend unless in the opinion of counsel for the holder thereof (which is in form and substance satisfactory to the Corporation), the securities represented thereby are not, at such time, required by law to bear such legend.

The Transferee acknowledges that it shall notify the Corporation prior to any conversion of the Debenture if the representations, warranties and certifications contained in the Form of Transfer are no longer true and correct.

Dated the ___ day of ____________, 20___.
In the presence of:	(Signature of Transferee)
(Witness)	(Name of Transferee - Please print)
(Name of Witness - Please print)	(Name and Capacity of Authorized Representative - please print)

The Debenture and the Common Shares issuable upon conversion of the Debenture shall only be transferable in accordance with applicable laws. The Debenture may only be converted in the manner required by the Indenture and the Debenture. Any securities acquired pursuant to the conversion of the Debenture shall be subject to applicable hold periods and any certificate representing such securities may bear restrictive legends.

EXHIBIT "1"

TO CDS GLOBAL DEBENTURE

Crailar Technologies Inc.

10% CONVERTIBLE SECURED DEBENTURES

DUE JULY 26, 2016

Initial Principal Amount: $ [l ]

Authorization:                                                 

ADJUSTMENTS

Date Amount of Increase Amount of Decrease New Principal Amount Authorization

SCHEDULE B - FORM OF REDEMPTION NOTICE

Crailar Technologies Inc.

10% CONVERTIBLE SECURED DEBENTURES

REDEMPTION NOTICE

To:     Holders of 10% Convertible Secured Debentures (the "Debentures") of Crailar Technologies Inc. (the "Corporation")

Note:     All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

Notice is hereby given pursuant to Section 4.3 of the convertible debenture indenture (the "Indenture") dated as of July 26, 2013 between the Corporation and Computershare Trust Company of Canada (the "Trustee"), that the aggregate principal amount of [$l ] of the [$l ] of Debentures outstanding will be redeemed as of [l ] (the "Redemption Date"), upon payment of a redemption amount of [$l ] for each $1,000 principal amount of Debentures, being equal to the aggregate of (i) [$l ] (the "Redemption Price"), and (ii) all accrued and unpaid interest hereon to but excluding the Redemption Date (collectively, the "Total Redemption Price").

The Total Redemption Price will be payable upon presentation and surrender of the Debentures called for redemption at the following corporate trust office:

Computershare Trust Company of Canada
510 Burrard Street, 2nd Floor
Vancouver, British Columbia V6C 3B9

Attention:     
Facsimile No:     

The interest upon the principal amount of Debentures called for redemption shall cease to be payable from and after the Redemption Date, unless payment of the Total Redemption Price shall not be made on presentation for surrender of such Debentures at the above-mentioned corporate trust office on or after the Redemption Date or prior to the setting aside of the Total Redemption Price pursuant to the Indenture.

No fractional Common Shares shall be delivered upon the exercise by the Corporation of the abovementioned redemption right but, in lieu thereof, the Corporation shall pay the cash equivalent thereof determined on the basis of the Current Market Price of Common Shares on the Redemption Date, provided, however, that the Corporation shall not be required to make any payment of less than $5.00.

DATED: _____________________________

CRAILAR TECHNOLOGIES INC.

                                                                                 
(Authorized Director or Officer of CRAILAR TECHNOLOGIES INC.

SCHEDULE C - FORM OF NOTICE OF CONVERSION

CONVERSION NOTICE

TO:     CRAILAR TECHNOLOGIES INC.

AND TO:     COMPUTERSHARE TRUST COMPANY OF CANADA

Note:     All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

The undersigned registered holder of 10% Convertible Secured Debentures irrevocably elects to convert such Debentures (or $___________________ principal amount thereof`) in accordance with the terms of the Indenture referred to in such Debentures and tenders herewith the Debentures, and, if applicable, directs that the Common Shares of CRAILAR TECHNOLOGIES INC. issuable upon a conversion be issued and delivered to the person indicated below. (If Common Shares are to be issued in the name of a person other than the holder, all requisite transfer taxes must be tendered by the undersigned).

Conversion Price:                             

The undersigned hereby acknowledges that the undersigned is aware that the Common Shares received on conversion may be subject to restrictions on resale under applicable securities legislation.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

[  ]     (A)      the undersigned holder at the time of conversion of the Debentures (i) is not in the United States, (ii) is not a U.S. Person, (iii) is not converting the Debentures for the account or benefit of a U.S. Person or a person in the United States, (iv) did not execute or deliver this conversion notice in the United States and (v) delivery of the underlying Common Shares will not be to an address in the United States; OR

[  ]     (B)     if the undersigned holder is (i) a holder in the United States, (ii) a U.S. Person, (iii) a person converting for the account or benefit of a U.S. Person, (iv) executing or delivering this conversion notice in the United States or (v) requesting delivery of the underlying Common Shares in the United States, the undersigned holder has delivered to the Corporation and the Corporation's transfer agent (a) a completed and executed U.S. Purchaser Letter in substantially the form attached to this conversion notice as Appendix "I" or (b) an opinion of counsel (which will not be sufficient unless it is in form and substance reasonably satisfactory to the Corporation) or such other evidence reasonably satisfactory to the Corporation to the effect that with respect to the Common Shares to be delivered upon conversion of the Debentures, the issuance of such securities has been registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration requirements is available.

It is understood that the Corporation and Computershare Trust Company of Canada may require evidence to verify the foregoing representations.

Notes:

1)     Certificates will not be registered or delivered to an address in the United States unless Box B above is checked.

2)     If Box B above is checked, holders are encouraged to consult with the Corporation and the Trustee in advance to determine that the legal opinion tendered in connection with the conversion will be satisfactory in form and substance to the Corporation and the Trustee.

"United States" and "U.S. Person" are as defined in Rule 902 of Regulation S under the U.S. Securities Act.

Date:                                                                                                      
(Signature of Registered Holder)

*If less than the full principal amount of the Debentures, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof).

NOTE: If Common Shares are to be issued in the name of a person other than the holder, the signature must be guaranteed by a chartered bank, a trust company or by a member of an acceptable Medallion Guarantee Program. The Guarantor must affix a stamp bearing the actual words: "SIGNATURE GUARANTEED".

(Print name in which Common Shares are to be issued,
delivered and registered)

Name:                                                                         

                                                                                    
(Address)

                                                                                    
(City, Province and Postal Code)

Name of Guarantor:                                                    

Authorized Signature:                                               

Appendix "I"

to

SCHEDULE C - FORM OF NOTICE OF CONVERSION

FORM OF U.S. PURCHASER LETTER UPON CONVERSION OF DEBENTURES

CRAILAR TECHNOLOGIES INC.

Attention: Chief Executive Officer

- and to -

Computershare Trust Company of Canada.

as Trustee

Dear Sirs:

We are delivering this letter in connection with the acquisition of common shares (the "Common Shares") of CRAILAR TECHNOLOGIES INC., a corporation incorporated under the laws of the Province of British Columbia (the "Corporation") upon the conversion of debentures of the Corporation ("Debentures"), issued under the indenture dated as of ______________, 2013 between the Corporation and Computershare Trust Company of Canada.

We hereby confirm that:

a)     we are acquiring the Common Shares for our own account;

b)     we have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of acquiring the Common Shares;

c)     we are not acquiring the Common Shares with a view to distribution thereof or with any present intention of offering or selling any of the Common Shares, except (A) to the Corporation, (B) outside the United States in accordance with Rule 904 under the U.S. Securities Act or (C) inside the United States in accordance with Rule 144 under the U.S. Securities Act, if applicable, and in compliance with applicable state securities laws;

d)     we acknowledge that we have had access to such financial and other information as we deem necessary in connection with our decision to convert the Debentures and acquire the Common Shares;

e)     we acknowledge that we are not acquiring the Common Shares as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

f)     we are an "accredited investor" satisfying one or more of the criteria set forth in Rule 501(a) of Regulation D under the U.S. Securities Act, as follows (please write "SUB" on each line that applies to you, and "BP" on each line that applies to each beneficial purchaser, if any, on whose behalf you are acting as a fiduciary or agent):

      Category 1.      A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934; an insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; an investment company registered under the United States Investment Company Act of 1940; a business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940; a small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S. $5,000,000; or an employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are Accredited Investors; or

      Category 2.      A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940; or

      Category 3.      An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Purchased Securities offered, with total assets in excess of U.S. $5,000,000; or

      Category 4.      A director or executive officer of the Corporation; or

      Category 5.      Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his or her purchase exceeds US$1,000,000 (for the purposes of calculating net worth: (i) the person's primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the conversion of the debenture, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the conversion of the debenture exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability);

      Category 6.      A natural person who had an individual income in excess of U.S.$200,000 in each of the two most recent years or joint income with that person's spouse in excess of U.S.$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

      Category 7.      A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the Purchased Securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; or

      Category 8.      An entity in which all of the equity owners are accredited investors.

We understand that the Common Shares are being offered in a transaction not involving any public offering within the United States within the meaning of the U.S. Securities Act and that the Common Shares have not been registered under the U.S. Securities Act. We further understand that any Common Shares acquired by us will be in the form of definitive physical certificates and that such certificates will bear a U.S. restrictive legend.

We acknowledge that you will rely upon our confirmations, acknowledgements and agreements set forth herein, and we agree to notify you promptly in writing if any of our representations or warranties herein ceases to be accurate or complete.

DATED this ____day of _____, 20__.

X                                                                                       
Signature of individual (if purchaser is an individual)

X                                                                                       
Authorized signatory (if purchaser is not an individual)

                                                                                      
Name of purchaser (please print)

                                                                                      
Name of authorized signatory (please print)

                                                                                      
Official capacity of authorized signatory (please print)

SCHEDULE D - COMMON SHARE LEGENDS

Subpart 1

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

Subpart 2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

SCHEDULE E - FORM OF DECLARATION FOR REMOVAL OF LEGEND

[Available only at such time as the Corporation qualifies as
a "foreign issuer" under Regulation S]

TO:     Computershare Trust Company of Canada, as trustee and registrar of the 10% Convertible Secured Debentures and Common Shares of CRAILAR TECHNOLOGIES INC. (the "Corporation")

AND TO:     The Corporation

The undersigned (a) acknowledges that the sale of the securities of the Corporation to which this declaration relates is being made in reliance on Rule 904 of Regulation S ("Regulation S") under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and (b) certifies that (1) the undersigned is not an "affiliate" of the Corporation, as that term is defined in Rule 405 under the U.S. Securities Act (or is an affiliate solely by virtue of holding the position of a director or officer of the Corporation), (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (B) the transaction was executed on or through the facilities of the TSX Venture Exchange and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any "directed selling efforts" (as defined in Regulation S) in the United States in connection with the offer and sale of the securities, (4) the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the securities are "restricted securities" (as defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the seller does not intend to and will not replace the securities sold in reliance on Rule 904 of Regulation S with fungible unrestricted securities and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

Certificate Number:                                                      

Number of Debentures:                                                 

Dated:                                                               By:                                                                Signature:                                                      Name:                                                            Title:                                                             

Affirmation by Seller's Broker-Dealer (required for sales
pursuant to Section (b)(2)(B)above)

We have read the foregoing representations letter of our customer, _____________________________ (the "Seller"), dated ____________________, 20__, pursuant to which the Seller has requested that we sell, for the Seller's account, the securities of the Corporation referenced above which are represented by certificate number ________________ (the "Securities"). We have executed sales of the Securities pursuant to Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), on behalf of the Seller. In that connection, we hereby represent to you as follows:

(1)     no offer to sell Securities was made to a person in the United States;

(2)     the sale of the Securities was executed in, on or through the facilities of the TSX Venture Exchange, and, to the best of our knowledge, the sale was not pre-arranged with a buyer in the United States;

(3)     no "directed selling efforts" were made in the United States by the undersigned, any affiliate of the undersigned, or any person acting on behalf of the undersigned; and

(4)     we have done no more than execute the order or orders to sell the Securities as agent for the Seller and will receive no more than the usual and customary broker's commission that would be received by a person executing such transaction as agent.

For purposes of these representations: "affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the undersigned; "directed selling efforts" means any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the Securities (including, but not be limited to, the solicitation of offers to purchase the Securities from persons in the United States); and "United States" means the United States of America, its territories or possessions, any State of the United States, and the District of Columbia.

Legal counsel to the Corporation shall be entitled to rely upon the representations, warranties and covenants contained in this letter to the same extent as if this letter had been addressed to them.

                                                                          
Name of Firm

By:                                                                     
Authorized Signatory

                                                                          
(print name)

                                                                          
(title)

SCHEDULE F - SECURED ASSETS

The following equipment located at Crailar US's facility in Pamplico, South Carolina, U.S.A., having an aggregate acquisition cost of no less than $3,922,240:

OBERMAIER	Type	Unit Price in EUR	Quantity	Total Euro
Pre-storing and weighing system	PSW 1500	€ 242,500	2	€ 485,000
Hydraulic Packing Press	HP 1200	€ 445,900	2	€ 891,800
Material carriers & carrier handling equipment	MC 1630/3	€ 47,400	11	€ 521,400
Hydraulic Fiber-Cake-Lifter	CL 1500	€ 93,200	2	€ 186,400
Fiber Dryer, 5 Chambers with add, Fiber Opener and RST	CA/2/2000 SD300/2000 OST 2000	€ 799,400	1	€ 799,400
				€ 2,884,000
			Exchange Rate	1.36
			USD	$ 3,922,240

SCHEDULE G - FORM OF CRAILAR US AMENDED AND RESTATED GUARANTY AND SECURITY AGREEMENT

(Please see attached)

AMENDED AND RESTATED GUARANTY AND SECURITY AGREEMENT

This AMENDED AND RESTATED GUARANTY AND SECURITY AGREEMENT (this "Guaranty"), dated as of December 23, 2013, is executed and delivered by CRAILAR INC., a Nevada limited liability company (the "Guarantor"), in favor of COMPUTERSHARE TRUST COMPANY OF CANADA (the "Trustee"), on behalf of itself and the holders of the Initial Debentures issued pursuant to that amended and restated convertible debenture indenture made as of December 23, 2013 between Crailar Technologies Inc. ("CTI") and the Trustee in light of the following:

WHEREAS:

(A)     The Guarantor and the Trustee are party to a guaranty and security agreement dated July 26, 2013 (the "Original Guaranty and Security Agreement"); and

(B)     The Guarantor and the Trustee wish to amend and restate the Original Guaranty and Security Agreement as provided for herein.

NOW, THEREFORE, in consideration of the foregoing, Guarantor and Trustee hereby agree as follows:

1.     DEFINITIONS AND CONSTRUCTION

(a)     Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Indenture. The following terms, as used in this Guaranty, shall have the following meanings:

"Guarantied Obligations" means the liabilities and obligations of CTI due or owing to the Trustee and the Debentureholders under the Indenture.

"Guarantor" has the meaning set forth in the preamble to this Guaranty.

"Guaranty" has the meaning set forth in the preamble to this Guaranty.

"Guaranty Limit" has the meaning set forth in Section 2 of this Guaranty.

"Initial Debentures" has the meaning set forth in the Indenture

"Indenture" has the meaning set forth in the preamble to this Guaranty.

"Trustee" has the meaning set forth in the preamble to this Guaranty.

"Voidable Transfer" has the meaning set forth in Section 9 of this Guaranty.

(b)     Construction. Unless the context of this Guaranty clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms "includes" and "including" are not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Guaranty refer to this Guaranty as a whole and not to any particular provision of this Guaranty. Section, subsection, clause, schedule, and exhibit references herein are to this Guaranty unless otherwise specified. Any reference in this Guaranty to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications,

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renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Neither this Guaranty nor any uncertainty or ambiguity herein shall be construed against Trustee or Guarantor, whether under any rule of construction or otherwise. On the contrary, this Guaranty has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. Any reference herein to any Person shall be construed to include such Person's successors and assigns. Any requirement of a writing contained herein shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

2.     GUARANTIED OBLIGATIONS; LIMITATION OF RECOURSE; TERMINATION OF GUARANTY

(a)     Subject to the terms and limitations specified in this Guaranty, Guarantor hereby irrevocably and unconditionally guaranties to Trustee and the Debentureholders until final payment in full thereof has been made, the prompt payment in full of the Guarantied Obligations, when and as the same shall become due and payable with the intent that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection. The guaranty herein provided shall be one of primary obligor and there shall be no requirement that Trustee look to CTI or any other Person for payment or performance of the Guarantied Obligations prior to the assertion of liability of Guarantor hereunder.

(b)     Notwithstanding Section 2(a) of this Guaranty, the recourse of the Trustee and the Debentureholders against the Guarantor under this Guaranty shall be limited solely to those certain assets of the Guarantor set out in Schedule "A" hereto (the "Secured Assets") and the total liability of Guarantor shall not exceed, the value of such Secured Assets from time to time (the "Guaranty Limit"). To the extent the Secured Assets (or proceeds thereof) are not sufficient to fully discharge and satisfy the Guarantied Obligations, the Guarantor will not be personally liable for any such deficiency.

(c)     If, at any time (i) there shall be no Guarantied Obligations due and payable by CTI or Guarantor pursuant to the Indenture or this Guaranty, as applicable, and no actual or potential claims shall have been asserted pursuant to this Guaranty, or (ii) the Trustee shall have realized against this Guaranty up to the Guaranty Limit, Guarantor may terminate this Guaranty by written notice to Trustee. Trustee shall use commercially reasonable efforts to notify Guarantor in writing within 30 days of the satisfaction of the conditions specified in either of clauses (i) or (ii) of the preceding sentence (a "Trustee Notice"). Upon Guarantor's delivery of written notice of termination to Trustee following receipt of a Trustee Notice, this Guaranty shall terminate automatically and without requirement of further action by Guarantor, Trustee or any other Person, and Trustee shall mark this Guaranty cancelled and return the same to Guarantor.

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3.     CONTINUING GUARANTY

This Guaranty includes Guarantied Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Guarantied Obligations, changing the interest rate, payment terms, or other terms and conditions thereof. To the maximum extent permitted by law, Guarantor hereby waives any right to revoke this Guaranty as to future Guarantied Obligations, except as expressly set forth at Section 2(c) of this Guaranty. If such a revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that

(a)     no such revocation shall be effective until written notice thereof has been received by Trustee,

(b)     no such revocation shall apply to any Guarantied Obligations in existence on such date (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof),

(c)     no such revocation shall apply to any Guarantied Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Trustee in existence on the date of such revocation,

(d)     no payment by Guarantor, CTI, or from any other source, prior to the date of such revocation shall reduce the maximum obligation of Guarantor hereunder, and

(e)     any payment by CTI or from any source other than Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Guarantied Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligation of Guarantor hereunder.

4.     SECURITY FOR GUARANTY

4.1     Guarantor hereby pledges, transfers and assigns to Trustee, on behalf of itself and the Debentureholders, and grants to Trustee as security for obligations of Guarantor under this Guaranty to pay and perform the Guarantied Obligations, a continuing security interest in and to the Secured Assets and all of Guarantor's right, title and interest therein. This pledge, assignment and grant of security interest shall secure payment of the Guarantied Obligations up to the Guaranty Limit. Guarantor represents and warrants that Trustee's security interest in the Secured Assets is a valid, first priority, perfected security interest in the Secured Assets subject only to Permitted Priority Encumbrances (as defined in the Indenture). Guarantor represents that no prior security interests exists with respect to the Secured Assets that no Person has any right in or to the Secured Assets, which is maintained solely as security for the obligations of Guarantor hereunder.

4.2     Until an Event of Default (as defined in the Indenture) has occurred, Guarantor shall, without the consent of the Trustee, be entitled:

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(a)     to transfer or sell any item of Secured Assets only as expressly permitted pursuant to the terms of the Indenture; and

(b)     to sell, assign, transfer, abandon, surrender or otherwise dispose of Secured Assets which have become worn out, unserviceable, obsolete, unsuitable or unnecessary in the conduct of its business or in the operation of any of the Secured Assets, free of the security interest created hereby, provided that there shall have been or shall be substituted for the same other fixtures, equipment, machinery, tools, implements, apparatus, facilities or appliances not necessarily of the same character but at least of equal utility at the date of such substitution or replacement (which forthwith shall become subject to the security interest created by this Guaranty and Security Agreement) of and to the extent that such replacement or substitution is necessary or desirable for the proper and efficient conduct of the business of Guarantor or in the operation of the Secured Assets;

and the Trustee will, at the expense of Guarantor, execute and deliver from time to time releases and discharges necessary or required as advised by its counsel with respect to the foregoing. Except as specifically permitted above, Guarantor will not dispose of any of the Secured Assets to any Person.

5.     PRIMARY OBLIGATIONS

This Guaranty is a primary and original obligation of Guarantor, is not merely the creation of a surety relationship, and is, subject to the Guaranty Limit, an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions until or unless this Guaranty has been terminated pursuant to Section 2. Guarantor hereby agrees that it is directly liable to Trustee, that the obligations of Guarantor hereunder are independent of the obligations of CTI or any other guarantor, and that a separate action may be brought against Guarantor, whether such action is brought against CTI or any other guarantor or whether CTI or any other guarantor is joined in such action. Guarantor hereby agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement by Trustee of whatever remedies they may have against CTI or any other guarantor, or the enforcement of any lien or realization upon any security by Trustee. Guarantor hereby agrees that any release which may be given by Trustee to CTI or any other guarantor shall not release Guarantor. Guarantor consents and agrees that Trustee shall not be under any obligation to marshal any property or assets of CTI or any other guarantor in favor of Guarantor, or against or in payment of any or all of the Guarantied Obligations.

6.     WAIVERS

(a)     To the fullest extent permitted by applicable law, Guarantor hereby waives:

(i)     notice of acceptance hereof;

(ii)     notice of the amount of the Guarantied Obligations, subject, however, to Guarantor's right to make inquiry of Trustee to ascertain the amount of the Guarantied Obligations at any reasonable time;

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(iii)     notice of any adverse change in the financial condition of CTI or of any other fact that might increase Guarantor's risk hereunder;

(iv)     notice of presentment for payment, demand, protest, and notice thereof as to any instrument in the Indenture and the Debentures; and

(v)     notice of any Event of Default under the Indenture.

(b)     To the fullest extent permitted by applicable law, Guarantor hereby waives the right by statute or otherwise to require Trustee to institute suit against CTI or to exhaust any rights and remedies which Trustee has or may have against CTI. In this regard, Guarantor agrees, subject to the Guaranty Limit, that it is bound to the payment of each and all Guarantied Obligations, whether now existing or hereafter arising, as fully as if the Guarantied Obligations were directly owing to Trustee by Guarantor. Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Guarantied Obligations shall have been performed and paid in cash, to the extent of any such payment) of CTI or by reason of the cessation from any cause whatsoever of the liability of CTI in respect thereof.

(c)     To the fullest extent permitted by applicable law, Guarantor hereby waives:

(i)     any right to assert against Trustee any defense (legal or equitable), set-off, counterclaim, or claim which Guarantor may now or at any time hereafter have against CTI or any other party liable to Trustee;

(ii)     any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guarantied Obligations or any security therefor;

(iii)     any right or defense arising by reason of any claim or defense based upon an election of remedies by Trustee;

(iv)     the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Guarantied Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to Guarantor's liability hereunder.

(d)     Until such time as this Guaranty shall have been terminated in accordance with Section 2(c) of this Guaranty:

(i)     Guarantor hereby waives and postpones any right of subrogation Guarantor has or may have as against CTI with respect to the Guarantied Obligations; and

(ii)     Guarantor hereby waives and postpones any right to proceed against CTI or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective of whether direct or indirect, liquidated or contingent), with respect to the Guarantied Obligations.

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(e)     The payment obligations of Guarantor hereunder shall be evidenced by Trustee's books and records and, in the absence of manifest error, shall be absolute, unconditional and irrevocable and shall not be affected, modified or impaired by:

(i)     any lack of validity or enforceability of the Indenture or the Debentures issued thereunder or any other agreement or instrument relating thereto (collectively, the "Related Documents") or any of the transactions contemplated by or related to the issuance of the Debentures (the "Related Transactions");

(ii)     any amendment or waiver of or any consent to departure from all or any of the Related Documents or the Related Transactions;

(iii)     the existence of any claim, set-off, defense or other right which CTI may have at any time against any beneficiary or any transferee of any of the Debentures or the Trustee or any other Person, whether in connection with the Related Documents, the Related Transactions or any unrelated document or transaction;

(iv)     any draft affidavit, letter, certificate, invoice, bill of lading, statement or any other document presented under any of the Debentures proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or

(v)     payment by the Trustee under any of the Debentures against presentation of a draft or certificate which does not comply with the terms of such Debenture.

(f)     WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY TRUSTEE, EVEN THOUGH SUCH ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE GUARANTIED OBLIGATIONS, HAS DESTROYED GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST CTI BY THE OPERATION OF APPLICABLE LAW.

(g)     Without limiting the generality of any other waiver or other provision set forth in this Guaranty, Guarantor hereby agrees as follows:

(i)     Trustee's right to enforce this Guaranty is absolute and is not contingent upon the genuineness, validity or enforceability of the Indenture or the Debentures.

(ii)     Guarantor agrees that Trustee's rights under the Indenture and the Debentures will remain enforceable even if the amount secured by the Indenture is larger in amount and more burdensome than that for which CTI is responsible.

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The enforceability of this Guaranty against Guarantor shall continue until the earlier of Guarantor's payment of the amount of the Guaranty Limit, the termination of this Guaranty, or when all sums due under the Guarantied Obligations have been paid in full, and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for CTI's obligations under the Indenture, from whatever cause, the failure of any security interest in any such security or collateral or any disability or other defense of CTI, any other guarantor of CTI's obligations under the Indenture, any pledgor of collateral for any person's obligations to Trustee or any other person in connection with the Indenture.

7.     RELEASES

Guarantor consents and agrees that, without notice to or by Guarantor and without affecting or impairing the obligations of Guarantor hereunder, Trustee may, by action or inaction, compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to enforce, or otherwise not enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the terms and provisions of the Indenture or the Debentures or may grant other indulgences to CTI in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Related Documents, or may, by action or inaction, release or substitute any other guarantor, if any, of the Guarantied Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the Guarantied Obligations or any other guaranty of the Guarantied Obligations, or any portion thereof. Guarantor agrees that its obligations hereunder shall not be released, diminished, impaired or reduced by the occurrence of any one or more of the following events:

(a)     any Insolvency Proceeding affecting CTI, Guarantor or any other guarantor of all or any part of the Guarantied Obligations, or any of their respective property;

(b)     any failure by Trustee to acquire, perfect or continue any lien or security interest on collateral securing all or any part of the Guarantied Obligations or this Guaranty;

(c)     the impairment of any collateral securing all or any part of the Guarantied Obligations or this Guaranty (including without limitation the negligent impairment); or

(d)     any other act or circumstance which might otherwise constitute a defense available to, or discharge of, CTI, Guarantor or any other guarantor of all or part of the Guarantied Obligations other than the final and unconditional payment in full of the Guarantied Obligations.

8.     NO ELECTION

Trustee shall have the right to seek recourse against Guarantor to the fullest extent provided for herein and no election by Trustee to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Trustee's right to proceed in any other form of action or proceeding or against other parties unless Trustee has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or

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proceeding by Trustee under any document or instrument evidencing the Guarantied Obligations shall serve to diminish the liability of Guarantor under this Guaranty except to the extent that Trustee finally and unconditionally shall have realized (i) payment in full of the Guarantied Obligations from the Guarantor up to the Guaranty Limit or (ii) payment in full of the Guarantied Obligations by such action or proceeding.

9.     REVIVAL AND REINSTATEMENT

If the incurrence or payment of the Guarantied Obligations or the obligations of Guarantor under this Guaranty by Guarantor or the transfer by Guarantor to Trustee of any property of Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if Trustee is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Trustee is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Trustee related thereto, the liability of Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

10.     FINANCIAL CONDITION OF CTI

Guarantor represents and warrants to Trustee that it is currently informed of the financial condition of CTI and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guarantied Obligations. Guarantor further represents and warrants to Trustee that it has read and understands the terms and conditions of the Indenture. Guarantor hereby covenants that it will continue to keep himself informed of CTI's financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Guarantied Obligations.

11.     NOTICES

All notices and other communications hereunder to Trustee shall be in writing and shall be mailed, sent, or delivered in accordance with Article 12 of the Indenture. All notices and other communications hereunder to Guarantor shall be in writing and shall be mailed, sent, or delivered to Guarantor at the address set forth below Guarantor's signature to this Guaranty.

12.     CUMULATIVE REMEDIES

Subject to Section 2, no remedy under this Guaranty or under the Indenture is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Guaranty or under the Indenture, and those provided by law. No delay or omission by Trustee to exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver thereof. No failure on the part of Trustee to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other right.

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13.     SEVERABILITY OF PROVISIONS

Each provision of this Guaranty shall be severable from every other provision of this Guaranty for the purpose of determining the legal enforceability of any specific provision.

14.     INCORPORATION OF COVENANTS

The Guarantor hereby agrees that the covenants of CTI relating to the Guarantor as set forth in Section 7.11 of the Indenture are incorporated in this Guaranty and shall be deemed covenants made by the Guarantor.

15.     ENTIRE AGREEMENT; AMENDMENTS

This Guaranty constitutes the entire agreement between Guarantor and Trustee pertaining to the subject matter contained herein. This Guaranty may not be altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by Guarantor and Trustee. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and for the specific purpose for which given. No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed a waiver of any other, similar or dissimilar, right or default or otherwise prejudice the rights and remedies hereunder.

16.     AMENDMENT AND RESTATEMENT

This Guaranty amends, restates and supercedes the Original Guaranty and Security Agreement. As of the date hereof, the Original Guaranty and Security Agreement shall be amended, restated and superseded in its entirety. On and after the date hereof, each reference in the Indenture to the "US Guaranty and Security Agreement" shall mean and be a reference to this Guaranty.

17.     PRECEDENCE

In the event of any conflict between the terms or conditions of this Guaranty and the terms or conditions of the Indenture, the conflicting terms or conditions of the Indenture shall prevail.

18.     SUCCESSORS AND ASSIGNS

This Guaranty shall be binding upon Guarantor and its personal representatives, heirs, successors and assigns and shall inure to the benefit of the successors and assigns of Trustee; provided, however, Guarantor may not assign this Guaranty or delegate any of its duties hereunder without Trustee's prior written consent and any unconsented to assignment shall be absolutely void.

19.     NO THIRD PARTY BENEFICIARY

This Guaranty is solely for the benefit of Trustee and Guarantor and their respective successors and assigns, and may not be relied on by any other Person.

20.     CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF NEVADA.

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THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF WASHOE, STATE OF NEVADA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT TRUSTEE'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE TRUSTEE ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. GUARANTOR AND TRUSTEE WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 19.

EACH OF GUARANTOR AND TRUSTEE HEREBY WAIVES HIS OR ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF GUARANTOR AND TRUSTEE REPRESENTS THAT HE OR IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES HIS OR ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

21.     COUNTERPARTS; TELEFACSIMILE EXECUTION

This Guaranty may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Guaranty. Delivery of an executed counterpart of this Guaranty by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Guaranty. Any party delivering an executed counterpart of this Guaranty by telefacsimile also shall deliver an original executed counterpart of this Guaranty but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Guaranty.

[Signature page follows]

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IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Guaranty as of the date first written above.

CRAILAR INC., a Nevada company

Per:     /s/ Kenneth Barker                           
           KENNETH C. BARKER
          President

ACCEPTED AND AGREED BY TRUSTEE:

COMPUTERSHARE TRUST COMPANY OF CANADA

Per: /s/ Gabriel Ducharme____________ Name: Gabriel Ducharme
Title: Corporate Trust Officer Per: /s/ Derek Lim_______________ Name: Derek Lim
Title: Associate Trust Officer

SCHEDULE A

SECURED ASSETS

The following equipment located at Guarantor's facility in Pamplico, South Carolina, U.S.A. having an aggregate acquisition cost of no less than $3,922,240.

[See Attached]

OBERMAIER	Type	Unit Price in EUR	Quantity	Total Euro
Pre-storing and weighing system	PSW 1500	€ 242,500	2	€ 485,000
Hydraulic Packing Press	HP 1200	€ 445,900	2	€ 891,800
Material carriers & carrier handling equipment	MC 1630/3	€ 47,400	11	€ 521,400
Hydraulic Fiber-Cake-Lifter	CL 1500	€ 93,200	2	€ 186,400
Fiber Dryer, 5 Chambers with add, Fiber Opener and RST	CA/2/2000 SD300/2000 OST 2000	€ 799,400	1	€ 799,400
				€ 2,884,000
			Exchange Rate	1.36
			USD	$ 3,922,240

EX-4

CDN$2,000,000 UNIT PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

TO: CRAILAR TECHNOLOGIES INC. (the "Corporation").
Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2
Phone: (250) 658-8582 and Fax: (250) 658-8586.

FROM:   ______________________, (the "Investor")

___________________________________________________________

RE:     CDN$0.60 per unit (each a "Unit"). Each Unit consists of one common share (each a "Share") and one common share purchase warrant (each, a "Warrant").

Reference Date: December 18, 2013.

INSTRUCTIONS FOR COMPLETING THIS SUBSCRIPTION AGREEMENT

1.     Please complete the information required on page 2 of this Subscription Agreement with respect to subscription amounts and registration and delivery particulars for the Share and Warrant certificates.

2.     Please complete the applicable forms (the "Forms") at the end of this Subscription Agreement as follows:

(a)     All Investors must execute Schedule A - Personal Information Acknowledgement and Consent;

(b)     If the Investor is not an individual (corporation, trust or other than a natural person) or it is a Portfolio Manager - please complete the TSX Venture Exchange (the "Exchange") Registration Form 4C. (If you have previously filed this form in connection with another transaction or corporation on the Exchange and your information has not changed you need NOT complete another one.) See Schedule B;

(c)     All Investors (Canadian residents, U.S. Persons (see definition) and others) must establish an exemption under applicable Canadian securities laws;

(d)     As such, all Investors must satisfy at least one of the exemptions set forth in Section 6.1(a), (b), (c) or (d) of this Subscription Agreement. If an Investor is relying on the "accredited investor" exemption set forth in Section 6.1(c) of the Subscription Agreement, the Investor must sign Schedule C - Representation Letter For Accredited Investors; and

(e)     In addition, Investors who are U.S. Persons (see definition), or who were offered the Units in the United States, or who execute or deliver this Subscription Agreement in the United States, must be "accredited investors" within the meaning assigned in Rule 501(a) of Regulation D promulgated under the U.S. Securities Act, and must complete and sign Schedule D - Certificate of U.S. Purchaser.

3.     All Investors must courier and/or fax completed forms either: (a) to counsel for the Corporation, McMillan LLP, located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, Attention: Thomas J. Deutsch (fax: (604) 893-2679); or (b) to the Corporation, located at Suite 305,

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4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2; Attention: Guy Prevost, Controller (fax: (250) 658-8586). Funds may be attached to the forms by certified cheque or bank draft payable: (a) to either (i) "Crailar Technologies Inc." or (ii) "McMillan LLP In Trust"; or (b) wired to the Corporation's counsel as set forth below. All monetary amounts herein are in Canadian dollars. U.S. dollars will be converted at the prevailing approximate rate on or about the actual the date of receipt and the number of Units issued adjusted accordingly. Funds received will be held and released subject to the conditions described in section 4.

SUBJECT TO THE CLOSING CONDITIONS DESCRIBED IN SECTION 4 BEING MET, BY EXECUTION HEREOF YOU ARE IRREVOCABLY AUTHORIZING THE CORPORATION TO RELEASE THEM WITHOUT FURTHER AUTHORITY FROM YOU.

McMillan LLP Trust Wire Instructions for CDN Dollars:*

Bank Name:        BMO Bank of Montreal.

                            First Bank Tower, 595 Burrard Street, Vancouver, B.C., Canada, V7X 1L7.

Account Name: McMillan LLP, In Trust.

Bank No.            001.
Swift No.:          BOFMCAM2.

Transit No.:       00040.

Account No.:   1577-447.

Details:             57532V-219025; Crailar Technologies Inc.; Thomas J. Deutsch; Subscription.

*     If you are sending United States currency from the United States or overseas (which will be converted to Canadian once they reach Canada) the funds must be routed through the following bank first and then through BMO:

Routing Bank:              Wells Fargo Bank NA

Swift Code:                  PNBPUS3NNYC.

Federal ABA#:            026005092.

Details:                         57532V-219025; Crailar Technologies Inc..; Thomas J. Deutsch; Subscription.

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INVESTOR information below: (Name of Investor - please print)	SUBSCRIPTION information below: Subscription: Number of Units:
(Signature of Investor) (Official Capacity or Title of Signatory if Investor is not an individual - please print) (Please print name of individual whose signature appears above if different than the name of the name of the Investor printed above.) (Signature of Investor) (Official Capacity or Title of Signatory if Investor is not an individual - please print) (Please print name of individual whose signature appears above if different than the name of the name of the Investor printed above.)	The Corporation reserves the right to accept this subscription in whole or in part.
(Investor's Address)	Subscription Amount Enclosed: $ Payable to: Crailar Technologies Inc. or wired as per the prior page to the Corporation's counsel in trust for the Corporation.
(Investor's Telephone Number and Fax Number) (Investor's E-Mail Address (optional))

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REGISTER the Units as set forth below: (Name) (Account reference, if applicable) (Address) DELIVER the Units as set forth below: (Name) (Account reference, if applicable) (Contact Name) (Address) (Telephone Number)

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OTHER INFORMATION TO BE COMPLETED BY EACH INVESTOR

A.     Corporate Placee or Investment Portfolio Manager Registration Form (Schedule A)

IF THE INVESTOR IS NOT AN INDIVIDUAL (i.e., a natural person), either [CHECK WHERE APPROPRIATE]:

_____has previously filed with the TSX Venture Exchange Inc. (the "Exchange") a Form 4C, Corporate Placee Registration Form, and represents and warrants that there has been no change to any of the information in the Corporate Placee Registration Form previously filed with the Exchange up to the date of this Subscription Agreement; or

____hereby delivers to the Corporation a completed Form 4C, Corporate Placee Registration Form, in the form attached hereto as for filing with the Exchange.

B.     Present Ownership of Securities

The Investor either [CHECK WHERE APPROPRIATE]:

____does not own, directly or indirectly, or exercise control or direction over, any common shares in the capital stock of the Corporation ("Shares") or securities convertible into Shares (excluding the Units subscribed for herein); or

_____owns, directly or indirectly, or exercise control or direction over, Shares and options, warrants and convertible securities entitling the Investor to acquire an additional Shares (excluding the Units subscribed for herein).

C.     Insider Status. The Investor either [CHECK WHERE APPROPRIATE]:

____is NOT an "Insider" of the Corporation as defined in the Securities Act (British Columbia); or

_____is an "Insider" of the Corporation as defined in the Securities Act (British Columbia); namely: "Insider" means either:

1.     a director or senior officer of the Corporation;

2.     a director or senior officer of a person that is itself an insider or subsidiary of the Corporation;

3.     a person that has:

(a)     direct or indirect beneficial ownership of;

(b)     control or direction over; or

(c)     a combination of direct or indirect beneficial ownership of and of control or direction over securities of the Corporation carrying more than 10% of the voting rights attached to all the Corporation's outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution; or

4.     the Corporation itself, if it has purchased, redeemed or otherwise acquired any securities of its own issue, for so long as it continues to hold those securities.

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D.     Member of "Pro Group"

The Investor either [CHECK WHERE APPROPRIATE]:

____is NOT a Member of the "Pro Group" as defined in the Rules of the Exchange; or

_____is a Member of the "Pro Group" as defined in the Rules of the Exchange; namely: "Pro Group" means:

1.      subject to subparagraphs 2, 3 and 4 below, Pro Group shall include, either individually or as a group:

(a)     the member (i.e. a member of the Exchange under its requirements);

(b)     employees of the member;

(c)     partners, officers and directors of the member;

(d)     affiliates of the member; and

(e)     associates of any parties referred to in subparagraphs (a) through (d); and

2.     the Exchange may, in its discretion, include a person or party in the Pro Group for the purposes of a particular calculation where the Exchange determines that the person is not acting at arm's length of the member;

3.     the Exchange may, in its discretion, exclude a person from the Pro Group for the purposes of a particular calculation where the Exchange determines that the person is acting at arm's length of the member; and

4.     the member may deem a person who would otherwise be included in the Pro Group pursuant to subparagraph 1 above to be excluded from the Pro Group where the member determines that:

(a)      the person is an affiliate or associate of the member acting at arm's length of the member;

(b)     the associate or affiliate has a separate corporate and reporting structure;

(c)     there are sufficient controls on information flowing between the member and the associate or affiliate; and

(d)     the member maintains a list of such excluded persons.

E.     Registrant Status. The Investor either [CHECK WHERE APPROPRIATE]:

_____     is a person registered under the Securities Act (British Columbia); or

____     is not a person registered under the Securities Act (British Columbia).

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ACCEPTANCE: The Corporation hereby accepts the above subscription as to _________________.

CRAILAR TECHNOLOGIES INC.

Per:                                                                                     Acceptance Date: _____________________, 20___.
                

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Consent to the Disclosure of Information under Privacy Legislation:

The Investor acknowledges that certain "Personal Information" (information about an identifiable individual) about the Investor may be required to be disclosed by the Corporation to the TSX Venture Exchange (the "Exchange") pursuant to Exchange policies and the Investor consents to the disclosure of such Personal Information by the Corporation to the Exchange, and to the collection, use and disclosure of such Personal Information by the Exchange in accordance with its specified purposes.

Contact Information of the Corporation's Attorneys:

McMillan LLP
Barristers and Solicitors
Suite 1500, 1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia, Canada, V6E 4N7
Attn: Mr. Thomas J. Deutsch
Direct phone: (604) 691 7445 and direct fax: (604) 893-2679
E-mail: thomas.deutsch@mcmillan.ca.

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PURCHASE OF CDN$2,000,000 UNITS EXEMPT FROM PROSPECTUS REQUIREMENTS

1.     Definitions

(a)     "Accredited Investor" means, for an Investor resident in Canada or the United States, a high net worth or high income person a specifically defined on the relevant accredited investor forms attached hereto;

(b)     "Applicable Securities Laws" means the securities legislation having application and the rules, policies, notices and orders issued by applicable securities regulatory authorities, including the Exchange, having application over this Offering and the Corporation including those laws in the jurisdiction in which the Investor is ordinarily resident;

(c)     "Business Day" means any day upon which banks in Vancouver, British Columbia, Canada are open for business;

(d)     "Closing" means a completion of an issue and sale by the Corporation and the purchase by the Investors of the Securities pursuant to this Subscription Agreement commencing at 9:00 a.m. Vancouver time on the Closing Date;

(e)     "Closing Date" means the date of each closing of the sale of Units pursuant to this Subscription Agreement;

(f)     "Convertible Securities" means any agreement, option, warrant, note, instrument, right or other security or conversion privilege issued or granted by the Corporation or any of its affiliates that is exercisable or convertible into, or exchangeable for, or otherwise carries the right of the holder to purchase or otherwise acquire Equity Securities, including pursuant to one or more multiple exercises, conversions and/or exchanges;

(g)     "EDGAR" means the Electronic Data-Gathering, Analysis, and Retrieval system of the SEC, accessible on the Internet at www.sec.gov;

(h)     "Equity Financing" has the meaning assigned to it in Section 4.1;

(i)     "Equity Financing Notice" has the meaning assigned to it in Section 4.1(a);

(j)     "Equity Securities" means any and all securities of the Corporation that, directly or indirectly, carry a residual right to participate in the earnings of the Corporation and, on the liquidation or winding up of the Corporation, in its assets, including Shares and Convertible Securities;

(k)     "Exchange" means the TSX Venture Exchange, the Canadian stock exchange on which the Corporation's shares are currently listed;

(l)     "Exemption" means the exemption from the prospectus or equivalent requirements under Applicable Securities Laws;

(m)     "Exempt Share Transaction" has the meaning assigned to it in Section 4.1;

(n)     "Foreign Portfolio Manager" means a person who carries on business as a "portfolio manager" (within the meaning of that term under Applicable Securities Laws) in an International Jurisdiction and who purchases Units as an agent for fully managed accounts;

(o)     "fully managed" in relation to an account, means that the Investor has the discretion as to the account as contemplated by Applicable Securities Laws;

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(p)     "IKEA Financing" means the contemplated loan agreement between the Corporation and IKEA Supply AG ("IKEA"), whereby IKEA has agreed to provide the Corporation with a loan of up to EUR 2,190,000 upon certain conditions being fulfilled before each and every draw down, which will bear interest at the simple interest rate of 1.9% per annum based on a 360 day year, and having a term of 30 months from the date of entering into the loan agreement.

(q)     "International Jurisdiction" means a country other than Canada or the United States;

(r)     "Investor" means the person or persons named as Investor on the face page of this Subscription Agreement and, if more than one person is so named, means all of them jointly and severally;

(s)     "material" means material in relation to the Corporation and any subsidiary considered on a consolidated basis;

(t)     "material change" means any change in the business, operations, assets, liabilities, ownership or capital of the Corporation and any subsidiary considered on a consolidated basis that would reasonably be expected to have a significant effect on the market price or value of the Corporation's securities;

(u)     "material fact" means any fact that significantly affects or would reasonably be expected to have a significant effect on the market price or value of the Corporation's securities;

(v)     "misrepresentation" has the meaning ascribed to that term under Applicable Securities Laws;

(w)     "Offering" means the planned sale by the Corporation of up to an aggregate of CDN$2,000,000 of Units on the terms set forth in this Subscription Agreement;

(x)     "Portfolio Manager" means an adviser who manages the investment portfolio of clients through discretionary authority granted by one or more clients;

(y)     "Pre-Emptive Right" has the meaning assigned to it in Section 4.1(c);

(z)     "Public Record" means information which has been publicly filed by the Corporation on SEDAR or on EDGAR;

(aa)     "Regulation D" means Regulation D under the U.S. Securities Act;

(bb)     "Regulation S" means Regulation S under the U.S. Securities Act;

(cc)     "Regulatory Acceptance" means the acceptance of the transaction contemplated hereby and the approval for listing of the Shares comprised in the Securities by the Exchange;

(dd)     "SEC" means the United States Securities and Exchange Commission;

(ee)     "Securities" means, collectively, the Shares, the Warrants and the Warrant Shares;

(ff)     "SEDAR" means the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators, accessible on the Internet at www.sedar.com;

(gg)     "Share" means a common share in the capital of the Corporation without par value;

(hh)     "Subscription Agreement" means this subscription agreement between the Investor and the Corporation, including all Schedules, and as it may be amended from time to time by mutual consent of the parties;

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(ii)     "Unit" means one Share and one Warrant sold together. A reference to "Unit" is for convenience only. Certificates will be issued as separate Shares and Warrants and not as Unit certificates;

(jj)     "U.S. Person" means a U.S. person as defined in Regulation S;

(kk)     "U.S. Securities Act" means the Securities Act of 1933, as amended, of the United States of America;

(ll)     "Warrants" means common share purchase warrants, and each Warrant is exercisable to acquire one additional Share of the Corporation at the exercise price of CDN$0.70 at any time during the five-year period immediately following the Closing Date on the terms described in section 3 herein;

(mm)     "Warrant Certificate" means the certificate representing the Warrant issued to an Investor as part of an Unit; and

(nn)      "Warrant Shares" means the Shares to be issued upon the exercise of the Warrants.

2.     Prospectus Exempt Subscription Commitment

2.1     The undersigned (the "Investor") hereby subscribes for and agrees to purchase from Crailar Technologies Inc. (the "Corporation"), subject to the terms and conditions set forth herein, that number of Units of the Corporation set out on the face page of this Subscription Agreement at the price of CDN$0.60 per Unit. Subject to the terms hereof, this subscription is an offer by the Investor and will be deemed to have become an agreement only upon its acceptance by the Corporation.

3.     Description of Units - Share and Warrants

3.1     Each Unit consists of one Share and one Warrant.

3.2     The Warrants will be governed by the terms and conditions set out in the certificates representing the Warrants (the "Warrant Certificates"). Each Warrant Certificate will contain or incorporate by reference, among other things, provision for the appropriate adjustment in a class, number and price of the Warrant Shares upon the occurrence of certain events, including any subdivision, consolidation or re-classification of the Shares of the Corporation or payments of stock dividends or upon the merger or re-organization of the Corporation.

3.3     Each Warrant is exercisable for 60 months from Closing at an exercise price of CDN$0.70 per Warrant Share.

4.     Pre-Emptive Rights

4.1     Subject to any required approval by, or notice to, the Exchange under the rules or requirements of the Exchange from and after the Closing Date in the event that the Corporation proposes to issue Equity Securities (an "Equity Financing"), directly or indirectly, other than the issue of Equity Securities: (i) for compensatory purposes to officers, employees, directors and consultants of the Corporation under compensation plans in existence on the date hereof; (ii) pursuant to any Convertible Securities of the Corporation outstanding on the Closing Date; or (iii) as consideration for the arm's length purchase of businesses or assets by the Corporation or its subsidiaries (the issuance of Equity Securities under paragraphs (i), (ii) and (iii) are referred to herein as an "Exempt Share Transaction"):

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(a)     the Corporation shall deliver a notice to the Investor in writing as soon as possible after the public announcement of an Equity Financing, but in any event on the earlier of: (i) the date on which the Corporation files a news release or files a Form 4A with the Exchange with respect to a private placement, (ii) the date on which the Corporation files a preliminary prospectus, registration statement or other offering document in connection with an Equity Financing that constitutes a public offering of its equity securities; and (iii) the later of (X) ten (10) Business Days prior to the proposed closing date of the Equity Financing; or (Y) the date the Corporation enters into a binding bid letter in respect of a "bought deal" Equity Financing (the "Equity Financing Notice"), with such notice specifying: (A) the total number of issued and outstanding securities in respect of each class of Equity Securities; (B) the total number of Equity Securities which are proposed to be offered for sale; (C) the rights, privileges, restrictions, terms and conditions of the Equity Securities proposed to be offered for sale; (D) the cash consideration for which the Equity Securities are proposed to be offered for sale; and (E) the proposed closing date of the Equity Financing;

(b)     as soon as practicable following the delivery of an Equity Financing Notice, the Corporation will use its commercially reasonable efforts to provide the Investor with such information concerning the Corporation as the Investor may reasonably request for the purposes of evaluating the Equity Securities;

(c)     the Investor shall have the right (the "Pre-Emptive Right") to subscribe for and purchase up to such number of Equity Securities that the Corporation proposes to offer for sale as described in the Equity Financing Notice equal, as at the date immediately prior to the closing of the Equity Financing, to the product of (A) a fraction, the numerator of which is (I) the number of Shares beneficially owned by the Investor without taking into account the Shares that may be acquired upon the exercise of warrants held by the Investor, and the denominator of which is (II) the total number of issued and outstanding Shares of the Corporation, multiplied by (B) the number of Equity Securities to be issued or sold by the Corporation as set forth in the Equity Financing Notice, for the consideration and on the same terms and conditions as offered to the other potential investors under the Equity Financing all as set forth in the Equity Financing Notice. If the Investor elects to subscribe for some or all of such Equity Securities, the Investor shall provide written notice to the Corporation by the close of business on the fifth Business Day following the day upon which the Equity Financing Notice is received by the Investor and the closing of the purchase by the Investor of such Equity Securities will occur, to the extent practicable, at the same time as the closing of the sale of the Equity Securities pursuant to the applicable Equity Financing, and, in any event, as soon as practicable thereafter;

(d)     where such Equity Financing is pursuant to a prospectus offering, the Corporation shall use commercially reasonable efforts to include the Investor's pro rata entitlement for sale as part of such prospectus offering, provided however that if the Investor's pro rata share is not included in such prospectus offering, the Corporation shall use commercially reasonable efforts to provide the Investor with the opportunity to subscribe for such Equity Securities on a private placement basis within fifteen (15) Business Days following the closing of the prospectus offering; and

(e)     the Corporation covenants and agrees to promptly apply for, and use its best efforts to expeditiously obtain, Exchange approval for the issuance of any Equity Securities to the Investor upon the exercise of its rights pursuant to this Section 4.1.

4.2     The Investor's Pre-Emptive Right hereunder will immediately terminate and be of no further force or effect on the date that is two and a half years from the Closing Date.

5.     Closing and Conditions

5.1     The Investor must deliver or fax to the offices or fax number of either counsel for the Corporation or the Corporation (as set forth on the front page of this Subscription Agreement), on or before the Closing Date, this Subscription Agreement duly completed and executed in accordance with the instructions on the face page of this Subscription Agreement together with evidence the subscription funds have been either delivered to either counsel for the Corporation or the Corporation or wired to counsel for the Corporation (each as set forth on the front pages of this Subscription Agreement). On request by the Corporation, the Investor agrees to complete and deliver any other information as may reasonably be required by the Exchange or under Applicable Securities Laws to complete the purchase and sale contemplated by this Subscription Agreement.

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5.2     Delivery against payment for the Units will be completed by the Corporation at its offices on the Closing Date provided that all conditions to Closing have been met. On the Closing certificates representing the Shares and Warrants will be delivered to the Investor as the Investor shall instruct.

5.3     The completion of the sale of Units contemplated by this Subscription Agreement is subject to the following conditions being satisfied on or prior to the Closing Date, which conditions are for the mutual benefit of the Corporation and Investor and may be waived, in whole or in part, by each of the Corporation or Investor in its sole discretion:

(a)     Regulatory Acceptance being obtained;

(b)     Closing of the IKEA Financing;

(c)     Extension of the maturity date of CAD$595,000 and US$50,000 plus interest of bridge financing from certain directors of the Company as contemplated by Section 8.1(h) of this Subscription Agreement.

6.     Investor's Acknowledgements - Regarding Risk, Restrictions, Independent Advice

6.1     The Investor represents and warrants and acknowledges and agrees (on its own behalf and, if applicable, on behalf of each beneficial purchaser for whom the Investor is contracting hereunder) with the Corporation that:

(a)     its decision to execute this Subscription Agreement and purchase the Units agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Corporation, and that its decision is based entirely upon its review of information about the Corporation in the Public Record;

(b)     no prospectus has been filed by the Corporation with any securities commission or similar authority in Canada or elsewhere in connection with the issuance of the Securities hereunder, and the issuance and the sale of the Units is subject to such sale being exempt from the prospectus requirements under Applicable Securities Laws and accordingly:

(i)     the Investor is restricted from using certain of the civil remedies available under such legislation;

(ii)     the Investor may not receive information that might otherwise be required to be provided to it under such legislation; and

(iii)     the Corporation is relieved from certain obligations that would otherwise apply under such legislation;

(c)     the Investor (or others for whom the Investor is contracting hereunder) has been advised to consult its own legal advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it (or others for whom it is contracting hereunder) is solely responsible (and the Corporation is in no way responsible) for compliance with applicable resale restrictions;

(d)     to the knowledge of the Investor, the sale of the Units was not accompanied by any public advertisement;

(e)     the Investor's offer made by this Subscription Agreement is (i) irrevocable and subject to the right of the Corporation to reject any Subscription prior to Closing by refunding any subscription funds and (ii) requires acceptance by the Corporation;

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(f)     this Subscription is not enforceable by the Investor unless it has been accepted by the Corporation and the Investor waives any requirement on the Corporation's behalf to immediately communicate its acceptance for this Subscription to the Investor;

(g)     the Securities are speculative investments which involve a substantial degree of risk;

(h)     the Investor is sophisticated in financial investments, has had access to and has received all information concerning the Corporation that the Investor has considered necessary in connection with the Investor's investment decision and the Investor will not receive an offering memorandum or similar disclosure document with respect to the Units offered hereunder;

(i)     the subscription proceeds will be available to the Corporation at Closing and this subscription is not conditional on any other subscription completing. The Corporation may pay finder's or referral fees in connection with this Subscription in its discretion;

(j)     no agency, governmental authority, regulatory body, stock exchange or other entity has made any finding or determination as to the merit for investment of, nor have any such agencies or governmental authorities made any recommendation or endorsement with respect to, the Securities; and

(k)      the Corporation will rely on the representations and warranties made herein or otherwise provided by the Investor in completing the sale and issue of the Units to the Investor.

6.2     The Investor hereby agrees that with respect to any personal information provided in this document or otherwise received by or in possession of the Corporation (collectively, the "Personal Information"), the Investor hereby consents to:

(a)     the disclosure of any Personal Information to the Exchange and such securities commissions as may have jurisdiction over the Corporation; and

(b)     the further collection, use and disclosure of any Personal Information by the aforesaid regulatory authorities for the discharge of their regulatory functions.

7.     Investor's Prospectus Requirement Exemption Status

7.1     The Investor, by the Investor's execution of this Subscription Agreement, hereby further represents, warrants to, and covenants with, the Corporation (which representations, warranties and covenants shall survive the Closing of the Offering) that the Investor is purchasing the Units as principal for its own account, that the Investor is not purchasing such Units for the benefit of any other person, that the Investor is not purchasing Units with a view to the resale or distribution of such Units and that at least one of the following Exemptions applies to the Investor:

(a)     Insiders' Family, Close Friends and Business Associates Exemption

The Investor is:

(i)     a director, executive officer or control person of the Corporation, or of an affiliate of the Corporation;

(ii)     a spouse, parent, grandparent, brother, sister, child or grandchild of a director, executive officer or control person of the Corporation, or of an affiliate of the Corporation;

(iii)     a parent, grandparent, brother, sister, child or grandchild of the spouse of a director, executive officer or control person of the Corporation or of an affiliate of the Corporation;

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(iv)     a close personal friend of a director, executive officer or control person of the Corporation, or of an affiliate of the Corporation;

(v)     a close business associate of a director, executive officer or control person of the Corporation, or of an affiliate of the Corporation;

(vi)     a founder of the Corporation or a spouse, parent, grandparent, brother, sister, child, grandchild, close personal friend or close business associate of a founder of the Corporation;

(vii)     a parent, grandparent, brother, sister, child or grandchild of a spouse of a founder of the Corporation;

(viii)     a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons described in paragraphs (i) to (vii) above; or

(ix)     a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are persons described in paragraphs (i) to (vii) above.

(b)     Minimum Amount Exemption

The aggregate acquisition cost of purchasing the Units will not be less than $150,000 paid in cash at the time of purchase, and the Investor has not been created or used solely to purchase or hold the Units in reliance on this Exemption;

(c)     Accredited Investor Exemption

The Investor is an "Accredited Investor" and the Investor has properly completed and duly executed the Representation Letter for Accredited Investors attached to this Subscription Agreement as Schedule C indicating the means by which the Investor is an Accredited Investor and confirms the truth and accuracy of all statements made by the Investor in such certificate; or

(d)     For residents of Ontario only, the Investor is:

(i)     a founder of the Corporation;

(ii)     an affiliate of a founder of the Corporation;

(iii)     a spouse, parent, brother, sister, grandparent or child of an executive officer, director or founder of the Corporation; or

(iv)     a person that is a control person of the Corporation.

7.2     Investors Outside of Canada (U.S. Investors see also section 6.3(k))

If the Investor is resident in a jurisdiction outside of Canada (including the United States) it acknowledges and certifies that:

(a)     no securities commission or similar regulatory authority has reviewed or passed on the merits of the Units;

(b)     there is no government or other insurance covering the Units;

(c)     there are risks associated with the purchase of the Units;

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(d)     there are restrictions on the Investor's ability to resell the Units, and it is the responsibility of the Investor to determine what those restrictions are and to comply with them before selling the Units;

(e)     the Corporation has advised the Investor that the Corporation is relying on an exemption from the requirements to provide the Investor with a prospectus and to sell the Units through a person registered to sell the Units under Applicable Securities Laws and, as a consequence of acquiring securities pursuant to this exemption, certain protections, rights and remedies provided by Applicable Securities Laws, including statutory rights of rescission or damages, will not be available to the Investor;

(f)     the Investor is knowledgeable of securities legislation in the Investor's jurisdiction of residence that may have application over the Investor or the Offering which would apply to this subscription and is satisfied that the Corporation and the Investor will not breach such laws by completing the transaction contemplated hereby;

(g)     the Investor is purchasing the Units pursuant to exemptions from any prospectus, registration or similar requirements under the laws of such Investor's International Jurisdiction and or, if such is not applicable, the Investor is permitted to purchase the Investor's Units, and to the investor's knowledge the Corporation has no filing obligations in the International Jurisdiction;

(h)     no laws in the International Jurisdiction require the Corporation to make any filings or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction;

(i)     the Units are being acquired for investment only and not with a view to resale or distribution within the International Jurisdiction; and

(j)     if the Investor is a resident of the United Kingdom then it complies with the provisions of Section 5.1 of this Subscription Agreement as if it were a resident of British Columbia and it is a person of the kind described in Article 11(3) of the Financial Services Act, 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, and is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of its business.

7.3     Other General Representations Applicable to All Investors

The following representations are hereby made by each Investor subject to the provisos contained below:

(a)      the Investor has no knowledge of a "material fact" or "material change", as those terms are defined in Applicable Securities Laws, in respect of the affairs of the Corporation that has not been generally disclosed to the public;

(b)     the Investor (and, if applicable, any beneficial purchaser for whom it is acting) is resident in the jurisdiction set out under the heading "Name and Address of Investor" on the execution page of this Subscription Agreement;

(c)     the Investor has the legal capacity and competence to enter into and execute this Subscription and to take all actions required pursuant hereto and, if the Investor is a corporation, or other entity, it is duly incorporated or otherwise formed and validly existing under the laws of its jurisdiction of incorporation or formation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution of this Subscription Agreement on behalf of the Investor;

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(d)     the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the Investor or of any agreement, written or oral, to which the Investor is a party or by which the Investor is bound;

(e)     the Investor has duly and validly authorized, executed and delivered this Subscription Agreement and understands it is intended to constitute a valid and binding agreement of the Investor enforceable against the Investor;

(f)     in connection with the Investor's investment in the Units, the Investor has not relied upon the Corporation for investment, legal or tax advice, and has in all cases sought the advice of the Investor's own personal investment advisor, legal counsel and tax advisers or has waived its rights thereto and the Investor is either experienced in or knowledgeable with regard to the affairs of the Corporation, or either alone or with its professional advisors is capable, by reason of knowledge and experience in financial and business matters in general, and investments in particular, of evaluating the merits and risks of an investment in the Units and is able to bear the economic risk of the investment and it can otherwise be reasonably assumed to have the capacity to protect its own interest in connection with the investment in the Units;

(g)     no person has made to the Investor any written or oral representations:

(i)     that any person will resell or repurchase the Units or any of the Securities;

(ii)     that any person will refund the purchase price for the Units;

(iii)     as to the future price or value of the Units or any of the Securities; or

(iv)     that the Units or any of the Securities will be listed and posted for trading on any stock exchange or that application has been made to list the Units or any of the Securities on any stock exchange;

(h)     the Investor represents and warrants that the aggregate Subscription amount (purchase price) which will be advanced by the Investor to the Corporation hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the "PCMLA") or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (United States) (commonly referred to as the "USA PATRIOT Act"), and the Investor acknowledges that the Corporation may in the future be required by law to disclose the Investor's name and other information relating to this Subscription Agreement and the Investor's subscription hereunder, on a confidential basis, pursuant to the PCMLA. To the best of its knowledge (i) none of the purchase price to be provided by the Investor (A) have been or will be derived from or related to any activity that is deemed criminal under the law of Canada, the United States of America or any other jurisdiction, or (B) are being tendered on behalf of a person or entity who has not been identified to the Investor, and (ii) it shall promptly notify the Corporation if the Investor discovers that any of such representations cease to be true, and to provide the Corporation with appropriate information in connection therewith;

(i)     the Investor acknowledges and consents to the fact that the Corporation is collecting the Investor's (and any beneficial purchaser for which the Investor is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar replacement or supplemental provincial or federal legislation or laws in effect from time to time) for the purpose of completing the Investor's subscription. The Investor acknowledges and consents to the Corporation retaining the personal information for so long as permitted or required by applicable law or business practices. The Investor further acknowledges

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and consents to the fact that the Corporation may be required by Applicable Securities Laws, stock exchange rules and/or Investment Industry Regulatory Organization of Canada rules to provide regulatory authorities any personal information provided by the Investor respecting itself (and any beneficial purchaser for which the Investor is contracting hereunder). The Investor represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Investor is contracting. In addition to the foregoing, the Investor agrees and acknowledges that the Corporation may use and disclose the Investor's personal information, or that of each beneficial purchaser for whom the Investor are contracting hereunder, as follows:

(i)     for internal use with respect to managing the relationships between and contractual obligations of the Corporation and the Investor or any beneficial purchaser for whom the Investor is contracting hereunder;

(ii)     for use and disclosure to the Corporation's transfer agent and registrar;

(iii)     for use and disclosure for income tax related purposes, including without limitation, where required by law, disclosure to Canada Revenue Agency;

(iv)     disclosure to securities regulatory authorities (including the Exchange) and other regulatory bodies with jurisdiction with respect to reports of trade and similar regulatory filings;

(v)     disclosure to a governmental or other authority (including the Exchange) to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure;

(vi)     disclosure to professional advisers of the Corporation in connection with the performance of their professional services;

(vii)     disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with the Investor's prior written consent;

(viii)     disclosure to a court determining the rights of the parties under this Subscription Agreement; or

(ix)     for use and disclosure as otherwise required or permitted by law;

(j)     the Investor further acknowledges and agrees that the Exchange collects personal information in forms submitted by the Corporation, which will include personal information regarding the Investor. The Investor agrees that the Exchange may use this information in the manner provided for in Appendix 6A to the TSX-V Corporate Finance Manual, a copy of which may be viewed at the TSX-V website, www.tsx.com and is incorporated herein by reference. The Investor further acknowledges that the Ontario Securities Commission collects personal information in forms submitted to it by the Corporation, including information about the Investor, the Investor's address and contact information, and the Investor's subscription. The Investor acknowledges that the Ontario Securities Commission is entitled to collect the information under authority granted to it under Applicable Securities Laws for the purpose of administration and enforcement of the Applicable Securities Laws in Ontario. The Investor acknowledges that it may obtain information regarding the collection of this information by contacting the Administrative Assistant to the Director of Corporate Finance, Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto, Ontario M5H 3S8, Telephone: (416) 593-3682, Facsimile: (416) 593-8252. The Investor consents to the collection of personal information by the Ontario Securities Commission;

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No U.S. Investor Participation Except with Accredited Investor Certificate of U.S. Purchaser (Schedule D)

(k)     the Investor represents and warrants EITHER (i) or (ii) that:

(i)     the Investor:

(A)     is not, and is not purchasing the Units for the account of or benefit of, a U.S. Person or a person in the United States;

(B)     was not offered Units in the United States; and

(C)     did not execute or deliver this Agreement in the United States; OR

(ii)     the Investor:

(A)     is a U.S. Person or a person in the Unites States who is an "accredited investor" as defined in Rule 501(a) of Regulation D under the U.S. Securities Act; and

(B)     has duly completed, executed and delivered to the Corporation the Certificate of U.S. Purchaser attached hereto as Schedule D, and represents, warrants and covenants to the Corporation as to the accuracy of all matters set out therein as at the date hereof and on the Closing Date;

(l)     the Investor additionally represents and warrants that:

(i)     the Investor does not have any agreement or understanding (either written or oral) with any U.S. Person or a person in the United States respecting:

(A)     the transfer or assignment of any rights or interests in any of the Securities;

(B)     the division of profits, losses, fees, commissions, or any financial stake in connection with this Subscription Agreement; or

(C)     the voting of any of the Securities; and

(ii)     the Investor has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons or for the account or benefit of U.S. Persons; and

(iii)     the Investor represents that the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act;

(m)     the Investor acknowledges that:

(i)     the Securities have not been registered under the U.S. Securities Act, and may not be offered or sold in the United States or to a U.S. Person unless an exemption from such registration requirements is available;

(ii)     the Corporation has no obligation or present intention of filing a registration statement under the U.S. Securities Act in respect of the Securities;

(iii)     the Investor will not engage in any directed selling efforts (as defined by Regulation S under the U.S. Securities Act) in the United States in respect of the Securities, which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of conditioning the market in the United States for the resale of the Securities; and

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(iv)     the Investor acknowledges that any person who exercises a Warrant will be required to provide to the Corporation either:

(A)     written certification that it is not a U.S. Person and that such Warrant is not being exercised within the United States or on behalf of, or for the account or benefit of, a U.S. Person or a person in the United States; or

(B)     a written opinion of counsel or other evidence satisfactory to the Corporation to the effect that the Warrant Shares have been registered under the U.S. Securities Act and applicable state securities laws or that the issuance of the Warrant Shares is exempt from registration thereunder;

Compliance with Resale Laws

(n)     the Investor will comply with Applicable Securities Laws concerning the resale of the Securities and all related restrictions (and the Corporation is not in any way responsible for such compliance) and shall speak and consult with its own legal advisors with respect to such compliance;

Own Expense

(o)     the Investor acknowledges and agrees that all costs and expenses incurred by the Investor (including any fees and disbursements of any special counsel or other advisors retained by the Investor) relating to the purchase of the Units shall be borne by the Investor; and

International Investor

(p)     if the Investor is resident of an International Jurisdiction (meaning herein a country other than Canada or the United States) then:

(i)     the Investor is knowledgeable of securities legislation having application or jurisdiction over the Investor and the Offering (other than the laws of Canada and the United States) which would apply to this subscription;

(ii)      the Investor is purchasing the Units pursuant to exemptions from any prospectus, registration or similar requirements under the laws of that International Jurisdiction or, if such is not applicable, the Investor is permitted to purchase the Investor's Units and the Corporation has no filing obligations in the International Jurisdiction;

(iii)     no laws in the Investor's International Jurisdiction require the Corporation to make any filings or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction; and

(iv)     the Units are being acquired for investment only and not with a view to resale and distribution within the Investor's International Jurisdiction.

8.     The Corporation's Representations

8.1     The Corporation represents and warrants to the Investor that, as of the date of this Subscription Agreement and at Closing hereunder (which representations and warranties shall survive the Closing of the Offering):

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(a)     the Corporation is a "reporting issuer" in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador and it is not in default in any material respect of any requirement of the Applicable Securities Laws in such jurisdictions, and the Corporation is not included on a list of defaulting reporting issuers maintained by any of the securities regulators in such jurisdictions;

(b)     the Corporation's Public Record is correct in all material respects and does not omit any material information about the Corporation;

(c)     the Corporation and its subsidiaries are valid and existing corporations duly incorporated and in good standing under the laws of the jurisdictions in which they are incorporated, continued or amalgamated;

(d)     all taxes (including income tax, capital tax, payroll taxes, employer health tax, workers' compensation payments, property taxes, customs duties and land transfer taxes), duties, royalties, levies, imposts, assessments, deductions, charges or withholdings and all liabilities with respect thereto including any penalty and interest payable with respect thereto (collectively, "Taxes") due and payable or required to be collected or withheld and remitted, by the Corporation and its subsidiaries have been paid, collected or withheld and remitted as applicable, except for where the failure to pay such Taxes would not have a material adverse effect. All tax returns, declarations, remittances and filings required to be filed by the Corporation and its subsidiaries have been filed with all appropriate Governmental Authorities and all such returns, declarations, remittances and filings are complete and accurate and no material fact or facts have been omitted therefrom which would make any of them misleading or have a material adverse effect.

(e)     the Corporation and each of its subsidiaries has established on its books and records reserves that are adequate for the payment of all material Taxes not yet due and payable and there are no liens for Taxes on the assets of the Corporation or any of its subsidiaries that are material, and there are no audits pending of the tax returns of the Corporation or any of its subsidiaries (whether federal, state, provincial, local or foreign) and there are no claims which have been or may be asserted relating to any such tax returns, which audits and claims, if determined adversely, would result in the assertion by any governmental agency of any deficiency that would result in a material adverse effect;

(f)     the Corporation has complied, or will comply, with Applicable Securities Laws and all applicable corporate laws and regulations in connection with the offer, sale and issuance of the Securities, and in connection therewith has not engaged in any "direct selling efforts," as such term is defined in Regulation S, or any "general solicitation or general advertising" as described in Regulation D;

(g)     the financial statements contained in the Public Record accurately reflect the financial position of the Corporation as at the date thereof, and no adverse material changes in the financial position of the Corporation have taken place since the date of the Corporation's last financial statements except as filed in the Public Record;

(h)     the creation, issuance and sale of the Securities by the Corporation does not and will not conflict with and does not and will not result in a breach of any of the terms, conditions or provisions of its constating documents or any agreement or instrument to which the Corporation is a party;

(i)     the Securities will, at the time of issue, be duly allotted, validly issued, fully paid and non-assessable and will be free of all liens, charges and encumbrances and the Corporation will reserve sufficient Shares in the treasury of the Corporation to enable it to issue the Units;

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(j)     this Subscription Agreement when accepted has been duly authorized by all necessary corporate action on the part of the Corporation and, subject to acceptance by the Corporation, constitutes a valid obligation of the Corporation legally binding upon it and enforceable in accordance with its terms;

(k)     there is no person acting or purporting to act at the request or on behalf of the Corporation that is entitled to any brokerage or finder's fee in connection with the Offering;

(l)     neither the Corporation nor any of its subsidiaries is a party to any actions, suits or proceedings which could materially affect its business or financial condition, and to the best of the Corporation's knowledge no such actions, suits or proceedings have been threatened as at the date hereof, except as disclosed in the Public Record;

(m)     no order ceasing or suspending trading in the securities of the Corporation nor prohibiting sale of such securities has been issued to the Corporation or its directors, officers or promoters and to the best of the Corporation's knowledge no investigations or proceedings for such purposes are pending or threatened;

(n)     the authorized capital of the Corporation consists of an unlimited number of Common Shares with no par value of which, as at the close of business on December 18, 2013, 44,472,698 Shares were issued and outstanding as fully paid and non-assessable shares in the capital of the Corporation; and

(o)     except as set out in the Public Record or herein, no person has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming a right, agreement or option for the issue or allotment of any unissued Shares of the Corporation or any other security convertible or exchangeable for any such shares or to require the Corporation to purchase, redeem or otherwise acquire any of the issued or outstanding shares of the Corporation.

9.     Covenants of the Corporation

9.1     The Corporation hereby covenants (which covenants shall survive the Closing of the Offering) with each Investor that it will:

(a)     offer, sell, issue and deliver the Securities pursuant to exemptions from the prospectus filing, or qualification requirements of Applicable Securities Laws and otherwise fulfill all legal requirements required to be fulfilled by the Corporation in connection with the Offering;

(b)     use its commercially reasonable efforts to maintain its status as a "reporting issuer" (or the equivalent thereof) in any province of Canada;

(c)      ensure that the Shares are duly issued as fully paid and non-assessable shares in the capital of the Corporation on payment of the Purchase Price;

(d)     ensure that the Shares are conditionally approved for listing on the Exchange on the Closing Date, subject to standard post-closing filings;

(e)     use its commercially reasonable efforts to maintain the listing of the Investor's Shares (or any shares or securities, whether of the Corporation or another company or entity, into which the Investor's Shares may from time to time be converted, reclassified or exchanged) on the Exchange or another recognized stock exchange or quotation system so long as the Corporation meets the minimum listing requirements of the Exchange or such other exchange or quotation system;

(f)     within the required time, file with the Exchange any documents, reports and information, in the required form, required to be filed by Applicable Securities Laws in connection with the Offering, together with any applicable filing fees and other materials;

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(g)     use its commercially reasonable efforts to raise CAD$3 million through a best efforts offering of Shares pursuant to a prospectus in Canada and registration statement in the United States to be launched during the first 90 days of 2014 (the "2014 Equity Offering");

(h)     prior to Closing, extend the maturity date in respect of CAD$595,000 and US$50,000 plus interest of current bridge financing from certain directors of the Company until the earlier of (i) the issue and sale of a minimum of CAD$3 million in Shares pursuant to the 2014 Equity Offering, and (ii) one year from the Closing Date;

(i)     pay a total of CAD$20,000 to the Investor at Closing with respect to the Investor's transactions costs associated with the purchase of the Units pursuant to this Subscription Agreement, and the Investor shall be responsible for any transaction costs, including, but not limited to, legal fees and all other reasonable costs, charges and expenses, over and above such CAD$20,000.

10.     Resale Restrictions and Legending of Securities

10.1     The Investor acknowledges that any resale of the Securities will be subject to resale restrictions required by the Applicable Securities Laws. The Investor will receive certificates representing the Securities bearing the following legend imprinted thereon:

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [four months plus one day from the Closing Date]."

10.2     If the Exchange hold period is applicable to the Investor, the Investor will also receive certificates representing the Securities bearing the following legend imprinted thereon:

"WITHOUT PRIOR WRITTEN APPROVAL OF 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 TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL [four months and a day from the closing date]".

10.3     The Investor acknowledges that the Issuer is considered a U.S. "domestic issuer" under applicable U.S. securities laws and, as such, upon the original issuance therefore and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, certificates representing the Securities and all certificates issued in exchange therefore or in substitution thereof, shall bear one of the following legends:

The certificates representing the Securities issued outside the United States to non-U.S. Persons shall bear the following legend:

'THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE U.S. SECURITIES ACT."

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The certificates representing the Shares issued in the United States or to U.S. Persons shall bear the following legend:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.";

provided, however, in either case, if any Shares, Warrants or Warrant Shares are being sold, the legend may be removed by delivery to the registrar and transfer agent and the Corporation an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

In addition, the Investor understands and agrees that the certificates representing the Warrants, and all certificates issued in exchange therefore or in substitution thereof, shall bear the applicable legend set forth above in this Section 9.3 as well as the following legend:

"THESE WARRANTS AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE WARRANTS AND THE SHARES ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT."

11.     Investor's Consent to Corporation to Correct or Complete Subscription Agreement

11.1     The Investor consents to the Corporation, and its law firm, completing or correcting the Investor's Subscription Agreement in any non-material fashion as may reasonably be required to make it effective.

12.     General

12.1     Time is of the essence hereof.

12.2     Neither this Subscription Agreement nor any provision hereof shall be modified, changed, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.

12.3     The parties hereto shall execute and deliver all such further documents and instruments and do all such acts and things as may either before or after the execution of this Subscription Agreement be reasonably required to carry out the full intent and meaning of this Subscription Agreement.

12.4     This Subscription Agreement shall be subject to, governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada as applicable and the Investor hereby irrevocably attorns to the jurisdiction of the Courts situate therein.

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12.5     This Subscription Agreement may not be assigned by any party hereto.

12.6     The Corporation shall be entitled to rely on delivery of a facsimile copy of this Subscription Agreement, and acceptance by the Corporation of a facsimile copy of this Subscription Agreement shall create a legal, valid and binding agreement between the Investor and the Corporation in accordance with its terms.

12.7     This Subscription Agreement may be signed by the parties in as many counterparts as may be deemed necessary, each of which so signed shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument.

12.8     This Subscription Agreement and including, without limitation, section 4 and the other representations, warranties, acknowledgements and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties notwithstanding the completion of the purchase of the Units by the Investor pursuant hereto, the completion of the issue of Units of the Corporation and any subsequent disposition by the Investor of the Units.

12.9     The invalidity or unenforceability of any particular provision of this Subscription shall not affect or limit the validity or enforceability of the remaining provisions of this Subscription.

12.10     Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Securities and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute, by common law, by the Corporation, by the Investor, or by anyone else.

12.11     All monetary amounts are in Canadian dollars unless otherwise expressly stipulated.

SCHEDULE A

PERSONAL INFORMATION ACKNOWLEDGEMENT AND CONSENT

IN THE MATTER OF PERSONAL INFORMATION PROVIDED TO
CRAILAR TECHNOLOGIES INC. (the "Issuer")

ALL Subscribers must complete this Acknowledgement.

"Personal Information" means any information about the undersigned and includes information obtained from the undersigned through written or verbal means between the undersigned and the Issuer, its agents or representatives.

ACKNOWLEDGEMENT AND CONSENT:

I, the undersigned, have read and understand the TSX Personal Information Acknowledgement set out below.

I hereby consent to:

(1)      the disclosure of my Personal Information to the TSX Venture Exchange Inc. and its affiliates, authorized agents, subsidiaries and divisions, including the TSX Venture Exchange (collectively referred to as the "Exchange") as requested from the Exchange;

(2)      the collection, use and disclosure of my Personal Information by the Exchange for the purposes described below under "TSX Personal Information Acknowledgement" or as otherwise identified by the Exchange, from time to time;

(3)      the disclosure of my Personal Information to the British Columbia Securities Commission and to any other applicable regulatory authority (collectively referred to as the "Regulatory Authorities") as requested from the Regulatory Authorities; and

(4)      the collection, use and disclosure of my Personal Information by the Regulatory Authorities for such purposes as are identified by the Regulatory Authorities from time to time.

Dated: December ____, 2013.

                                                                                     
Name of Subscriber [Please Print]

                                                                                     
Signature of Subscriber or Authorized Signatory of Subscriber

                                                                                     
Name and Office of Authorized Signatory of Subscriber

                                                                                     
Signature of Subscriber or Authorized Signatory of Subscriber

                                                                                     
Name and Office of Authorized Signatory of Subscriber

                                                                                     
                                                                                     
Address of Subscriber

TSX Personal Information Acknowledgement

TSX Venture Exchange Inc. and its affiliates, authorized agents, subsidiaries and divisions, including the TSX Venture Exchange (collectively referred to as the "Exchange") collect Personal Information in certain Forms that are submitted by the individual and/or by an Issuer or Applicant and use it for the following purposes:

• to conduct background checks;
• to verify the Personal Information that has been provided about each individual;
• to consider the suitability of the individual to act as an officer, director, insider, promoter, investor relations provider or, as applicable, an employee or consultant, of the Issuer or Applicant;
• to consider the eligibility of the Issuer or Applicant to list on the Exchange;
• to provide disclosure to market participants as to the security holdings of directors, officers, other insiders and promoters of the Issuer, or its associates or affiliates;
• to conduct enforcement proceedings; and
• to perform other investigations as required by and to ensure compliance with all applicable rules, policies, rulings and regulations of the Exchange, securities legislation and other legal and regulatory requirements governing the conduct and protection of the public markets in Canada.

As part of this process, the Exchange also collects additional Personal Information from other sources, including but not limited to, securities regulatory authorities in Canada or elsewhere, investigative, law enforcement or self-regulatory organizations, regulations services providers and each of their subsidiaries, affiliates, regulators and authorized agents, to ensure that the purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be disclosed:

(a)      to the agencies and organizations in the preceding paragraph, or as otherwise permitted or required by law, and they may use it in their own investigations for the purposes described above; and

(b)     on the Exchange's website or through printed materials published by or pursuant to the directions of the Exchange.

The Exchange may from time to time use third parties to process information and/or provide other administrative services. In this regard, the Exchange may share the information with such third party service providers.

SCHEDULE B

FORM 4C

CORPORATE PLACEE REGISTRATION FORM

This Form will remain on file with the Exchange and must be completed if required under section 4(b) of Part II of Form 4B. The corporation, trust, portfolio manager or other entity (the "Placee") need only file it on one time basis, and it will be referenced for all subsequent Private Placements in which it participates. If any of the information provided in this Form changes, the Placee must notify the Exchange prior to participating in further placements with Exchange listed Issuers. If as a result of the Private Placement, the Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded that they must file a Personal Information Form (2A) or, if applicable, Declarations, with the Exchange.

1. Placee Information:

(a)     Name:  

(b)     Complete Address:

(c)     Jurisdiction of Incorporation or Creation:

2.     (a)     Is the Placee purchasing securities as a portfolio manager: (Yes/No)? ____

(b)     Is the Placee carrying on business as a portfolio manager outside of Canada:
(Yes/No)? ____

3.     If the answer to 2(b) above was "Yes", the undersigned certifies that:

(a)     it is purchasing securities of an Issuer on behalf of managed accounts for which it is making the investment decision to purchase the securities and has full discretion to purchase or sell securities for such accounts without requiring the client's express consent to a transaction;

(b)     it carries on the business of managing the investment portfolios of clients through discretionary authority granted by those clients (a "portfolio manager" business) in ____________________ [jurisdiction], and it is permitted by law to carry on a portfolio manager business in that jurisdiction;

(c)     it was not created solely or primarily for the purpose of purchasing securities of the Issuer;

(d)     the total asset value of the investment portfolios it manages on behalf of clients is not less than $20,000,000; and

(e)     it has no reasonable grounds to believe, that any of the directors, senior officers and other insiders of the Issuer, and the persons that carry on investor relations activities for the Issuer has a beneficial interest in any of the managed accounts for which it is purchasing.

4.     If the answer to 2(a). above was "No", please provide the names and addresses of Control Persons of the Placee:

Name* Address

*     If the Control Person is not an individual, provide the name of the individual that makes the investment decisions on behalf of the Control Person.

5.     Acknowledgement - Personal Information and Securities Laws

(a)     "Personal Information" means any information about an identifiable individual, and includes information contained in sections 1, 2 and 4, as applicable, of this Form.

The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

(i)     the disclosure of Personal Information by the undersigned to the Exchange (as defined in Appendix 6B) pursuant to this Form; and

(ii)     the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

(b)     The undersigned acknowledges that it is bound by the provisions of applicable Securities Law, including provisions concerning the filing of insider reports and reports of acquisitions.

Dated and certified (if applicable), acknowledged and agreed, at                                                                                      

on December ____, 2013.

                                                                                     
(Name of Purchaser - please print)

                                                                                     
(Authorized Signature)

                                                                                     
(Official Capacity - please print)

                                                                                     
(Please print name of individual whose signature
appears above)

                                                                                     
(Authorized Signature)

                                                                                     
(Official Capacity - please print)

                                                                                     (Please print name of individual whose signature
appears above)

THIS IS NOT A PUBLIC DOCUMENT

SCHEDULE C

REPRESENTATION LETTER

(FOR ACCREDITED INVESTORS)

To:     Crailar Technologies Inc. ("the Corporation").

In connection with the purchase of Units of the Corporation (the "Units") by the undersigned subscriber or, if applicable, the principal on whose behalf the undersigned is purchasing as agent (the "Subscriber" for the purposes of this Schedule C), the Subscriber hereby represents, warrants, covenants and certifies to the Corporation that:

1.     The Subscriber is purchasing the Units as principal for its own account or is deemed to be acting as principal pursuant to National Instrument 45-106 entitled "Prospectus and Registration Exemptions" ("NI 45-106");

2.     The Subscriber is an "accredited investor" within the meaning of NI 45-106 by virtue of satisfying the indicated criterion as set out in Appendix "A" to this Representation Letter; and

3.     Upon execution of this Schedule C by the Subscriber, this Schedule C shall be incorporated into and form a part of the Subscription Agreement.

Dated: December ____, 2013.

                                                                                         
Print name of Subscriber

By:                                                                                   
Signature

                                                                                        
Print name of Signatory (if different from Subscriber)

                                                                                         
Title

By:                                                                                  
Signature

                                                                                         
Print name of Signatory (if different from Subscriber)

                                                                                         
Title

__________

IMPORTANT: PLEASE INITIAL APPENDIX "A" ON THE NEXT PAGE

APPENDIX "A" TO SCHEDULE C

Accredited Investor - (defined in NI 45-106) means:

[ ]     (a)     an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;

[ ]     (b)     an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

[ ]     (c)     an individual who, either alone or with a spouse, has net assets of at least $5,000,000;

[ ]     (d)     a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;

[ ]     (e)     a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;

[ ]     (f)     a Canadian financial institution, or a Schedule III bank;

[ ]     (g)     the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

[ ]     (h)     a subsidiary of any person referred to in paragraphs (f) or (g), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;

[ ]     (i)     a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);

[ ]     (j)     an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (i);

[ ]     (k)     the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;

[ ]     (l)     a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

[ ]     (m)     any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;

[ ]     (n)     a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;

[ ]     (o)     an investment fund that distributes or has distributed its securities only to:

(i)     a person that is or was an accredited investor at the time of the distribution;

(ii)     a person that acquires or acquired securities in the circumstances referred to in Sections 2.10 [Minimum amount investment], and 2.19 [Additional investment in investment funds] of NI 45-106; OR

(iii)     a person described in paragraph (i) or (ii) that acquires or acquired securities under Section 2.18 [Investment fund reinvestment] of NI 45-106;

[ ]     (p)     an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;

[ ]     (q)     a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;

[ ]     (r)     a person acting on behalf of a fully managed account managed by that person, if that person:

(i)     is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; and

(ii)     in Ontario, is purchasing a security that is not a security of an investment fund;

[ ]     (s)     a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;

[ ]     (t)     an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (f) to (i) or paragraph (n) in form and function;

[ ]     (u)     an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; OR

[ ]     (v)     a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor;

and for purposes hereof:.

(a)	"Canadian financial institution" means:
	(i)	an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of the Cooperative Credit Associations Act (Canada); or
	(ii)	a bank, loan corporation, trust company , trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;
(b)	"control person" has the meaning ascribed to that term in securities legislation except Ontario where "control person" means any person that holds or is one of a combination of persons that hold:
	(i)	a sufficient number of any of the securities of an Corporation so as to affect materially the control of the Corporation; or
	(ii)	more than 20% of the outstanding voting securities of an Corporation except where there is evidence showing that the holding of those securities does not affect materially the control of that Corporation;
(c)	"eligibility adviser" means a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed;
(d)	"executive officer" means, for a Corporation, an individual who is
	(i)	a chair, vice-chair or president;
	(ii)	a vice-president in charge of a principal business unit, division or function including sales, finance or production;
	(iii)	an officer of the Corporation or any of its subsidiaries and who performs a policy-making function in respect of the Corporation; or
	(iv)	performing a policy-making function in respect of the Corporation;
(e)	"financial assets" means (i) cash, (ii) securities or (iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;
(f)	"founder" means, in respect of a Corporation, a person who:
	(i)	acting alone, in conjunction or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the Corporation; and
	(ii)	at the time of the trade is actively involved in the business of the Corporation;
(g)	"fully managed account" means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client's express consent to a transaction;
(h)	"investment fund" has the meaning ascribed thereto in National Instrument 81-106 - Investment Fund Continuous Disclosure;
(i)	"person" includes:
	(i)	an individual;
	(ii)	a corporation;
	(iii)	a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and
	(iv)	an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative;
(j)	"related liabilities" means:
	(i)	liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets; or
	(ii)	liabilities that are secured by financial assets.
(k)	"spouse" means, an individual who:
	(i)	is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual;
	(ii)	is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender; or
	(iii)	in Alberta, is an individual referred to in paragraph (i) or (ii) immediately above or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and
(l)	"subsidiary" means a Corporation that is controlled directly or indirectly by another Corporation and includes a subsidiary of that subsidiary;
Affiliated Entities and Control
1.     A Corporation is considered to be an affiliate of another Corporation if one of them is a subsidiary of the other, or if each of them is controlled by the same person.
2.     A person (first person) is considered to control another person (second person) if: (a)     the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless the first person holds the voting securities only to secure an obligation; (b)     the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests in the partnership; or (c)     the second person is a limited partnership and the general partner of the limited partnership is the first person.

SCHEDULE D

ACCREDITED INVESTOR CERTIFICATE OF U.S. PURCHASER

(THIS FORM MUST BE COMPLETED BY UNITED STATES INVESTORS ONLY)

A "United States investor" is: (a) any person who is, or who is purchasing the Units for the account of or benefit of, a U.S. Person or a person in the United States; (b) any person who was offered Units in the United States; or (c) any person who executed or delivered this Agreement in the United States. A U.S. Person includes: (a) any natural person resident in the United States; (b) any partnership or corporation organized or incorporated under the laws of the United States; (c) any trust of which any trustee is a U.S. person; (d) any partnership or corporation organized outside the United States by a U.S. Person principally for the purpose of investing in securities not registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), unless it is organized or incorporated, and owned, by accredited investors (within the meaning assigned in Rule 501(a) of Regulation D) who are not natural persons, estates or trusts; (e) any estate of which any executor or administrator is a U.S. person. Capitalized terms not specifically defined in this Certificate will have the meaning ascribed to them in the Subscription Agreement to which this Certificate is attached.

2.     The Investor covenants, represents and warrants to Crailar Technologies Inc. (the "Corporation") that:

(a)     it understands that the Securities have not been and will not be registered under the U.S. Securities Act and that the sale contemplated hereby is being made in reliance on the exemption from such registration requirement provided by Rule 506 of Regulation D promulgated under the U.S. Securities Act;

(b)     it acknowledges that it has not purchased the Units as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

(c)     it understands and agrees that there may be material tax consequences to the Investor of an acquisition, disposition or exercise of any of the Securities. The Corporation gives no opinion and makes no representation with respect to the tax consequences to the Investor under United States, state, local or foreign tax law of the undersigned's acquisition or disposition of such securities. In particular, no determination has been made whether the Corporation will be a "passive foreign investment company" within the meaning of Section 1291 of the United States Internal Revenue Code of 1986, as amended;

(d)      it understands and agrees that the financial statements of the Corporation have been prepared in accordance with United States generally accepted accounting principles, which differ in some respects from Canadian generally accepted accounting principles, and thus may not be comparable to financial statements of United States companies;

(e)     it understands and acknowledges that upon the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the U.S. Securities Act or applicable state securities laws and regulations, the certificates representing the Shares, Warrants, and, upon issuance, any Warrant Shares will bear a legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY [for Warrants add: AND THE SECURITIES ISSUABLE UPON exercise HEREOF] HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. they MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSEFERRED EXPECT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.";

(f)     it understands and acknowledges that the Corporation is not currently, nor is it obligated to become a "foreign issuer";

(g)     it consents to the Corporation making a notation on its records or giving instruction to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described herein;

(h)     if an individual, it is a resident of the state or other jurisdiction listed in its address on the signature page of the Subscription Agreement, or if the Investor is not an individual, the office of the Investor at which the Investor received and accepted the offer to purchase the Corporation's Securities is the address listed on the signature page of the Subscription Agreement;

(i)     it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Units and it is able to bear the economic risk of loss of its entire investment;

(j)     the Corporation has provided to it the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and it has had access to such information concerning the Corporation as it has considered necessary or appropriate in connection with its investment decision to acquire the Units;

(k)     it is acquiring the Units for its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the Securities in violation of the United States securities laws;

(l)     if it decides to offer, sell or otherwise transfer any of the Securities, it will not offer, sell or otherwise transfer any of such Securities directly or indirectly, unless:

(i)     the sale is to the Corporation;

(ii)     the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations;

(iii)     the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder and in accordance with any applicable state securities or "Blue Sky" laws; or

(iv)     the Securities are sold in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities,

and, in the case of clauses (iii) or (iv) above, it has prior to such sale furnished to the Corporation an opinion of counsel or other evidence of exemption in form and substance reasonably satisfactory to the Corporation stating that such transaction is exempt from registration under applicable securities laws and that the legend referred to in paragraph (e) above may be removed.;

(m)      it understands and agrees that the Warrants may not be exercised in the United States or by a U.S. Person or for the account or benefit of a U.S. Person or a person in the United States unless registered under the U.S. Securities Act and any applicable state securities laws, or unless an exemption from such registration requirements is available and the holder has furnished an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to such effect, and that certificates representing the Warrants will bear a legend to the following effect:

"THESE WARRANTS AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE WARRANTS AND THE SHARES ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT."; and

(n)     it, and if applicable, each beneficial purchaser for whose account it is purchasing the Units, is an "accredited investor" as defined in Regulation D by virtue of satisfying one or more of the categories indicated below (please hand-write your initial on the appropriate lines and write "SUB" for the criteria the Investor meets and "BEN" for the criteria any persons for whose account or benefit the Investor is purchasing the Units meets):

Category 1.	A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
Category 2.	A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
Category 3.	A broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934; or
Category 4.	An insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; or
Category 5.	An investment company registered under the Investment Company Act of 1940; or
Category 6.	A business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; or
Category 7.	A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or
Category 8.	A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of U.S. $5,000,000; or
Category 9.	An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or
Category 10.	A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or
Category 11.	An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Units, with total assets in excess of U.S. $5,000,000; or
Category 12.	A director, executive officer or general partner of the Corporation; or
Category 13.	A natural person whose individual net worth, or joint net worth with that person's spouse, exceeds U.S. $1,000,000 (for the purposes of calculating net worth, (i) the person's primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of the securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability); or
Category 14.	A natural person who had an individual income in excess of U.S. $200,000 in each year of the two most recent years or joint income with that person's spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
Category 15.	A trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under Regulation D; or

Category 16. An entity in which each of the equity owners meets the requirements of one of the above categories.

ONLY UNITED STATES INVESTORS NEED TO COMPLETE AND SIGN

Dated: _________________________, 2013.

X                                                                                    
Signature of individual (if Subscriber is an individual)

X                                                                                     
Authorized signatory (if Subscriber is not an individual)

                                                                                        
Name of Subscriber (please print)

                                                                                           
Name of authorized signatory (please print)

                                                                                         
Official capacity of authorized signatory (please print)

__________

EX-4

WARRANT CERTIFICATE

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 21, 2014.

WITHOUT PRIOR WRITTEN APPROVAL OF 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 TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 21, 2014.

THESE WARRANTS AND THE SECURITIES DELIVERABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

THESE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THESE WARRANTS AND THE SECURITIES DELIVERABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE AFTER 5:00 PM (VANCOUVER TIME) ON DECEMBER 20, 2018

WARRANT TO PURCHASE
COMMON SHARES OF CRAILAR TECHNOLOGIES INC.

Warrant Certificate Number: u                                                            Number of Warrants: u

THIS IS TO CERTIFY THAT for value received, u (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 December 20, 2018 (the "Expiry Time") one fully paid and non-assessable common share ("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 a purchase price (the purchase price in effect from time to time being called the "Exercise Price") of CAD$0.70 per Common Share if exercised on or before December 20, 2018, subject to adjustment as provided herein.

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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.     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

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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 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 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.

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 December 20, 2013 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;

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(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:

(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).

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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.

(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

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(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).

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;

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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:

(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

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(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

(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 Reoganization, 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.

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(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.

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(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.

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

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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 construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

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.

Notices to the Corporation shall be addressed to:

Crailar Technologies Inc.
305-4420 Chatterton Way
Victoria, British Columbia
V8X 5J2

Attention: Guy Prevost, Director
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.

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10.     Legends on Common Shares:

10.1     Canadian Legends: Any certificate representing Common Shares issued upon the exercise of this Warrant prior to the date which is four months and one day after the date hereof will bear the following legends:

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 21, 2014."

and

"WITHOUT PRIOR WRITTEN APPROVAL OF 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 TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 21, 2014."

provided that at any time subsequent to the date which is four months and one day after the date hereof any certificate representing such Common Shares may be exchanged for a certificate bearing no such legends.

10.2     U.S. Legends: The Warrantholder acknowledges that the Corporation is considered a U.S. "domestic issuer" under applicable U.S. securities laws and, as such, all certificates representing Common Shares issued upon the exercise of Warrants shall bear one of the restrictive legends as set forth hereinbelow.

These Warrants and the Common Shares to be issued upon its exercise have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or the securities laws of any state of the United States. These Warrants may not be exercised in the United States, or by or for the account or benefit of a U.S. person or a person in the United State, unless (i) the Common Shares are registered under the U.S. Securities Act and the applicable laws of any such state, or (ii) an exemption from such registration requirements is available, and (iii) the Warrantholder has complied with the requirements set forth in subscription form attached hereto as Schedule A. "United States" and "U.S. person" are as defined in Regulation S under the U.S. Securities Act.

Any Common Shares issued upon exercise of these Warrants in the United States, or to or for the account or benefit of a U.S. person or a person in the United States, will be "restricted securities", as defined in Rule 144(a)(3) under the U.S. Securities Act. The certificates representing such Common Shares, as well as all certificates issued in exchange or in substitution therefor, until such time as is no longer required under the applicable requirements of the U.S. Securities Act, or applicable state securities laws, will bear, on the face of such certificate, the following legend:

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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

Any Common Shares issued upon exercise of these Warrants outside the United States to a person who is not a U.S. person and is not exercising these Warrants for the account or benefit of a U.S. person or a person in the United States, and who did not execute or deliver the subscription form attached hereto as Schedule A in the United States, will be "restricted securities", as defined in Rule 144(a)(3) under the U.S. Securities Act, and will bear, on the face of such certificate the following legend:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE U.S. SECURITIES ACT."

11.     Lost Certificate

11.1     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.

12.     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.

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13.     Transfer

13.1     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 completing and delivering to the Corporation the transfer form attached hereto as Schedule B.

14.     Successors and Assigns

14.1     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 20^th day of December, 2013.

CRAILAR TECHNOLOGIES INC.

Per:                                                      
           

SCHEDULE A

TO:     CRAILAR TECHNOLOGIES INC.

SUBSCRIPTION FORM

The undersigned hereby subscribes for ____________ common shares ("Common Shares") of Crailar Technologies Inc. (the "Corporation") (or such other number of Common Shares or other securities to which such subscription entitles the undersigned in lieu thereof or in addition thereto) pursuant to the provisions of the warrant certificate (the "Warrant Certificate") dated as of the 20^th day of December, 2013 issued by the Corporation to the Warrantholder (as defined in the Warrant Certificate) at the purchase price of CAD$0.70 per Common Share if exercised on or before 5:00 p.m. (Vancouver time) on December 20, 2018, (or at such other purchase price as may then be in effect under the provisions of the Warrant Certificate) and on and subject to the other terms and conditions specified in the Warrant and encloses herewith a cheque, bank draft or money order or has transmitted good same day funds by wire or other similar transfer in lawful money of Canada payable to or to the order of the Corporation in payment of the subscription price.

The undersigned hereby directs that the Common Shares subscribed for be registered and delivered as follows:

Name in Full Address (include Postal/Zip Code) Number of Common Shares

As at the time of exercise hereunder, the undersigned Warrantholder represents, warrants and certifies as follows (check one):

(A)     [ ]  the undersigned Warrantholder at the time of exercise of the Warrant is not in the United States, is not a "U.S. person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and is not exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (as defined in Regulation S), and did not execute or deliver this subscription form in the United States; OR

(B)     [ ]  the undersigned Warrantholder is resident in the United States, is a U.S. person, or is exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (a "U.S. Holder"), and is an "accredited investor", as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (a "U.S. Accredited Investor"), and has completed the U.S. Accredited Investor Status Certificate in the form attached to this subscription form; OR

(C)     [ ]if the undersigned Warrantholder is a U.S. Holder, the undersigned Warrantholder has delivered to the Corporation and the Corporation's transfer agent an opinion of counsel (which will not be sufficient unless it is in form and substance satisfactory to the Corporation) or such other evidence satisfactory to the Corporation to the effect that with respect to the common shares to be delivered upon exercise of the Warrant, the issuance of such securities has been registered under the U.S. Securities Act and applicable state securities laws, or an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available.

Note: Certificates representing common shares will not be registered or delivered to an address in the United States unless box (B) or (C) immediately above is checked.

If the undersigned Warrantholder has indicated that the undersigned Warrantholder is a U.S. Accredited Investor by marking box (B) above, the undersigned Warrantholder additionally represents and warrants to the Corporation that:

1     the undersigned Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Common Shares, and the undersigned is able to bear the economic risk of loss of his or her entire investment;

2.     the undersigned is: (i) purchasing the Common Shares for his or her own account or for the account of one or more U.S. Accredited Investors with respect to which the undersigned is exercising sole investment discretion, and not on behalf of any other person; (ii) is purchasing the Common Shares for investment purposes only and not with a view to resale, distribution or other disposition in violation of United States federal or state securities laws; and (iii) in the case of the purchase by the undersigned of the Common Shares as agent or trustee for any other person or persons (each a "Beneficial Owner"), the undersigned Warrantholder has due and proper authority to act as agent or trustee for and on behalf of each such Beneficial Owner in connection with the transactions contemplated hereby; provided that: (x) if the undersigned Warrantholder, or any Beneficial Owner, is a corporation or a partnership, syndicate, trust or other form of unincorporated organization, the undersigned Warrantholder or each such Beneficial Owner was not incorporated or created solely, nor is it being used primarily to permit purchases without a prospectus or registration statement under applicable law; and (y) each Beneficial Owner, if any, is a U.S. Accredited Investor; and

3.     the undersigned has not exercised the Warrants as a result of any form of general solicitation or general advertising (as such terms are used in Rule 502 of Regulation D under the U.S. Securities Act), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, television, the Internet or other form of telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

If the undersigned has indicated that the undersigned is a U.S. Accredited Investor by marking box (B) above, the undersigned also acknowledges and agrees that:

1.     the Corporation has provided to the undersigned the opportunity to ask questions and receive answers concerning the terms and conditions of the offering, and the undersigned has had access to such information concerning the Corporation as the undersigned has considered necessary or appropriate in connection with the undersigned's investment decision to acquire the Common Shares;

2.     if the undersigned decides to offer, sell or otherwise transfer any of the Common Shares, the undersigned must not, and will not, offer, sell or otherwise transfer any of such Common Shares directly or indirectly, unless:

(a)     the sale is to the Corporation;

(b)     the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations;

(c)     the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in accordance with any applicable state securities or "blue sky" laws; or

(d)     the Common Shares are sold in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities, and it has prior to such sale furnished to the Corporation an opinion of counsel reasonably satisfactory to the Corporation;

3.     the Common Shares are "restricted securities" under applicable federal securities laws and that the U.S. Securities Act and the rules of the United States Securities and Exchange Commission provide in substance that the undersigned may dispose of the Common Shares only pursuant to an effective registration statement under the U.S. Securities Act or an exemption therefrom;

4.     the Corporation has no obligation to register any of the Common Shares or to take action so as to permit sales pursuant to the U.S. Securities Act (including Rule 144 thereunder);

5.     the certificates representing the Common Shares (and any certificates issued in exchange or substitution for the Common Shares) will bear a legend stating that such securities have not been registered under the U.S. Securities Act or the securities laws of any state of the United States, and may not be offered for sale or sold unless registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, or unless an exemption from such registration requirements is available;

6.     the legend may be removed by delivery to the registrar and transfer agent and the Corporation of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;

7.     there may be material tax consequences to the undersigned of an acquisition or disposition of the Common Shares;

8.     the Corporation gives no opinion and makes no representation with respect to the tax consequences to the undersigned under United States, state, local or foreign tax law of the undersigned's acquisition or disposition of any Common Shares; in particular, no determination has been made whether the Corporation will be a "passive foreign investment company" (commonly known as a "PFIC") within the meaning of Section 1297 of the United States Internal Revenue Code;

9.     funds representing the subscription price for the Common Shares which will be advanced by the undersigned to the Corporation upon exercise of the Warrants will not represent proceeds of crime for the purposes of the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the "PATRIOT Act"), and the undersigned acknowledges that the Corporation may in the future be required by law to disclose the undersigned's name and other information relating to this exercise form and the undersigned's subscription hereunder, on a confidential basis, pursuant to the PATRIOT Act. No portion of the subscription price to be provided by the undersigned (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to or by the undersigned, and it shall promptly notify the Corporation if the undersigned discovers that any of such representations ceases to be true and provide the Corporation with appropriate information in connection therewith;

10.     the Corporation is not currently, nor it is obligated to become a "foreign issuer"; and

11.     the undersigned consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described in this subscription form.

In the absence of instructions to the contrary, the securities or other property will be issued in the name of or to the Warrantholder hereof and will be sent by first class mail to the last address of the Warrantholder appearing on the register maintained for the Warrants.

DATED this _________ day of _______________, 20_____.

In the presence of:

                                                                                                                                                           
Signature of Witness                                                   Signature of Warrantholder

                                                                                                                                                           
Witness's Name                                                          Name and Title of Authorized Signatory for
                                                                                     the Warrantholder

Please print below your name and address in full.

Legal Name                                                                          

Address                                                                                

INSTRUCTIONS FOR SUBSCRIPTION

The signature to the subscription must correspond in every particular with the name written upon the face of the Warrant Certificate without alteration. If the certificates representing the common shares to be issued upon exercise of the Warrants differs from the registration of the Warrant Certificates the signature of the registered Warrantholder must be guaranteed by an authorized officer of a Canadian chartered bank, or of a major Canadian trust company, or by a medallion signature guarantee from a member recognized under the Signature Medallion Guarantee Program, or from a similar entity in the United States, if this transfer is executed in the United States, or in accordance with industry standards.

In the case of persons signing by agent or attorney or by personal representative(s), the authority of such agent, attorney or representative(s) to sign must be proven to the satisfaction of the Corporation.

If the Warrant Certificate and the form of subscription are being forwarded by mail, registered mail must be employed.

U.S. ACCREDITED INVESTOR STATUS CERTIFICATE

In connection with the exercise of certain outstanding warrants of CRAILAR TECHNOLOGIES INC. (the "Company") by the Warrantholder, the Warrantholder hereby represents and warrants to the Company that the Warrantholder, and each beneficial owner (each a "Beneficial Owner"), if any, on whose behalf the Warrantholder is exercising such warrants, satisfies one or more of the following categories of Accredited Investor (please write "W/H" for the undersigned Warrantholder, and "B/O" for each beneficial owner, if any, on each line that applies):

_______ (1)	Any bank as defined in Section 3(a)(2) of the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; any investment company registered under the U.S. Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of US$5,000,000; any employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are "accredited investors" (as such term is defined in Rule 501 of Regulation D of the U.S. Securities Act);
_______ (2)	Any private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940;
_______ (3)	Any organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000;
_______ (4)	Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person (being defined as a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment);
_______ (5)	A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of purchase, exceeds US$1,000,000 (for the purposes of calculating net worth, (i) the person's primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of this certification, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of this certification exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability);
_______ (6)	A natural person who had annual gross income during each of the last two full calendar years in excess of US$200,000 (or together with his or her spouse in excess of US$300,000) and reasonably expects to have annual gross income in excess of US$200,000 (or together with his or her spouse in excess of US$300,000) during the current calendar year, and no reason to believe that his or her annual gross income will not remain in excess of US$200,000 (or that together with his or her spouse will not remain in excess of US$300,000) for the foreseeable future;
_______ (7)	Any director or executive officer of the Company; or
_______ (8)	Any entity in which all of the equity owners meet the requirements of at least one of the above categories.

SCHEDULE B

FORM OF TRANSFER

TO:     Crailar Technologies Inc.
305-4420 Chatterton Way
Victoria, British Columbia V8X 5J2

Attention: Chief Financial Officer

Telephone: 604-658-8582; Fax: 604-658-8586

FOR VALUE RECEIVED, the undersigned (the "Transferor") hereby sells, assigns and transfers unto __________________________________ (the "Transferee") ________________ Warrants exercisable for common shares of Crailar Technologies Inc. (the "Corporation") registered in the name of the Transferor on the register of the Corporation maintained therefor, and hereby irrevocably appoints                                       the attorney of the Transferor to transfer the said securities on the books maintained by the Corporation with full power of substitution.

The Transferor hereby directs that the Warrants hereby transferred be issued and delivered as follows:

NAME IN FULL ADDRESS NUMBER OF WARRANTS

The Transferor hereby certifies that (check either A or B):

____     (A)     if the Transferee is (i) a U.S. person, (ii) a person in the United States, or (ii) any person who is acting for the account or benefit of a U.S. person or a person in the United States, the transfer of the Warrants is being completed pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), in which case the Transferor has delivered or caused to be delivered by the Transferee a written opinion of U.S. legal counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that the transfer of the Warrants is exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws; or

____     (B)     the transfer of the Warrants is being made in reliance on Rule 904 of Regulation S ("Regulation S") under the U.S. Securities Act, and the Transferor certifies that:

(1)     the undersigned is not an "affiliate" (as defined in Rule 405 under the U.S. Securities Act) of the Corporation or a "distributor", as defined in Regulation S, or an affiliate of a "distributor";

(2)     the offer of such securities was not made in the United States, or to or for the benefit or account of a U.S. person or a person in the United States and at the time the offer was accepted, the Transferor and any person acting on its behalf reasonably believed that the Transferee was outside the United States and not a U.S. person;

(3)     neither the Transferor nor any person acting on its behalf engaged in any "directed selling efforts" (as such term is defined in Regulation S) in connection with the offer and sale of the Warrants;

(4)     the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the Warrants are "restricted securities" (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act);

(5)     the Transferor does not intend to replace the securities sold in reliance on Rule 904 of the U.S. Securities Act with fungible unrestricted securities; and

(6)     the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or a scheme to evade the registration provisions of the U.S. Securities Act;

and, if requested by the Corporation or its transfer agent, the undersigned has delivered or caused to be delivered an opinion of legal counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that the transfer of the Warrants is exempt from the registration requirements of the U.S. Securities Act.

"United States" and "U.S. person" are as defined in Regulation S under the U.S. Securities Act.

[The rest of this page intentionally left blank]

DATED this _______ day of ___________________, 20___.

Signature of Transferor guaranteed by:

                                                                       
Medallion Signature Guarantee
Stamp of Transferor


                                                                       
Authorized Officer

                                                                       
Name of Institution                                                                        
Signature of Transferor
                                                                       
(print name of Transferor)                                                                        
(if applicable, print name of signatory and office)                                                                        
                                                                       
Address of Transferor

Instructions for Transfer

Signature of the Warrantholder must be the signature of the person appearing on the face of this Warrant Certificate in every particular, without alteration or change.

If the Form of Transfer is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.

The signature on the Form of Transfer must be guaranteed by one of the following methods:

In Canada and the US: a Medallion Guarantee obtained from a member of an acceptable Medallion Guarantee Program (STAMP, SEMP or MSP). Many banks, credit unions and broker dealers are members of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words "Medallion Guaranteed".

In Canada: a Signature Guarantee obtained from a major Canadian Schedule I bank that is not a member of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words "Signature Guaranteed".

Outside Canada and the US: Warrantholders must obtain a guarantee from a local financial institution that has a corresponding affiliate in Canada or the US that is a member of an acceptable Medallion Guarantee Program. The corresponding affiliate must overguarantee the guarantee provided by the local financial institution.

The Warrants will only be transferable in accordance with applicable laws. The Warrants and the common shares issuable upon exercise thereof have not been and will not be registered under the U.S. Securities Act, or under the securities laws of any state of the United States, and may not be transferred to or for the account or benefit of a U.S. person or any person in the United States without registration under the U.S. Securities Act and applicable state securities laws, or compliance with the requirements of an exemption from registration.

TRANSFEREE ACKNOWLEDGMENT

The undersigned transferee (the "Transferee") acknowledges and agrees that the Warrants may not be offered, sold, pledged or otherwise transferred in the absence of: (a) an effective registration statement under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and the applicable laws of any such state, relating thereto; or (b) an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. Each Warrant Certificate, and each certificate representing Common Shares issuable upon exercise thereof, shall contain a legend on the face thereof, in the appropriate form, setting forth the restrictions on transfer referred to in the Warrant Certificate, unless in the opinion of counsel for the holder thereof (which is in form and substance satisfactory to the Corporation), the securities represented thereby are not, at such time, required by law to bear such legend, or in the case of the Common Shares, are transferred pursuant to an effective registration statement under the U.S. Securities Act and the applicable state securities laws. The holder acknowledges and agrees that the Warrants represented by this Warrant Certificate, and the Common Shares issuable upon exercise thereof, constitute "restricted securities" under the U.S. Securities Act.

If the Transferee acquires the Warrants pursuant to a resale transaction pursuant to Rule 904 of Regulation S under the U.S. Securities Act, then the Transferee acknowledges that the Warrants still continue to be deemed restricted securities and will continue to bear a restrictive legend.

Any certificate issued at any time in exchange or substitution for any certificate bearing a restrictive legend shall also bear such legend unless in the opinion of counsel for the holder thereof (which is in form and substance satisfactory to the Corporation), the securities represented thereby are not, at such time, required by law to bear such legend.

The Transferee acknowledges that it shall notify the Corporation prior to any exercise or deemed exercise of the Warrants if the representations, warranties and certifications contained in the Form of Transfer are no longer true and correct.

Dated the ___ day of ________________, 20___.
In the presence of:	(Signature of Transferee)
(Witness)	(Name of Transferee - Please print)
(Name of Witness - Please print)	(Name and Capacity of Authorized Representative - please print)

The Warrants and the Common Shares issuable upon exercise of the Warrants shall only be transferable in accordance with applicable laws. The Warrants may only be exercised in the manner required by the Warrant Certificate and the underlying subscription agreement. Any securities acquired pursuant to this exercise of Warrants shall be subject to applicable hold periods and any certificate representing such securities may bear restrictive legends.

__________

EX-10

Dated November 6, 2013

SCHRURS NV

as the Seller

AND

CRAILAR TECHNOLOGIES INC.
(acting in its own name and for its own account
as well as in the name and for the account of any Affiliate)

as the Purchaser

IN PRESENCE OF

Mr. Serge Schrurs

(For acceptance of its obligations under Clause 12.1)

ASSET PURCHASE

AGREEMENT

TABLE OF CONTENTS

1.	DEFINITIONS AND INTERPRETATION	4
2.	SALE AND PURCHASE	4
3.	TRANSFER PROVISIONS	6
4.	PURCHASE CONSIDERATION	7
5.	LEASE AGREEMENT	8
6.	CONDITIONS PRECEDENT	8
7.	CLOSING	10
8.	SELLER'S REPRESENTATIONS AND WARRANTIES	12
9.	INDEMNIFICATION	13
10.	CONDUCT OF CLAIMS	15
11.	SPECIFIC INDEMNITY	17
12.	POST-CLOSING UNDERTAKINGS	18
13.	EXPLICIT TERMINATION CLAUSE	19
14.	CONFIDENTIALITY AND ANNOUNCEMENTS	20
15.	GENERAL PROVISIONS	21
1.	CAPACITY AND AUTHORITY	35
2.	SELLER'S EQUIPMENT AND MACHINERY	36
3.	TRANSFERRED CONTRACTS	37
4.	TRANSFERRED PERMIT	39
5.	LITIGATION	38
6.	EMPLOYEES	40

THIS ASSET PURCHASE AGREEMENT is made on November 6, 2013,

BETWEEN:

(1)     SCHRURS NV, an open limited liability company ("naamloze vennootschap / société anonyme") incorporated under the laws of Belgium, having its registered office at Pijpestraat 18, 8560 Wevelgem, registered with the Crossroads Databank for Enterprises under number (Kortrijk) 0452.656.339 (the "Seller"),

hereby represented by Mr. Serge Schrurs in his capacity as Managing Director;

AND:

(2)     CRAILAR TECHNOLOGIES INC., a company incorporated under the laws of Canada, having its registered office at Chatterton Way 305-4420, Victoria, British Columbia V8X 5J2 (Canada), acting in its own name and for its own account as well as in the name and for the account of an Affiliate (the "Purchaser"),

hereby represented by _________________ in his capacity as ________________.

The Seller and the Purchaser are hereinafter collectively referred to as the "Parties" and each individually (also) as a "Party".

IN PRESENCE OF:

(3)     Mr. SERGE SCHRURS, residing at Pijpestraat 18 8560 Wevelgem, ("Serge Schrurs"), for acceptance of its obligations under Clause 12.1.

WHEREAS:

(A)     The Seller is engaged in activities related to the dyeing, bleaching, processing and treatment of all natural and synthetic fibres for the textile industry (the "Business").

(B)     On August 30, 2013 the Purchaser and the Seller signed a letter of intent with respect to a possible transfer of certain assets related to the Seller's Business to the Purchaser (the "LOI").

(C)     From September 9, 2013 until October 25, 2013 the Purchaser has performed an analysis and due diligence investigation with respect to the Seller, the Transferred Assets and the Transferred Liabilities on the basis of information and documents made available by the Seller in the Data Room. An index of all documents contained in the Data Room is attached as Schedule 2 to this Agreement.

(D)     The Seller and the Purchaser have now reached a final agreement relating to the transfer of the Transferred Assets and the Transferred Liabilities from the Seller to the Purchaser (the "Transaction"), in accordance with the terms and conditions set forth in this asset purchase agreement (the "Agreement").

(E)     Within the framework of this Agreement, Parties have agreed that on the Closing Date, (i) the Purchaser and Serge Schrurs shall enter into a services agreement (an agreed form copy of which is attached as Schedule 7) (the "Services Agreement") and (ii) the Seller and the Purchaser shall enter into a lease agreement with respect to the wet processing facility located at Oostkaai 46, 8900 Ieper (the "Lease Agreement").

THEREFORE IT HAS BEEN AGREED AS FOLLOWS:

1.     DEFINITIONS AND INTERPRETATION

In addition to the terms defined elsewhere in this Agreement, capitalised words and expressions shall have the meaning set forth in Schedule 1, unless in case the context would require otherwise.

2.     SALE AND PURCHASE

2.1     Transferred Assets

2.1.1     Subject to the terms and conditions set forth in this Agreement, the Seller hereby sells, assigns, transfers, conveys and delivers to the Purchaser, and the Purchaser shall accept such sale, assignment, transfer, conveyance and delivery, free of any and all Encumbrances, of any and all rights, title, benefit and interest that the Seller has in and to the following assets (hereinafter collectively referred to as the "Transferred Assets"):

(A)     any and all equipment, furniture, including office equipment and furniture, tools, fixtures, fittings and other tangible personal property located at the Leased Premises, as listed in Schedule 3 (the "Transferred Equipment and Machinery").

(B)     the environmental permit granted to the Seller by decision of the Deputation of the Provincial Council of the Province of West Flanders dated February 8, 1996, a copy of which is attached as Schedule 4 (the "Transferred Permit");

(C)     the rights, title and interests of the Seller in, to and under the employment contracts of the employees of the Seller, as listed in Schedule 5 (the "Transferred Employees").

2.1.2     Notwithstanding the above, Parties explicitly agree that the Seller will be allowed to continue to serve its current insulation customers provided that it does not interfere with the Purchaser's operations and that all fees related thereto shall be to the benefit of the Purchaser.

2.2     Excluded Assets

For the avoidance of doubts, it is hereby explicitly agreed upon that the following assets are not transferred to the Purchaser and are thus excluded from the terms and provisions of this Agreement (the "Excluded Assets"):

(A)     The following cars/furniture owned or leased by the Seller:

i.     BMW 116d hatch WBAUH51070E312757

ii.     Two wooden old family heritage in office and kitchen

2.3     Transferred Liabilities

As of the Closing Date, the Purchaser shall assume the following obligations and liabilities of the Seller:

2.3.1     any and all obligations and liabilities of the Seller under the Transferred Contracts;

2.3.2     any and all obligations and liabilities of the Seller under the employment agreements with the Transferred Employees.

2.4     Excluded Liabilities

All obligations, liabilities, debts, Taxes, expenses, costs, charges, commitments, accounts payable, breaches, warranties, guarantees or responsibilities of the Seller which are not Transferred Liabilities, including yet without limitation (i) the Seller's Debts and (ii) any legal, tax and accounting expenses incurred in connection with this Transaction, shall be excluded from the assumption of obligations and liabilities by the Purchaser under this Agreement and shall thus remain with the Seller, irrespective of whether known or unknown, due or not due, and payable or executable before, on or after the Closing Date (the "Excluded Liabilities").

3.     TRANSFER PROVISIONS

3.1     General

3.1.1     Title to and economic risk in respect of the Transferred Assets and the Transferred Liabilities shall pass to the Purchaser on the Closing Date.

3.1.2     All monies or other items belonging to the Purchaser which are received by the Seller on or after the Closing Date in connection with the Transferred Assets shall immediately be paid or passed by the Seller to the Purchaser.

3.1.3     The Seller and the Purchaser jointly undertake to execute all documents and take all steps as may reasonably be required by the Purchaser to vest the title to the Transferred Assets in the name of the Purchaser and to give effect to this Agreement.

3.2     Transferred Employees

3.2.1     Parties acknowledge and agree that the transfer of Transferred Assets and Transferred Liabilities contemplated by this Agreement constitutes a transfer of an undertaking or part of an undertaking, within the meaning of the Collective Bargaining Agreement no. 32bis, as amended, implementing the provisions of the EC Directive 2001/23 dated 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, as interpreted by the ECJ and the Belgian national courts and any modification of that Directive and all other collective bargaining agreements or other legislation implementing that Directive ("CAO 32bis").

3.2.2     As of the Closing Date, the Purchaser shall employ the Transferred Employees listed in Schedule 5. The Purchaser shall continue to observe the terms and conditions of the employment agreements and shall maintain the working conditions of the Transferred Employees, including the acquired length of service, the salary and other benefits in kind, as applicable on the Closing Date.

3.2.3     The Seller shall be solely responsible for the payment of all wages and the provision of accrued entitlement including premiums, end-of-year premiums, commission, loans, holiday pay) related to the Transferred Employees employment up to the working day immediately preceding the Closing Date. The Seller shall pay to the Purchaser an indemnity equal to all accrued entitlements of the Transferred Employees as if their employment contract would be terminated on the Closing Date including the social security contributions and taxes with respect to these amounts. This indemnity shall be paid within 15 Business Days following receipt by the Seller of a payment request from the Purchaser, duly evidencing the amount(s) for which the Seller is liable in accordance with this Clause 3.2.3.

4.     PURCHASE CONSIDERATION

4.1     In consideration for the Transferred Assets and Transferred Liabilities, the Purchaser shall, (re)pay all outstanding amounts under the loans and debts as set forth in Schedule 6, the aggregate value of which as at October 4, 2013 amounts to EUR 881.056 (the "Seller's Debts") directly to the relevant creditors of such Seller's Debts, on behalf of the Seller and in accordance with the provisions of Clause 4.2 en 4.3.

4.2     Subject to Clause 4.3, the (re)payment of the Seller's Debts by the Purchaser shall be made as follows:

4.2.1     As of the Closing Date and until the third anniversary of such Closing Date, the repayment of the Seller's Debts by the Purchaser shall be made in accordance with the terms of such Seller's Debts and/or the repayment schemes agreed upon between the Seller and the respective creditors of the Seller's Debts.

4.2.2     On the third anniversary of the Closing Date, the aggregate outstanding amount under the Seller's Debts at that point in time, shall be (re)paid in whole by the Purchaser to the respective creditors of the Seller's Debts.

4.3     Notwithstanding Clause 4.2.1, the Purchaser shall be entitled to repay all or part of the outstanding amounts under the Seller's Debts at any time on or after the Closing Date.

4.4     In case the (early) repayment of any of the Seller's Debts pursuant to Clause 4.2 or 4.3 would result in any penalty or reinvestment compensation being due to the relevant creditor, such penalty or reinvestment compensation shall be borne by the Seller.

4.5     The sale and transfer of the Assets contemplated by the Agreement is a sale of an undertaking ("bedrijfstak" / "branche d'activités") and is therefore exempt from Belgian Value added Tax ("BTW" / "TVA") in accordance with Article 11 of the Belgian VAT Code. The Parties shall comply with all regulations and procedures required to ensure application of Article 11 of the Belgian VAT Code to the sale of the Assets.

Should the tax exempt status in accordance with Article 11 of the Belgian VAT Code be refused by the tax authorities and should VAT be due on the transfer as contemplated in this Agreement, the Purchaser shall pay such VAT on the Purchase Consideration and the Seller shall issue an appropriate invoice for VAT purposes.

5.     LEASE AGREEEMENT

The Purchaser and the Seller hereby undertake that, following the execution of this Agreement, they will negotiate in good faith the terms and conditions of a lease agreement with respect to the wet processing facility located at Oostkaai 46, 8900 Ieper, which shall be entered into on the Closing Date between the Seller (as the lessor) and the Purchaser (as the Lessee) (the "Lease Agreement").

6.     CONDITIONS PRECEDENT

6.1     Conditions precedent to each Party's obligations

6.1.1     The obligation of each of the Parties to consummate the Transaction is subject to the satisfaction of the following conditions precedent (the "Conditions Precedent")

(A)     The Seller shall have obtained:

(1)     a valid tax certificate in accordance with article 442bis of the Belgian Income Tax Code, evidencing that no taxes are due by the Seller and that the Seller is not subject to any pending tax audit, issued by the competent tax administration not earlier than 25 days before the Closing Date;

(2)     a valid VAT certificate in accordance with article 93undeciesB of the Belgian VAT Code, evidencing that no VAT is due by the Seller and that the Seller is not subject to any pending tax audit, issued by the competent tax administration not earlier than 25 days prior to the Closing Date;

(3)     a valid social security certificates in accordance with article 41quinquies of the Act of 27 June 1969 on the State Social Security Service (RSZ), confirming that no social security contributions of the Seller are outstanding, issued not earlier than 25 days prior to the Closing Date.

(B)     Each of KBC and BNP Paribas shall have explicitly and unconditionally approved and consented to (i) this Agreement and the Transaction contemplated hereby and (ii) the fact that the KBC Debts c.q. the BNP Paribas Debts shall be repaid by the Purchaser on behalf of the Seller and that any such repayment by the Purchaser of any amount of the KBC Debts c.q. the BNP Paribas Debts shall discharge the Seller from its payment obligation towards KBC resp. BNP Paribas for the same amount.

6.1.2     The Seller shall be responsible for, and shall use all reasonable endeavours with a view to the fulfilment of aforementioned Conditions Precedent as soon as practicably possible following the date of this Agreement.

6.2     Satisfaction of the Conditions Precedent

Notwithstanding Article 1179 of the Civil Code, the fulfilment of the Conditions Precedent shall have no retroactive effect.

6.3     Non-Satisfaction

6.3.1     If any of the Conditions Precedent set out in Clause 5.1 is not satisfied within six (6) months after the date of this Agreement, each of the Parties has the right to terminate this Agreement by giving written notice to the other Party.

6.3.2     If this Agreement is terminated pursuant to this Clause 6.3.1 all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party.

6.3.3     The Conditions Precedent set forth in Clause 6.1.1 are for the sole benefit of the Purchaser and may solely be waived by the Purchaser, in its own discretion, at any time on or prior to the Closing Date.

7.     CLOSING

7.1     Date and place

The Closing shall take place on the date to be agreed upon between Parties as soon as practicably possible following satisfaction of all Conditions Precedent and in any event no later than the date mentioned in Clause 6.3.1 (the "Closing Date").

7.2     Closing Obligations

7.2.1     Seller's Closing Obligations

On the Closing Date, the Seller shall do all of the following (the "Seller's Closing Obligations"):

(A)     The Seller shall deliver to the Purchaser:

(1)     a copy of the minutes of a meeting of the board of directors of the Seller authorising the Seller to enter into and perform its obligations under this Agreement;

(2)     a tax certificate in accordance with Article 442bis of the Belgian Income Tax Code, issued no earlier than 25 days prior to the Closing Date, stating that no income taxes are due by the Seller;

(3)     a tax certificate in accordance with Article 93Undecies of the Belgian VAT Code, issued no earlier than 25 days prior to the Closing Date, stating that no VAT is due by;

(4)     a certificate in accordance with Article 41quinquies of the Act of 27 June 1969 to amend the decision Act of 28 December 1944, issued by the relevant social security authorities, issued no earlier than 25 days prior to the Closing Date, stating that no social security obligations are due by the Seller;

7.2.2    Purchaser's Closing Obligations

On the Closing Date, the Purchaser shall deliver to the Seller a copy of the minutes of a meeting of the board of directors of the Purchaser authorising the Purchaser to enter into and perform its obligations under this Agreement (the "Purchaser's Closing Obligation").

7.2.3     Joint Closing Obligations

On the Closing Date, the Seller and the Purchaser shall do all of the following or shall cause the same to be done (the "Joint Closing Obligations"):

(A)     The Seller and the Purchaser shall send written information letters to each of the Transferred Employees mentioning the consequences of application of the CAO 32bis;

(B)    The Purchaser and Serge Schrurs shall enter into the Services Agreement;

(C)     The Purchaser and the Seller shall enter into the Lease Agreement.

7.3     Simultaneous Closing

The effectiveness of any action taken at the Closing towards fulfillment of any Closing Obligation is conditional upon completion of all other actions taken towards fulfillment of all other Closing Obligations; failure to complete one of said actions shall automatically render all other such actions null and void.

8.     SELLER'S REPRESENTATIONS AND WARRANTIES

8.1     General

The Seller warrants to the Purchaser that the representations and warranties set out in Schedule 7 (the "Seller's Representations") are true, accurate and not-misleading on the Closing Date.

8.2     Disclosures

Each of the Seller's Representations shall be construed as a separate warranty and is given subject only to the matters which are disclosed in Schedule 9, which shall therefore limit the contents and scope of such Seller's Representations, provided that such matters are described in such detail allowing the Purchaser, assisted by its professional advisors, and taking into account the professional experience of the Purchaser to assess the nature, subject matter and scope and consequence of such matter.

8.3     Purchaser's knowledge / Due diligence

The rights and remedies of the Purchaser in respect of a breach of any of the Representations shall not be affected by the signing of the Agreement, by the Due Diligence or any other investigation made by the Purchaser or by any other prior knowledge of the Purchaser (except as may result from the Disclosure Schedules and then only within the limits of Clause 9.2 hereof), by the giving of any time or other indulgence by the Purchaser to any person, by the Purchaser rescinding or not rescinding this Agreement, or by any other cause whatsoever except a specific waiver or release by the Purchaser in writing and any such waiver or release shall not prejudice or affect any remaining rights or remedies of the Purchaser.

9.     INDEMNIFICATION

9.1     Liability for breaches

The Seller agrees to fully indemnify the Purchaser against any and all Damages incurred by the Purchaser, resulting from or being a consequence of:

(A)     any breach or inaccuracy of any of the Seller's Representations contained in this Agreement; or

(B)     any breach of any other covenant or obligation of the Seller contained in this Agreement.

9.2     Time limitation for Claims

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim unless notification of such claim is given by the Purchaser to the Seller in accordance with Clause 10.1 within 36 months after the Closing Date.

Notwithstanding the preceding, any agreement, representation or warranty in respect of which indemnification may be sought under this Clause 9 shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if a Claim Notice in respect of the inaccuracy, incompleteness or breach thereof giving rise to such right to indemnity shall have been given to the Party against whom such indemnity may be sought prior to such time.

9.3     Contingent liabilities

The Seller shall have no obligation to indemnify the Purchaser in respect of any liability which is contingent ("voorwaardelijke of latente verbintenis" / "obligation conditionnelle ou éventuelle"), unless and until such contingent liability has become an actual liability and is due and payable, provided, however, that this Clause 9.3 shall not have the effect of preventing the Purchaser from validly making a claim in respect of a contingent liability within the time limit specified in Clause 9.2, even though it has not become an actual liability.

9.4     Maximum liability

Notwithstanding any other provision in this Agreement, the aggregate liability of the Seller under this Agreement shall not exceed the amount of the Purchase Consideration.

9.5     Minimum Claims

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim arising from any single Damage where the amount which would otherwise be recoverable under this Agreement in that respect does not exceed EUR 25.000. When the threshold of EUR 25.000 is met, the Purchaser shall only be entitled to recover the amount of the Damages, in excess of such threshold, without prejudice to the other limitations of liability set out herein.

9.6     Insurance proceeds and recoveries from third parties

9.6.1     The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim if and to the extent that the Damages in respect of which the Claim is made:

(A)     are effectively recovered under an insurance policy in force at the Closing Date or at the date of the occurrence of the Damage; or

(B)     are effectively recovered from any other third party.

9.6.2     Accordingly, any amount for which the Seller would otherwise have been liable in respect of any Claim shall be reduced by the amount of any insurance proceeds, indemnification or other recovery from any insurance company or any other third party in respect of the Damage which is the subject matter of the Claim.

9.6.3     If the Seller pays an amount in discharge of any Claim and the Purchaser subsequently recovers from any insurance company or any other third party a sum relating to the subject matter of the Claim, the Purchaser shall pay to the Seller an amount equal to the difference between:

(A)     the amount paid by the Seller to the Purchaser; and

(B)     the amount that the Purchaser would have received if the amount of such recovery had been taken into account in determining the amount due by the Seller in accordance with this Clause 9.

9.6.4     If the Seller pays an amount in respect of any Claim, the Purchaser shall assign to the Seller all of its rights arising from the Damage which is the subject matter of that Claim against any insurance company or other third party, to the extent such assignment is permitted.

9.7     No cumulation (non bis in idem)

If the same event, matter or circumstances can give rise to a Claim under several provisions of this Agreement, the Purchaser shall only be indemnified once.

9.8     Mitigation

Without prejudice to Article 1134, Section 3 of the Belgian Civil Code, the Purchaser shall procure that all reasonable steps are taken to avoid or mitigate any Damages which might give rise to a Claim against the Seller.

9.9     Fraud Exception

None of the limitations contained in this Clause 9 shall apply in case of fraud ("fraude"/"bedrog") or wilful misconduct by the Seller.

10.     CONDUCT OF CLAIMS

10.1     Notification of a Claim

In order to make a Claim against the Seller, the Purchaser shall give a notice of such Claim to the Seller within the time limits provided in Clause 9.2 (the "Claim Notice"). Such notice shall set out in reasonable detail the legal and factual basis of the Claim, together with a first bona fide estimate of the amount of the Damages. A copy of all documents establishing the basis of the Claim shall be enclosed in the notice.

10.2     Notification of Seller's Objections

10.2.1     The Seller shall give a notice to the Purchaser objecting to the Claim within thirty (30) days following notification of such Claim. Such notice shall contain a statement of the basis of the Seller's objections to the extent available.

10.2.2     If the Seller fails to notify the Purchaser that it objects to such Claim within the period of time provided under Clause 10.2.1, the amount of such Claim shall be conclusively deemed a liability of the Seller who did not object and shall be paid to the Purchaser.

10.2.3    If the Seller objects to a Claim within the period of time provided under Clause 10.2.1, the Parties shall use their best efforts to resolve such dispute and, in the absence of such resolution, such dispute shall be submitted to the courts in accordance with Clause 15.10.

10.3     Payment by the Seller

10.3.1     If the Seller has accepted the amount claimed by the Purchaser or if the Seller and the Purchaser have agreed on another amount, the Seller shall pay such amount within 15 (fifteen) calendar days of such acceptance or agreement.

10.3.2     If the matter giving rise to a Claim has been decided by the competent court and the Seller has been ordered to pay any amount pursuant to any enforceable judgement, the Seller shall pay such amount within fifteen calendar days after such judgement has become res judicata.

10.3.3     All payments shall be made in accordance with such instructions as shall be notified by the Purchaser to the Seller.

10.4     Third party claims

If the events, matters or circumstances that may give rise to a Claim against the Seller occur or arise as a result of or in connection with a claim by or a liability to a third party (a "Third Party Claim"), then:

10.4.1     the Purchaser shall provide the Seller with copies of all documents and correspondence from that third party, and all other correspondence and documents relating to the Third Party Claim as the Seller may reasonably request, subject to the Seller agreeing to keep all such information and documents confidential and to use them only for the purpose of dealing with the Third Party Claim;

10.4.2     the Purchaser shall assume and control the defence in respect of such Third Party Claim;

10.4.3     the Seller shall have the right to participate in, but not control, any defence against any Third Party Claim at its sole cost and expense.

10.4.4     the Purchaser shall keep the Seller informed and, when appropriate consult with the Seller, on the status of any Third Party Claim including, without limitation, all proposed settlement negotiations.

10.4.5     the Purchaser shall not enter into any settlement of any Third Party Claim without the written prior consent of the Seller, which consent shall not be unreasonable withheld or delayed. In the absence of any response by such other Party within 30 calendar days following a written request to obtain the abovementioned consent, this non-response shall be deemed to express this Party's consent.

11.     SPECIFIC INDEMNITY

11.1     The Seller shall indemnify the Purchaser for any and all Damages, resulting from any and all payments made or to be made by the Purchaser under the Transferred Liabilities to the extent that such payments relate to the period up to the Closing Date or to events, circumstances or facts occurred prior to the Closing Date;

11.2     The limitations set out in Clause 8 and Clause 9 shall not apply to this specific indemnity.

12.     POST-CLOSING UNDERTAKINGS

12.1     Competition

12.1.1     The Seller and Serge Schrurs undertake to the Purchaser they shall not and that they shall procure that their respective Affiliates as well as Serge Schrurs' spouse and relatives in descending order shall not, directly or indirectly, for their own account or in conjunction with or on behalf of any person (as principal, agent, independent, contractor, partner, employee, consultant or otherwise), unless with the prior written consent of the Purchaser:

(A)     compete with the Business, as such business is carried on as of the Closing Date in the Territory;

(B)     solicit or endeavor to entice away from or discourage from dealing with the Purchaser or induce to trade on different terms any person who was a customer or client of the Business at the Closing Date; or

(C)     solicit or endeavor to entice away from or discourage from being employed by the Purchaser or any of its Affiliates any employee (including the Transferred Employees), whether or not such person would commit a breach of contract by reason of leaving employment; provided, however, that nothing in this paragraph shall prohibit hiring as a result of general solicitations or hiring of former employees, i.e. employees who have left the Purchaser or any of its Affiliates for more than six months.

12.1.2     It is hereby expressly understood that nothing in this Clause 12.1 shall prohibit (i) Serge Schrurs to enter into the Services Agreement and to provide, as an independent contractor, the Purchaser with general management services on the basis thereof or (ii) the Seller to continue serving its current insulation customers provided that it does not interfere with the Purchaser's operations and that all fees related thereto shall be to the benefit of the Purchaser.

12.1.3     The duty not to compete as described in this Clause 12.1 shall remain in full force and effect until the third anniversary of the Closing Date. The limitations set forth in this Clause 12.1 are considered as reasonable by the Parties. In the event a limitation is considered null and void, the provisions of Clause 15.7 shall apply.

12.1.4     In the event of any breach of the covenants contained in this Clause 12.1, the Purchaser shall be entitled to indemnification in cash from the Seller for the Damages caused, it being understood that such Damages will be equal to EUR 150.000. If the Damages effectively suffered by the Purchaser exceed the said amount of EUR 150.000, the Purchaser is entitled to claim from the Seller any excess amount so that he receives full payment of such Damages.

12.2     Notifications

Immediately following Closing, the Purchaser shall procure:

(A)     the due notification of the content of this Agreement (together with the relevant certificates mentioned in Clause 7.2.1(A)(2), 7.2.1(A)(3) and 7.2.1(A)(4) to the competent tax and social security authorities in accordance with (i) Article 442bis, Section Section 2 and 3, of the Belgian Income Tax Code 1992, (ii) Article 93undeciesB of the Belgian VAT Code and (iii) Article 41quinquies of the Act of 27 June 1969 to amend the decision Act of 28 December 1944 regarding the social security of employees; and

(B)     the due notification of this Agreement and the Transaction contemplated hereby to the Deputation of the Provincial Council of the Province of West Flanders in accordance with article 42 of the Flemish Regulation on Environmental Permits.

13.     EXPLICIT TERMINATION CLAUSE

13.1     If at any time between the Closing Date and the third anniversary of the Closing Date the Purchaser fails to fulfill any repayment obligation with respect to the Seller's Debts , where such obligation has been agreed upon between the Seller and the creditor of such Seller's Loans and disclosed to the Purchaser pursuant to this Agreement, the Seller may notify Purchaser in accordance with Clause 15.2 of such failure.

13.2     If the Purchaser fails to cure such repayment failure within 60 calendar days from receipt of notification of such failure, the Seller may, at its option, deliver to the Purchaser a notice of immediate demand for return of all right, title, benefit and interest in and to the Transferred Assets as set out in Clause 2.1 of this Agreement, and the Purchaser will be deemed upon receipt of such demand to so assign, transfer, convey and deliver all such rights in and to the Transferred Assets to the Seller. The parties hereby agree to carry out any actions, and to execute and deliver any additional deeds or documents necessary to effect the purpose of this Clause 13.

13.3     Notwithstanding the foregoing, any and all assets contributed, acquired or added to the Transferred Assets by the Purchaser subsequent to the Closing Date will remain the sole property of the Purchaser and the Seller will allow the Purchaser unimpeded access to all such assets during normal business hours. The Seller will safeguard such assets in the same manner as the Transferred Assets and will allow the Purchaser a 90 day removal period commencing with the demand set out in Clause 13.2.

13.4     Parties further acknowledge and agree that the transfer provisions set forth in Clause 3 of this Agreement, shall mutatis mutandis apply to the transfer of the Transferred Assets and the Transferred Liabilities from the Purchaser to the Seller in accordance with this Clause 13.

14.     CONFIDENTIALITY AND ANNOUNCEMENTS

14.1     Subject to the exceptions provided in Clause 14.2, each Party shall treat as strictly confidential all information received or obtained by it or its agents or professional advisers as a precursor to or in connection with or as a result of entering into or performing this Agreement (the "Confidential Information") which relates to:

(A)     the existence of and any of the contents of this Agreement;

(B)     the negotiations relating to this Agreement;

(C)     the Business or affairs of the Purchaser; or

(D)     the other Party.

14.2     Each Party may disclose Confidential Information if and to the extent:

(A)     required by the law of any relevant jurisdiction, by governmental order or by relevant stock exchange regulations;

(B)     to a court, arbitrator or administrative tribunal in the course of proceedings before it to which the disclosing party is a party in a case where such disclosure is required by such proceedings;

(C)     required to vest the full benefit of this Agreement in either Party or their successors or permitted assigns;

(D)     properly disclosed to the professional advisers, auditors and bankers of each Party (subject to the latter being bound by a confidentiality undertaking);

(E)     the information has come into the public domain other than by that Party's breach of this Agreement; or

(F)    with respect to the Confidential Information referred to in Clause  14.1(C), the information is known in its industry of principal use or independently developed by the Seller;

provided that, to the extent practicable, any such information disclosed pursuant to Clause 14.2 shall be disclosed only after consultation with the other Party.

14.3     The restrictions contained in Clause 14 shall continue to apply without limit in time and whether or not this Agreement is terminated in any manner whatsoever.

14.4     Announcements of the Transaction contemplated in this Agreement shall be allowed as from the Closing Date. The Parties will consult with each other on the form, content and timing of such announcement.

14.5     The Parties shall take all necessary actions to ensure that no accidental or unauthorised disclosure of the contents of this Agreement occurs.

15.     GENERAL PROVISIONS

15.1     Further assurance

The Seller shall after the Closing Date execute all such deeds and documents and do all such things as the Purchaser may require for perfecting the Transaction to be effected under or pursuant to this Agreement and for giving the Purchaser the full benefit of the provisions of this Agreement.

15.2     Notices

15.2.1     Any notice, approval, consent or other communication to be made under or in connection with the matters contemplated in this Agreement shall be made in writing and in English and be signed by or on behalf of the Party giving it and shall be delivered personally or sent by fax confirmed by registered mail:

If to the Seller:	Name:	Schrurs NV
	Address:	Pijpestraat 18 8560 Wevelgem (Belgium)
	Attention:	Serge Schrurs
	Fax:	__________________
With a copy to:	Name:	De Wolf & Partners
	Address:	Koning Leopold I-straat 24 8500 Kortrijk (Belgium)
	Attention:	Jasper Caby
	Fax:	+32 56 21 59 53
If to the Purchaser:	Name:	Crailar Technologies Inc.
	Address:	Chatterton Way 305-4420, Victoria, British Columbia V8X 5J2 (Canada)
	Attention:	Ted Sanders
	Fax:	___________________
With a copy to:	Name:	Stibbe CVBA
	Address:	Loksumstraat 25, 1000 Brussels (Belgium)
	Attention:	Katrien Vorlat
	Fax:	+32 2 533 51 45

and shall be deemed to have been duly given or made as follows:

(A)     if personally delivered, upon delivery at the address of the relevant Party;

(B)     if sent by express courier, three calendar days after the date of posting; and

(C)     if sent by fax, on production of a transmission report from the machine from which the fax was sent which indicates that the fax was sent in its entirety to the fax number of the recipient, subject to such fax being confirmed by registered letter sent the same day as the day of the fax transmission.

15.2.2     A Party may notify the other Party to this Agreement of a change to its name, relevant addressee, address or fax number for the purposes of the giving of notices or other communications provided that such notification shall only be effective:

(A)     on the date specified in the notification as the date on which the change is to take place; or

(B)     if no date is specified or the date specified is less than five calendar days after the date on which notice is given, the date falling five calendar days after notice of any such change has been given.

15.3     Costs and expenses

The Parties shall pay their own costs in connection with the preparation and negotiation of this Agreement and any matter contemplated by it.

15.4     Entire agreement

This Agreement (and the documents and agreements referred to herein) contains the entire agreement between the Parties with respect to its subject matter.

15.5     Amendment

No amendment of this Agreement shall be effective unless it is made in writing and signed by duly authorised representatives of all Parties.

15.6     Assignment

15.6.1     Except as otherwise provided herein, no Party may assign all or part of its rights and obligations under this Agreement to any third party (through a sale, a capital contribution, a donation or any other transaction, including the sale or contribution of a division ("bedrijfstak" / "branche d'activité") or of a business as a whole ("algemeenheid" / "universalité"), or a merger, spin-off or split-up) without the prior written consent of the other Party. As long as such consent has not been obtained, the assigning Party shall continue to be liable for all obligations that it intended to assign (without prejudice to any other right or remedy that the other Parties may have for breach of this Clause) and the assignee shall not be entitled to exercise any of the rights under this Agreement.

15.6.2     Subject to the assignment restrictions set out in this Clause 15.6 the provisions of this Agreement shall inure to the benefit of and shall be binding upon the Parties and their respective heirs, successors and assigns.

15.7     Severability / Partial invalidity

15.7.1     If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, that provision shall be deemed not to form part of this Agreement, and the legality, validity or enforceability of the remainder of this Agreement shall not be affected.

15.7.2     In such case, each Party shall use its reasonable best efforts to immediately negotiate in good faith a valid replacement provision having a similar economic effect which is as close as possible to that of the invalid, void or unenforceable provision.

15.8     No waiver

The rights and remedies of the Parties shall not be affected by any failure to exercise or delay in exercising any right or remedy or by the giving of any indulgence by any other Party or by anything whatsoever except a specific waiver or release in writing and any such waiver or release shall not prejudice or affect any other rights or remedies of the Parties. No single or partial exercise of any right or remedy shall prevent any further or other exercise thereof or the exercise of any other right or remedy.

15.9     Governing law

This Agreement shall be governed by and construed in accordance with Belgian law.

15.10     Jurisdiction

All disputes arising out of or in connection with this Agreement and which the Parties are unable to settle amicably shall be subject to the exclusive jurisdiction of the courts of Brussels, and the language of the procedure shall be Dutch.

Done at _________________ on November 6, 2013 in 6 originals, each Party and Serge Schrurs recognizing having received its original and 3 originals for filing purposes.

For the Purchaser
/s/ Theodore Sanders
Name : Theodore Sanders	Name :
Title : CFO	Title :
For the Seller
/s/ Serge Schrurs
Name : Serge Schrurs
Title : Managing Director

For acceptance of its obligations under Clause 12.1

/s/ Serge Schrurs

Serge Schrurs

SCHEDULE 1

Definitions and interpretation

1. Definitions

In this Agreement each of the following words and expressions shall have the following meanings:

Affiliate	:	means any person or entity controlling, controlled by, or under common control of a Party within the meaning of article 11 of the Companies Code.
Agreement	:	means this asset purchase agreement, including the Schedules hereto, which form an integral part thereof.
BNP Paribas Debts	:	means the debts and liabilities of the Seller towards BNP Paribas, as set forth in Schedule 6.
Business	:	has the meaning set out in Recital (A).
Claim	:	means a claim made by the Purchaser for Damages resulting from the inaccuracy, incompleteness or breach of any of the Seller's Representations.
Claim Notice	:	has the meaning as set out in Clause 10.1.
Clause	:	means any clause of this Agreement.
Closing	:	means the transfer of title and economic risk in respect of of the Transferred Assets and Transferred Liabilities pursuant to this Agreement.
Closing Date	:	means the date on which the Closing takes place, as set out in Clause 6.1.
Conditions Precedent	:	has the meaning set out in Clause 6.1.
Confidential Information	:	has the meaning set out in Clause 14.1.
Damages	:	means any direct loss within the meaning of Articles 1149, 1150 and 1151 of the Belgian Civil Code.
Encumbrance	:	means any mortgage, lien, pledge, encumbrance, security interest, deed of trust, usufruct ("vruchtgebruik"/ "usufruit"), option, encroachment, reservation, order, decree, judgment, condition, restriction, charge, claim or any other third party right of any kind, however documented.
Excluded Assets	:	has the meaning as set out in Clause 2.2.
Excluded Liabilities	:	has the meaning as set out in Clause 2.4.
Governmental Authority		means any nation or government, any state, regional, provincial, territorial, local or other political subdivision thereof, or any supranational authority and any entity or official exercising executive, legislative, judicial, quasi-judicial, regulatory or administrative functions of or pertaining to government.
Joint Closing Obligations	:	has the meaning set out in Clause 7.2.3.
KBC Debts	:	means the debts and liabilities of the Seller towards KBC to the Seller, as set forth in Schedule 6.
Lease Agreement	:	has the meaning set out in Recital (E).
Leased Premises	:	shall mean the wet processing facility located at Oostkaai 46, 8900 Ieper.
Liabilities	:	means, as to any person, all past, present and future debts, adverse claims, fines, liabilities and obligations of any kind.
Purchase Consideration	:	means the aggregate price for the Assets as defined in Clause 4.1.
Purchaser's Closing Obligations	:	has the meaning as set out in Clause 7.2.2.
Seller's Closing Obligations	:	has the meaning as set out in Clause 7.2.1.
Seller's Debts	:	has the meaning as set out Clause 4.1.
Seller's Representations	:	means the representations and warranties made by the Seller to the Purchaser pursuant to Clause 8 and as set forth in Schedule 8.
Services Agreement	:	has the meaning set out in Recital (E).
Tax(es)	:	means all federal, state, local and foreign taxes (including, without limitation, income, profit, VAT, franchise, sales, use, real property, personal property, ad valorem, excise, employment, social security and wage withholding taxes) and instalments of estimated taxes, assessments, deficiencies, levies, imports, duties, license fees, registration fees, withholdings, or other similar charges of every kind, character or description and any interest, penalties or additions to tax imposed thereon or in connection therewith.
Territory	:	means Belgium.
Third Party Claim	:	has the meaning set out in Clause 10.2.
Transaction	:	means the transfer of the Transferred Assets and the Transferred Liabilities by the Seller to the Purchaser and the corresponding acquisition of the Transferred Assets and the Transferred Liabilities by the Purchaser from the Seller, subject to the terms and conditions of this Agreement.
Transferred Assets	:	has the meaning as set out in Clause 2.1.
Transferred Contracts	:	has the meaning as set out in Clause 2.1.2.
Transferred Employees	:	has the meaning as set out in Clause 2.1.1(C).
Transferred Equipment and Machinery	:	has the meaning as set out in Clause 2.1.1(A).
Transferred Liabilities	:	has the meaning as set out in Clause 2.3.
Transferred Permit	:	has the meaning as set out in Clause 2.1.1(B).

2. Interpretation

In this Agreement, except where the context otherwise requires:

• in the event of any difficulty of interpretation, the rules set out in Articles 1156 to 1164 of the Belgian Civil Code ("Burgerlijk Wetboek /Code Civil") shall apply. However, the application of Article 1162 of the Belgian Civil Code is expressly waived.
• the original version of this Agreement has been drafted in English. Should this Agreement be translated into French, Dutch or any other language, the English version shall prevail among the Parties to the fullest extent permitted by Belgian law, provided, however, that whenever French and/or Dutch translations of certain words or expressions are contained in the original English version of this Agreement, such translations shall be conclusive in determining the Belgian legal concept(s) to which the Parties intended to refer.
• a reference to an enactment or statutory provision shall include a reference to any subordinate legislation made under the relevant enactment or statutory provision and is a reference to that enactment, statutory provision or subordinate legislation as from time to time amended, consolidated, modified, re-enacted or replaced.
• when using the words "shall cause" or "shall procure that" (or any similar expression or any derivation thereof), the Parties intend to refer to the Belgian law concept of "porte-fort" / "sterkmaking".

• in this Agreement, general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words and general words which follow particular or specific words shall not be given a restrictive meaning by reason of the fact that they are preceded by such words.
• reference to this Agreement includes this Agreement as amended and supplemented in accordance with its terms.
• reference in this Agreement to the "best efforts" of a person means the efforts that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible.
• for the calculation of a period of time, such period shall start the next following day after the day on which the event triggering such period of time has occurred. The expiry date shall be included in the period of time. If the expiry date is a Saturday, a Sunday or a bank holiday in Belgium, the expiry date shall be postponed until the next business day in Belgium. Unless otherwise provided herein, all periods of time shall be calculated in calendar days.

SCHEDULE 2

INDEX DATA ROOM

SCHEDULE 3

TRANSFERRED EQUIPMENT AND MACHINERY

[redacted]

SCHEDULE 4

TRANSFERRED PERMIT

Province of West FlandersProvince Boeverbos
King Leopold III -laan 41
B - 8200 St- Andries
Phone 050 /40 31 11
IN CHOiCE TEL
Telex 81 170
Fax 050 / 40 31 00 REGISTERED
On N.V. Schrurs
PIJPESTRAAT 12
8560 WEVELG

Bruges , 16/02/1996

Our ref: 7C/33011/273/A/1

your ref:

Attachments: Decision + certificate

Subject: Application of SA Schrurs , PIJPESTRAAT WEVELGEM with the object of operating a textile facility located at OOSTKAAI 48 YPRES .

Dear,

According to art. 35, 5°c of the Flemish Regulation concerning the environmental licenses, a certified copy of the decision of the Provincial Deputation, as well as the certificate referred to in art. 1 Section 4 of the Flemish Regulation on the Environment is being sent to you.

Yours sincerely,

On behalf of the Provincial Council,

The Deputy Director,

/ s / Bruno Tricot

Bruno Tricot.

Dossier 33011/273/A/1

Decision of the Provincial Deputation of the Provincial Council, containing license for - NV Schrurs - to operate an establishment located in YPRES ( YPRES )

The Provincial Deputation of the Provincial Council,

Given the decree of 28 June 1985 concerning the environmental license, as amended by the decree of February 7, 1990, to December 12, 1990, of December 21, 1990, of December 22, 1993 and December 21, 1994;

Given the Decree dd February 6, 1991 of the Flemish Executive establishment of the Flemish regulations concerning the environmental license, as amended by Decree of the Flemish Executive of 27 February 1992, by decision of 28 October 1992, by decision of 27 April 1994 and by decision of 1 June 1995;

Given the decision of the Flemish Government of 1 June 1995 concerning General and Sectoral provisions relating to Environmental Hygiene (VLAREM II , Belgian Official Gazette dated July 31, 1995) , As amended by Decree of 6 September 1995;

The following license(s) and decisions were given regarding the operation of the apparatus shown below and on the date of the application of the license application here below, that's in application.

Given the environmental license application on 11.3.1995, by Schrurs NV, established in 8560 WEVELGEM , PijPESTRAAT 12 , seeking to obtain an environmental permit for a facility located at 8900 YPRES (YPRES,) EASTERN QUAY 48, cadastral :

Dept. Township. Parcelnr section.

YPRES 5 B 941 / C (Part)

with the object to operate a textile processing facility

(Headings

3.3

Wastewater and cooling water: the not discharging of under section 3.6 includes domestic sewage in public sewers (3) Requested: 40 m3/year wastewater

3.6.3.1.

Wastewater and cooling water: waste water treatment plants for hazardous industrial waste water (effluent till 50 m3/h) (2)

Requested : 20000 m3/year wastewater

4.2.

Coating agents: application of lacquers, paints, etc. by immersion (2)

Requested : 133.2 kW three dyeing machines Requested : 5 kW steel dyeing machine 12.2.1 .

Electricity: electrical transformers with an individual nominal power of 100 kVA till 1,000 kVA (3) Requested : 165 kVA transformer

16.3.2.2.

Gases: compressors with a single driving force > 10 kW t.e.m. 200 kW (2)

Requested: 18.7 kW air compressor 17/03/32 .

Hazardous substances: warehouses for oxidizing, harmful, corrosive or irritant substances (> 1000 kg till 50,000 kg) (except those referred to in section 48) (2)

Requested: 3180 kg corrosive substances Requested : 5890 kg irritants

Requested: 510 kg harmful coagulate

23.3

Plastics: storage of plastics and articles of plastic with a maximum capacity of > 10 tonnes in a room or 100 tonnes in the open air, exc. those referred Cat 48 (2)

Requested: 100 tonnes of plastics

29.5.2.2.

Metal forging and devices for the mechanical treatment / manufacturing of metal (objects) (total thrust > 10 kW till 200kW ) (2)

Requested 5,7 kW 2 metalwork.

39.13.

Steam Appliances: steam generators with a water content of > 5,000 liters (1)

Requested: 25000 liter boiler

39.4.1.

Steam Appliances: heat exchangers with a water capacity of the secondary area of 251 till 5000 1 (3) Requested 5000 liters exchanger

41.43.

Textiles: chemical cleaning and treatment of textiles (total force of > 200 kW) (1)

Requested: 259.51 kW textile dying .

41.5.

Textile: Textile(goods) warehouses with a capacity > 10 tonnes (3)

Requested: 200 tons of textiles

43.1.3.

Combustion devices without electricity production (combustion c.d.) with a heat output > 5000 kW (1)

Requested: 6977 kW boiler

so that it would include :

a textile company:

- The discharge of wastewater from sanitary installations and kitchen (0.1 m3/hr , 0.18 m3/day and 40 m3/year) into the public sewer

- The discharge of wastewater from the textile dye house and the draining of the boiler (10 m3/hr, 200 m3/day and 20,000 m3/year ) via a wastewater basin of 500 m3 (aeration, mixing, pH adjustment, temperature adjustment and sedimentation) into the public sewer

- High voltage transformer 165 kVA

- A textile dying firm with 3 textile fibre dyeing machines each 44.4 kW , a jet dyeing machine 5 kW and two spin operators , respectively . 11 kW and 13 kW

- A dryer with an opener of 8 kW , 2 dryers respectively . 6 kW and 9.8 kW, 2.2 kW dryer, two balers respectively . 5 kW and 16.91 kW and a 1.1 kW rounding machine bobbins

- A Meurabloc boiler (No 2416, 12 bar) with gas burner and pump 11 kW each, a water content of 25.0001 and a thermal power of 6,977 kW

- An air compressor 18.7 kW

- A 7.6 kW hoist

- A repository for 6001 acetic acid (technical 40 % vol .) 1 Cleocid 300 V, 300 1 hypochlorite , 1201

hydrogen peroxide (27.5%) , 1,620 1 NaOH - solution (29%) and 2.100 kg of sodium carbonate in the open air

- A color magazine with storage of 240 kg corrosive, 3790 kg irritating and 510 kg harmful dye auxiliary products

- A heat exchanger with a water capacity of the secondary area of 5.0001 in between openings of 3 m3 - 2 metalworking machines together 5.7 kW

- Warehouse storage of up to 200 tons of textiles and textile articles divided into raw materials and finished products such as sisal, wool, cotton, spools, acrylic, polyester and polyamide including up to 100 tonnes of plastics and articles of plastics.

Given the fact that on the date of 13/11/1995, the environmental license application was declared admissible and complete;

Given the documents, certifying that the environmental license obtained the necessary publicity, in accordance with Article 17 of the Flemish regulations regarding the environmental license;

Given the minutes dd. 12/23/1995 proving that no written or oral objections and comments were submitted during the public inquiry;

Given the advice of the board of Mayor and Aldermen that is favorable if it's provided that the discharged effluent from the treatment plant, does not harm or hamper the operation of the(the pH must be constant in order to avoid acidic water with high lead concentrations),if it's provided that a region- green screen is applied and if it's provided that the treatment is well maintained and the sludge is regularly discharged to an approved establishment;

Given the hearing of the applicant by the Provincial Environmental license Commission;

Given the favorable advice dated 12/01/1996 of the Environmental Department of the Environmental licenses, Nature, Land and Water Administration;

Given the favorable opinion, dated 06/12/1995 of the ROHM Department of Administration for Planning and Housing Department of the Environment and Infrastructure;

Given the partially favorable opinion dated 04/01/1996 of the Flemish Environment Agency;

Given the favorable opinion, dated 15/12/1995 of the Public Waste Company; having regard to the favorable opinion dated. 26/01/1996 of the Provincial Environmental Commission;

Given the location of the establishment in an area for polluting industries of the regional plan Ieper-Poperinge, for which the following rules apply:

2.1.2. Areas for environmentally loading industries. These are intended for companies who must be isolated for economic or social reasons;

Given the location of the device in a BPA "Industrial area expansion of the leperleekanaal II (Art. 17)" dated 26/09/1991 for which the following rules apply: Business-ground

Whereas (reasoning from the viewpoint of urban and spatial aspects) it may be established that the operation of the facility which is the subject of the aforementioned environmental permit application forms, is consistent with the aforementioned spatial and urban planning regulations made;

Whereas, in contrast to the opinion of the Provincial Environmental license commission, is showed that a region- green screen is designated so as not to disturb the general view of the area, which responds to the comments of the Town Council with this particular condition;

Whereas it comes to moving a textile company from Wevelgem to leper;

Whereas the sanitary and industrial wastewater are fed separately to the street sewer;

That the requested rate for industrial is halved compared to the discharge permit in Wevelgem , that section 3.63 applied instead of the requested 3.4 and 3.62 , that this is officially rectified;

That the industrial waste is discharged through a small treatment plant consisting of sedimentation, homogenization, pH and temperature regulation, which is not provided in a color treatment;

Whereas the parameters Kjeldahl -N and phosphate are not applied while these compounds are normally present in such waste water;

Whereas there is vagueness about what the discharge of industrial concerns so it is appropriate that this will be examined and evaluated by an environmental expert "surface" , that this is imposed with a special condition;

Considering industrial waste can be aggressive, that the applicant has stated in the provincial environmental license committee, that the wastewater basin will be conducted in foil, that this does not necessarily guarantee that there's no soil and groundwater contamination and that the water-basin should be performed in durable and impervious material, that this is imposed with a special condition;

Whereas the dye centrally deployed in the commercial building, the dyes and auxiliary products are stored in the color magazine on the floor above the office, that the chemical products are stored in the open air outside, that this can be done according the Vlarem II conditions.

Whereas the air outlet of the heating of the boiler (gas burners) and the raw material dryers (water vapor) will happen through a chimney;

Whereas the institution is working between 5 and 21 and that night work is also possible in the future, that in a particular condition suitable working hours should be imposed;

Whereas the operation of the allowable part of the institution must be compatible with the environment, both in terms of risks to the external security as regards the nuisance, the effects on the environment, the waters , the nature and the man outside the establishment;

Whereas it is therefore necessary to impose license conditions that are achievable and meet the requirement of best available clean technologies without excessive costs permit conditions, and that the technical criteria and the applicable standards are applied in this spirit, that these conditions can be instantiated as defined in annex;

Considering the partially favorable opinion from the Flemish Environment Agency, as follows: favorable for discharge of HA in sewage if we meet the conditions for the discharge of BA in surface water via a sewage treatment plant if it's provided that it's up to 10 m3 / h , 200 m3/day and 20,000 m3 / y discharged and it's provided that the imposed parameters and pollutants are respected; unfavorable for the discharge of BA through a sewage treatment plant that consists of a basin of 500 m3 for the reason that it concerns here a new business which may be expected to produce a wastewater stream the already poorly working WWTP will not improve"

can not be taken into consideration with regard to the discharge of BA via a sewage treatment plant which consists of a basin of 500 m3

and is refuted by the above considerations;

Whereas the elements introduced by the applicant, heard by the Provincial Environmental license Commission are as follows: "There are now 11 employees, an impermeable film is now widely used for water treatment basins in the textile sector, there are no phenols used in the process; normally we don't meet the sectoral standards, there occurred a misconception in the application, in the column "res after purification " the sectoral standards are written, which we are definitely under. We moved to leper because we could connect to a sewer there; a water treatment plant for discharge to surface water is priceless, because we are contractors who have to do different kinds of work, a water treatment plant like this would never function properly, there is no treatment, wastewater is cooling , and the pH is adjusted, I charge directly into the sewer, I could increase my business numbers with much ease, but then I do not get the discharge standards, which I would not want, the line to the water-basin is in stainless steel and is hollowed out, I have no idea about the composition of the settled sludge, everything had to go fast because I can only move in the long vacation in 1996, the license is valid until February 1997 ";

Whereas these elements don't alter the considerations and observations mentioned above ;

Whereas it can be established that the risks for the external safety, nuisance, the effects on the environment, the water, nature and humans out of the institute, caused by the requested operation, if it's provided that we meet the present decision imposed set of environmental conditions, can be reduced to an acceptable level;

Whereas, therefore, there is reason to allow the requested permit in full

DECISION:

ARTICLE 1

Section 1 . On Schrurs NV, established in 8560 WEVELGEM , PIJPESTRAAT 12 states permit this decision granted to an establishment located in OOSTKAAI 48 8900 YPRES ( YPRES ) , cadastral knows as :

Dept. Township. Parcelnr section .

YPRES 5 B 941 / C (Part )

with the object: to operate a textile company

(headings

3.3.

Wastewater and cooling water: not discharge under section 3.6 include domestic sewage in public sewers (3) Number : 40 m3/year wastewater

3.6.3.1.

Wastewater and cooling water: waste water treatment plants for hazardous industrial wastewater (effluent till 50 m3/h) (2)

number: 20000 m3/year wastewater

4.2.

Coating agents: application of lacquers, paints , etc. by immersion (2)

number: 133.2 kW 3 dyeing machines

number: 5 kW sample dyeing machine

122.1.

Electricity: transformers with a rated power of 100 kVA individual t.e.m. 1,000 kVA (3) Number : 165 kVA transformer.

16322.

Gases compressors with a total power > 10 kW t.e.m. 200 kW ( 2 )

number : 18.7 kW air compressor

17.3.3.2.

Hazardous substances: warehouses for oxidizing, harmful, corrosive or irritant substances ( > 1000 kg till 50,000 kg ) (except those referred to in section 48) ( 2 )

number : 3180 kg corrosive substances

number : 5890 kg irritants

number : 510 kg pollutants

233.

Plastics: storage of plastics and articles of plastic with a maximum capacity of > 10 tonnes in a room or 100 tonnes in the open air , exc. those referred Cat 48 ( 2 )

some 100 tonnes of plastics

29.5.2.2.

Metal: forging and devices for the mechanical treatment / manufacturing metal (objects) (total thrust > 10 kW till 200kW ) ( 2 )

number: 5,7 kW 2 metal working machines

39.1.3.

Steam Appliances: steam generators with a water content of> 5,000 liters ( 1 )

number: 25000 liter boiler

39.4.1.

Steam Appliances: heat exchangers with a water capacity of the secondary area of 251 till 5.0001 (3)

number: 5000 liters heat exchanger

41.4.3.

Textiles: chemical cleaning and treatment of textiles (total motive power > 200 kW) (1)

number : 259.51 kW textile dying

41.5 .

Textile: Textile warehouses (goods) with a capacity > 10 tonnes ( 3 )

some 200 tons of textiles

43.1.3.

Combustion devices without electricity production (combustion plants, etc.) with a heat output > 5000 kW ( 1 )

number : 6977 kW boiler

So that it would henceforth include:

A textile company with:

- The discharge of wastewater from sanitary facilities and kitchen ( 0.1 m3/hr , 0.18 m3/day and 40 m3/year ) into the public sewer

- The discharge of wastewater from the textile dying and draining of the boiler (10 m3/hr, 200 m3/day and 20,000 m3/year ) via a sewage basin of 500 m3 ( aeration , mixing, pH adjustment , temperature adjustment and sedimentation) into the public sewer

- High voltage transformer 165 kVA

-A textile dying firm with 3 dyeing machines each 44.4 kW, a 5 kW eon jet dyeing machine and two spin operators , respectively.11 kW and 13 kW

- A drying with a more open 8 kW , 2 dryers respectively . 6 kW and 9.8 kW, 2.2 kW eon dryer, two balers respectively . 5 kW and 16.91 kW and 1.1 kW eon rounding machine bobbins

- A Meurabloc boiler (No 2416 , 12 bar) with gas burner and pump 11 kW each , a water content of 25.0001 and a thermal power of 6,977 kW

- An air compressor 18.7 kW

- Hoist a 7.6 kW

- A repository for 6001 acetic acid (technical 40 % vol . ) 1 Cleocid 300 V, 300 1 hypochlorite , 1201

hydrogen peroxide (27.5%) , 1,620 1 NaOH - solution (29%) and 2.100 kg of sodium carbonate in the open air

- A color magazine with storage of 240 kg corrosive, 3790 kg irritant and 510 kg harmful dyes and auxiliary products

- A heat exchanger with a water capacity of the secondary area of 5.0001 in the basin between 3 m3

- 2 metal working machines together 5.7 kW

- Warehouse storage of up to 200 tons of textiles and textile articles divided into raw materials and finished products such as sisal, wool, cotton, reels, acrylic, polyester and polyamide including up to 100 tonnes of plastics and articles of plastics.

ARTICLE 2

Section 1 . The in Article 1 mentioned licensed establishment shall put into operation as from the date specified in Article 3, within a period of 200 calendar days.

Section 2 . To the extent that a building permit is required for the device which is the subject of the authorization referred to in Article 1, laying under the Act of March 29, 1962 the organization of spatial planning and urban design , or otherwise the present environmental will be suspended as long as the building permit has not been granted .

In deviation of the provisions of Section 1, the starting date of the environmental will be permitted until the day that the building permit is vested.

Section 3. If the building permit to in Section 2 is referred, the environmental operation of law will be referred to in Article 1 on the day of the refusal of planning permission in the last instance expires.

ARTICLE 3

The authorization referred to in Article 1 shall be granted for a period of 20 years.

1. starting on 02/08/1996, except where :

a) present environmental license has been suspended because the building permit , required under Article 44 of the Law of 29 March 1962 on the organization of spatial planning and urban design , is not granted permit at the date of this final environmental, the operator has to inform the government that granted the environmental license (by registered letter), of the date the building license was granted.

b) present environmental permit in accordance with Article 2 Section 3 shall lapse by law, in which case no license period allowed ;

2. ending on 02/08/2016 , unless

- The establishment in accordance with the provisions of sub 1a) , was later taken into use , in which case the date of expiry of this authorization with a period corresponding to the subsequent commissioning will be shifted later, unless the deadline coincides with the ongoing previously granted license(s).

ARTICLE 4

For the authorization referred to in Article 1 the following general and sectoral conditions for new devices shall be applied (including, where appropriate, the items stated apply only);

VO1: General Environmental Policy - General Chapter 4.1. and Annex 4.1.8 . (Link to text)

VO2: General environmental conditions - sound:

Chapter 4.5 and Annex 2.2.1, 2.2.2, 4.5.1, 4.5.2 and 4.5.3

VO3: General environmental conditions - surface:

Chapter 4.2 and Annex 4.2.5.1 (Link) and 4.2.5.4 (Link to text)

VO5: General environmental conditions - air:

Chapter 4.4. and appendices 4.4.1 ( Link) , 4.4.2 , 4.4.3 , 4.4.4 and 4.4.5 ( Link)

V26: Discharge of industrial waste waters:

Section 532 and Annex 53.1 (reference in text) and attachments 5.3.2 point 44 ° a) discharging in sewer

V27: Coating agents, dyes and pigments : section 5.4

V35: Electricity: section 5.12

V38: Gases - general: Section 5.16.1

V40: Gases - refrigeration equipment - compressors (physical treatment): Section 5163

V46: Hazardous substances - general: definitions hazardous substances Art. 5.17.0.1 and art. 1.1.2 (only definitions of hazardous substances)

V47: Hazardous substances - activities industrial warehouses with risks of serious accidents , industrial production and storage facilities of certain hazardous substances:

Section 5.17.1 and 5.17.1 Annex (reference text)

V61: Air pollution - thermal power plants, furnaces and combustion furnaces : Section 5:20 (excluding section 5202 : petroleum refineries . ) And Section 5:43

V81: Steam Appliances: Chapter 5:39

V82: Textiles : Chapter 5:41

This doesn't change the strict compliance off the following conditions: Decision of the Flemish Government of 1 June 1995 concerning General and Sectoral provisions relating to Environmental Hygiene (VLAREM II , Belgian Official Gazette dated July 31, 1995 .) As amended by Decree of 6 September 1995.)

Special Conditions:

1) In the application of art. 5.41.0.4. Vlarem 2 the textile dying may also run from 19 h to 7 h

2) the industrial basin should be a concrete or similar structure so that the risk of contamination is adequately restricted

3) the contaminated substances in the wastewater should be identified , including the removal method of the sludge in the wastewater, missing authorization for contaminants should be done after obtaining the final permit within 6 months, this examination should be done by an environmental expert „ surface water ( section 1.3 . title 2 of the Vlarem ) and the results should be reported within 6 months of the external services of the West Flanders Environmental and Ecological Inspectorate Aminal departments.

4) the proper operation of the wastewater treatment should be evaluated by an environmental expert " surface water " (Chapter 1.3 of Title 2 of the Vlarem). Study has to be communicated to the external services of the West Flanders Environmental and Ecological Inspectorate Aminal department.

5) met the sectoral conditions for discharge of industrial textile finishing in sewage client regardless of the specific reference volume Annex 5.3.2.44 ° a) (Title 2 of the Vlarem )

6) the establishment lasting client clothed in a region- green screen of alternating tall and low trees , with a minimum width of 3 meters

ARTICLE 5

This authorization shall not affect the rights of thirds.

ARTICLE 6

Section 1. The provisions of Article 5 Section 1 , 2 ° of Title I of the Vlarem apply to any change of the licensed establishment.

Section 2. Any acquisition of the facility by another operator at the latest 10 calendar days before the date of acquisition has to be reported to the licensing authority granted pursuant to the provisions of Article 42 of the Flemish Regulation on Environmental.

A renewal of the license must be applied in accordance with the provisions of the Flemish regulations regarding environmental appearance between the 18th and the 12th month before the expiry of the license period of the current license.

Bruges, the 02/08/1996

Were attending: HH . Olivier Vanneste, Governor - chairman, Werner DATA, Ferdinand PEUTEMAN, Mrs. MC VAN DER Stichele - de Jaegere, Sir Gerard NAEYAERT , the Lord and the Lord Defreyne Gerrit Jan DURNEZ members, Mr. Hilaire OST Registrar

County Registrar, The President,

Seal of the Province of West Flanders

ATTENTION!

According as the coupling of the building to the environmental license expires under the Act of March 29, 1962 organization of town and country planning should be refused on the day of the final refusal of the environmental license.

There may be appealed to the Flemish Government against this decision, in accordance with the provisions of the Flemish Regulation on the environmental permit. This appeal must be filed within 30 calendar days after posting or by registered letter, addressed to the Flemish minister competent for the environment, at the address of the Department of Environmental AMINAL (Belliard 14-18 1040 BRUSSELS) or Cabinet Flemish Minister.

In support of the receiving of the writing, the wiring has to be companied by the attest of shipment respectively of enclosing as also a proof of payment of the registration fee.

SCHEDULE 5

TRANSFERRED EMPLOYEES

Name	Date of birth	Date of employment
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

SCHEDULE 6

SELLER'S DEBTS as at October 4, 2013

Creditor	Initial amount	Amount due as at 4/10/2013	Interest (%)	End date
KBC DEBTS
Straight loan C11296374269	230,000	229978,94
Loan 726617340113	95,000	17416,83	3,95	29/09/2014
Loan 726799431442	154,720	136669,38	3,1	31/08/2022
Loan 726799432048	157,255	131045,88	3,1	4/09/2019
Leasing Dryer C11296374269	220,000	173178,32		4/09/2017
BNP PARIBAS DEBTS
Loan 245-7014859-09	99,000	71651,68	4,545	31/03/2017
Loan 245-5646297-20	19,000	5066,52	3,21	14/01/2015
Loan Le Relais	50,000	50.000	N/A	N/A
Loan Marc Schrurs	66,048.55	66.048,55	4	N/A
Potential liability in respect of dismissal employee	N/A	[Potential liability]	N/A	N/A
TOTAL		EUR 881.056

SCHEDULE 7

AGREED FORM COPY OF THE SERVICES AGREEMENT

DATED November 6, 2013

CRAILAR TECHNOLOGIES INC.

as "the Company"

AND

Mr. Serge SCHRURS

as "the Consultant"

SERVICES

AGREEMENT

TABLE OF CONTENTS

OBJECT OF THE AGREEMENT	2
QUALIFICATION OF THE AGREEMENT	2
EXECUTION OF THE CONTRACT	2
FEES	5
CONFIDENTIALITY	5
INTELLECTUAL PROPERTY	6
TERMINATION	8
MISCELLANEOUS	9
GOVERNING LAW AND JURISDICTION	9

THIS SERVICES AGREEMENT (the "Agreement") is entered into [•] 2013

BETWEEN

(1)     [•], incorporated under the laws of Belgium, having its registered office at [•] and registered in the register for legal entities under the number [•];

duly represented by [•], in [his or her] capacity as [•];

hereinafter referred to as "the Company";

AND

(2)     Mr. Serge SCHRURS, domiciled in Belgium at Pijpestraat 18, 8560 Wevelgem;

hereinafter referred to as "the Consultant";

The Company and the Consultant are hereinafter referred to as "a Party" and collectively as "the Parties"

WHEREAS:

(A)     The Consultant has managed and operated for many years a company specialized in the textile industry, in particular specialized in wet processing, with a facility located at 8900 Ieper ("the Facility").

(B)     On the day hereof, the Company has acquired from Schrurs NV certain assets and liabilities related to the operations at the Facility.

(C)     The Company has expressed its will to benefit from the experience and the expertise of the Consultant to further develop certain textile related activities at the Facility.

(D)     The Consultant is willing to provide his experience and expertise by offering professional and independent services to the Company.

(E)     In this context, the Parties agree to the following which sets out the terms and conditions of their collaboration.

IT HAS BEEN AGREED AND ACCEPTED AS FOLLOWS:

1.     OBJECT OF THE AGREEMENT

As from 06 November (hereinafter referred to as "the Effective Date"), the Consultant will, as an independent contractor, provide the Company with the services and advice with respect to the management and operation of the new textile related operations at the Facility ("the Service").

The Consultant will execute any other tasks that he considers necessary in that regard and give such advice that the Company might require for the proper management of the Facility.

In providing the Services, the Consultant will take into consideration the strategic decisions of the Company's board of directors.

2.     QUALIFICATION OF THE AGREEMENT

2.1.     Independency

According to Article 331 of the Programme-Act (I) of December 27, 2006, the Parties agree that the Consultant will perform his obligations under the present Agreement on an independent basis. The Consultant will be accountable to the Company for the faithful and diligent performance of his duties under this Agreement.

2.2.     Responsibilities

The Consultant, in its sole responsibility, must comply with all statutes and regulations that apply to his status, especially social and tax obligations that apply to him. The Consultant agrees to hold the Company harmless from and against any and all damage, loss, liability, and expense (including costs of investigation and reasonable attorneys' fees) suffered or incurred by the Company and resulting from any breach of this provision.

3.     EXECUTION OF THE CONTRACT

3.1.     General

The Consultant undertakes to execute the Services under the present Agreement in a good, efficient and proper manner using his best efforts. The Consultant must use all reasonable means to execute the Services in an appropriate, loyal, and efficient manner, and the Consultant agrees to do everything within his power to promote the interests and the reputation of the Company and its affiliated members.

The Consultant will see to it that his undertakings described above will be respected by his agents, officers, employees, and directors, if any.

3.2.     Appointments

The Services shall be rendered by Mr. Serge Schrurs. The Consultant may not replace himself with another person or agent without the prior written approval of the Company.

If the Consultant appoints another person to render the Services under this Agreement on the Consultant's behalf, this appointed person must observe the obligations of this Agreement. The Consultant agrees to hold the Company harmless from and against any and all damage, loss, liability and expense (including costs of investigation and reasonable attorneys' fees) suffered or incurred by the Company and resulting from a breach of the commitments under Articles 2 and 5 of the present Agreement.

3.3.     Manner in which the Consultant is to execute his duties under the Agreement

Subject to the strategic decisions of the Company's board of directors, the Consultant has full autonomy in how, when, and where he will render the Services under the present Agreement. The Consultant will ensure that his Services are organized in such a way that the Company will receive optimal quality of Services.

The Consultant will devote the time necessary to provide the Company with the Services. In this respect, the Parties estimate that the time required for the Consultant's proper execution of his duties under this Agreement is a minimum of 1,750 hours per year.

3.4.     Access to the premises and network

The Company allows the Consultant to access its premises and its computer and telephone networks.

3.5.     Autonomy

The Consultant has full autonomy in providing the Services. He will determine himself the modalities, the conditions with respect to the technical aspects for the provision of the Services as well as the manner in which his activities will be organized. The Consultant has full autonomy in organizing his working time and work.

However, the Consultant will be available to the Company according to its business needs. The Consultant will devote his efforts, time, and availability to the correct performance of his tasks under the present Agreement.

4.

5.     FEES

5.1.     Annual Fee

The annual fee of the Consultant is set at [redacted], excluding VAT. This annual fee is to be paid in 12 monthly instalments of [redacted] (excluding VAT) per instalment.

At the end of each month, the Consultant will invoice the Company [redacted] (i.e., the sum of a monthly instalment) for having rendered services for the month concerned. The Company will pay the invoice within 15 days from the post-marked date of the invoice. Any dispute with respect to an invoice must be communicated to the Consultant within 10 calendar days as from the date of the invoice concerned. The invoice concerned will not be paid before the dispute has been settled.

5.2.     Additional fee

The Consultant could be paid a yearly additional fee of maximum [redacted] depending on the quality of the Services rendered by the Consultant to the Company and the added value that he and his Services have given to the Company.

Parties agree that this additional fee is paid at the sole discretion of the Company and that the Consultant has no acquired right to this additional fee.

5.3.     Costs

The fees mentioned in this Article 4 include all costs and expenses incurred by the Consultant for the execution of his duties this Agreement, but they do not include special expenses that have been pre-approved in writing by the Company. For these special expenses, the Company will reimburse them to the Consultant when all relevant documentation are submitted to the Company in this respect.

6.     CONFIDENTIALITY

6.1.     In the framework of the present Agreement, as well as in his capacity as the former owner of the Facility and assets sold to the Company, the Consultant had and still has access to a lot of Confidential Information, including information about/ from the Crailar group.

6.2.     The Consultant undertakes to keep confidential any and all Confidential Information related to the Facility, and to the Crailar group and not to disclose the Confidential Information in whole or in part to any other person without the other Party's prior written consent, and this during the entire term of the Agreement and at any time thereafter, both in Belgium and abroad.

6.3.     "Confidential Information" means any and all information and documentation of either Party and the Crailar group to which the Company belongs, including but not limited to know-how, industrial information, technical, commercial information and data, methods of operation and processes, customer and supplier names and information, customer lists, trade secrets, business processes, methodologies, tools, financial data, statistical information, personnel and other business data, and any commercially valuable information in whatever form, to the extent that such information is not publicly available or easily accessible.

6.4.     This confidentiality undertaking does not apply when the Consultant is obliged to disclose such kind of information in accordance with any legal provision or any judicial or arbitral decision.

6.5.     During the term of this Agreement, the Consultant undertakes to abstain from any act or activity that will likely harm directly or indirectly the interests of the Company.

6.6.     For as long as Mr. Serge Schrurs is a consultant of the Company and for the duration of 6 months after he is no longer active in this role, the Consultant agrees that he will not acquire, operate, or otherwise participate in, have an interest in, provide management or advice or business assistance to, or engage in--howsoever, either directly or indirectly--the operations or entities operating in Belgium which are involved in the same or similar business activities as the Company (these being understood as activities of or related to the textile processing industry).

6.7.     If the Consultant breaches his obligation under Article. 5.6, the Company will be immediately and automatically entitled to the payment of an aggregate lump sum indemnity of EUR 65,000, without prejudice to claim in addition the real damages sustained.

6.8.     The Consultant undertakes to see to it that all provisions under this Article 5 will be respected by the any of his employees, agents, or subcontractors, as well as any of his family members.

7.

8.     INTELLECTUAL PROPERTY

8.1.     For the purposes of this Agreement, Intellectual Property includes, without being limited to, any work, material, and information such as ideas, discoveries, trade secrets, know-how, copyright, drafts, plans, drawings and designs, trademarks, commercial names, domain names, software, developments, inventions, processes, advertising, documentation, skills, formulas, technology, patents, topographies of semiconductors, technique, information and writings relating to works protected by copyright, hardware and software, as well as all texts, reports, images, logos, distinctive signs, slogans, diagrams, databases, collections of information, packaging, manuals and preparatory materials, regardless of the format (paper, electronic, etc.), and the technical item on which the works are recorded.

8.2.     The Consultant hereby confirms that he assigns unconditionally and irrevocably--to the extent necessary and in the most extended manner (i.e., for all exploitation forms and modalities worldwide for the duration of the rights concerned according to national and international legislation)--the Company, who has accepted, and any third party designated by the Company all rights to all Intellectual Property which the Consultant, either alone or in collaboration with others, has created, discovered, or conceived and will create, discover, or conceive, whether in the framework of the present agreement or because of this Agreement, whether as the result of either a task the Consultant undertook to fulfil under this Agreement or a task assigned to the Consultant during the course of his execution of this Agreement, whether during or outside the office hours and through any means (material, financial, personnel, information, know-how, ...) that the Consultant used and provided to the Company.

8.3.     These assigned rights belong exclusively to the Company and/or any third party designated by the Company. The Company and/or the designated third party will decide at their/its sole discretion whether to exploit their rights to the Intellectual Property. If the Intellectual Property is not exploited at all, the rights, including ownership rights, remain with the Company and/or the designated third party.

8.4.     With regard to moral rights, the Consultant expressly waives its right of paternity. In any event, the Consultant will refrain from exercising his moral rights over his works in a way which could prejudice the Company's commercial interests. Regarding the right of integrity, the Consultant may only oppose modification(s) of his work insofar as his honour or reputation can be damaged as a result of the modification(s).

8.5.     The Consultant confirms herewith that the fees due under the present Agreement covers the monetary compensation for the transfer mentioned in Article 6.2. and also the waiver mentioned in Article 6.4.

8.6.     In view of the transfer set out in Article 6.2, the Consultant confirms that he will refrain from claiming anywhere in the world any intellectual property right or any other right or claim in relation to the Intellectual Property set out in Articles 6.1 and 6.2. The Consultant also confirms that he will refrain from introducing any application for patent, trademark, design, or any similar protection.

8.7.     The Consultant warrants that he is entitled to transfer the rights to the Intellectual Property and that the Intellectual Property and the rights relating thereto transferred to the Company do not infringe and will not infringe any rights of third parties.

8.8.     The Consultant will safeguard and indemnify the Company and/or any of its designated third parties against any action brought by other third parties concerning an infringement of the rights of that third party which would have allegedly been caused by the Intellectual Property or by the rights to the Intellectual Property which were transferred to the Company

The Consultant agrees--on request of the Company and without being entitled to any additional compensation--to do the following: (i) sign any document and take any action which the Company considers necessary to acquire and maintain adequate patent and other intellectual property protection in any country of jurisdiction in the advantage of the Company in relation to any rights assigned to it under Article 6.2, and (ii) assist the Company in the drafting of the necessary documents and in acquiring, maintaining, and enforcing the protection of these rights.

9.     TERMINATION

9.1.     Duration

The present Agreement is concluded for a definite term of [redacted]. This term starts on the Effective Date as described in Article 1 above and ends automatically at the end of [redacted] from this Effective Date.

Parties can agree on renewing the present contract for a new term of [redacted], or any other term as agreed between Parties.

9.2.     Termination

Any Party may terminate the present Agreement by serving a notice period of 6 months or paying the other party an indemnity corresponding to half of the annual fee as mentioned in Article 5.1. of the present Agreement.

9.3.     Serious failure

Any Party may terminate the present Agreement with immediate effect and without notice or indemnity whatsoever if the other Party has committed a serious failure by not complying with its legal, statutory, or contractual obligations.

9.4.     Return of documents

Upon this Agreement's termination, the Consultant must deliver to the Company the documents and/or belongings of the Company that would be in his possession or in the possession of the agent whom the Consultant appointed per article 3.2. of the present Agreement.

10.     MISCELLANEOUS

10.1.     Entire Agreement/Amendments

This Agreement constitutes the entire understanding of the Parties with respect to the services that the Consultant is to render to the Company. This Agreement may not be altered, modified, or amended except if it is done in writing and signed by the Parties hereto.

10.2.     No Waiver

The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion will not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

10.3.     Severability

In the event that any one or more of the provisions of this Agreement is or becomes invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions of this Agreement will not be affected thereby.

11.     GOVERNING LAW AND JURISDICTION

This Agreement is governed by and construed in accordance with Belgian law, and any disputes concerning this Agreement is to be submitted to the exclusive jurisdiction of the Belgian courts and tribunals.

IN WITNESS WHEREOF, the Parties hereto have duly signed this Agreement on the date written above.

[Please write by hand the phrase "read and approved" before signing.]

THE COMPANY

/s/ Theodore Sanders

______________________________________________

Name: Theodore Sanders

Title: CFO

THE CONSULTANT

/s/ Serge Schrurs

______________________________________________

Name: Serge Schrurs

"read and approved"

SCHEDULE 8

SELLER'S REPRESENTATIONS

1. CAPACITY AND AUTHORITY

1.1     Capacity, power, authority and action

1.1.1     The Seller is a corporation duly incorporated, organised, validly existing for an indefinite duration and duly registered under Belgian law, is duly qualified to do business in Belgium and is not involved in any (threatening) procedure of bankruptcy, liquidation or receivership.

1.1.2     The Seller has the requisite capacity, power and authority and has taken all action necessary, to execute, deliver and exercise its rights, and perform its obligations under the Agreement and any other document to be executed by the Seller.

1.1.3     The Seller has obtained all applicable governmental, statutory, regulatory or other consents, licences, waivers or exemptions to empower it to enter into and perform its obligations under the Agreement.

1.2     Binding agreements

The Seller's obligations under the Agreement and any other document to be executed by the Seller in connection with the Agreement are, or when the relevant document is executed will be, valid and enforceable in accordance with their respective terms.

1.3     No Breach

The execution of, and the fulfilment of, compliance and performance by the Seller of its obligations under the Agreement and any other documents to be executed by the Seller pursuant to or in connection with the Agreement will not:

1.3.1     conflict with the deed of incorporation ("oprichtingsakte" / "acte de constitution") or the articles of association of the Seller, or give rise to conflicts or liabilities as a consequence of said execution or performance;

1.3.2     conflict with or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any Transferred Contract, the Transferred Permit or any law to which the Seller is a party or by which the Seller or any of the Transferred Assets or Transferred Liabilities are bound;

1.3.3     require the Seller to obtain any consent or approval of, or give any notice or make any registration with, any Governmental Authority or person which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked;

1.3.4     constitute a violation of any laws applicable to the Seller; or

1.3.5     result in the creation of any Encumbrance whatsoever upon any of the Transferred Assets.

2.     SELLER'S EQUIPMENT AND MACHINERY

2.1     The Seller has good, valid and marketable title to the Transferred Equipment and Machinery owned by the Seller, and all such Transferred Equipment and Machinery is in its possession and under its control, free and clear of any Encumbrances, and no other person has or claims any rights in relation thereto. Upon delivery to the Purchaser on the Closing Date, the Seller will thereby transfer to the Purchaser good and marketable title to the Transferred Equipment and Machinery, subject to no Encumbrance of any nature whatsoever.

2.2     All of the Transferred Equipment and Machinery owned, leased, used or occupied by the Seller is (i) in good repair and condition, subject to ordinary wear and tear, regularly maintained, fully serviceable and suitable for the purposes for which they are used, and (ii) used in accordance with all applicable laws.

2.3     The Seller has operated the Business and kept the Transferred Equipment and Machinery in conformity with all applicable laws, regulations, court decisions, arbitration awards and other legal requirements applicable to them (including, but not limited to, environment noise, safety and health requirements) and has made all registrations, transcriptions and notifications as are required or desirable under such laws, regulations, court decisions, arbitration awards or other legal requirements.

2.4     The Seller has not been put on notice of any violation or non-compliance in connection with the operation of the Business or the use of any of the Transferred Equipment and Machinery.

2.5     Taking into account the Lease Agreement which shall be entered into by the Parties on Closing Date, the Transferred Equipment and Machinery, together with all other Transferred Assets comprises all assets which are necessary for the continued operation of the Business.

2.6     The Seller has complied in all material respects with all legal requirements to which the Seller or its Business or any of the Transferred Assets are subject, whether in Belgium or in any other country, and is not currently in violation of any of the foregoing.

3.     TRANSFERRED CONTRACTS

3.1     Each of the Transferred Contracts is valid and enforceable in accordance with its terms. Neither the Seller, nor any other party thereto is in default with respect to any provisions thereof. No event has occurred which, with or without the giving of notice or lapse of time, or both, would constitute a default thereunder.

3.2     None of the Transferred Contracts is of an unusual, abnormal or onerous nature taking into account the business and the nature of the operations of the Business.

3.3     To the best of the Seller's knowledge, there is no threat whereby any of the Transferred Contracts may be terminated or rescinded or whereby the terms may be worsened as against the Seller or, following the consummation of the Transaction, the Purchaser.

3.4     The Seller has not waived any rights or privileges under any of the Transferred Contracts.

3.5     There are no acts or facts that, separately or taken as a whole, could lead to another qualification as the one that parties gave to a Transferred Contract.

3.6     There has not been any adverse change in the business relationship of the Seller with any customer or supplier.

3.7     There are no special circumstances which might lead to the Business being restricted or hindered.

4.     TRANSFERRED PERMIT

4.1     Other than the Transferred Permit, there are no licences, permits, consents, approvals or authorisations which are in any matter necessary for the Seller to own, lease or otherwise hold the Transferred Assets and to carry out the Business as it is presently conducted and as it has previously been conducted by it.

4.2     The Transferred Permit is not threatened with suspension or cancellation, in whole or in part, and has not expired and will not expire before the end of the term for which it has been delivered. The Seller has taken all appropriate action (including without limitation the necessary investments) that ought to have been taken with respect to the renewal or extension of such Transferred Permit.

4.3     The Seller is not aware of any circumstances indicating that the Transferred Permit is likely to be revoked or not renewed in the ordinary cause.

4.4     The Seller is not in default, nor has it received any notice of any claim of default, with respect to any such Transferred Permit.

4.5     The Transferred Permits will not be adversely affected by the consummation of the Transaction contemplated by this Agreement.

5.     LITIGATION

There is no action, suit, investigation or proceeding pending or to the best of the Seller's knowledge threatened before any court or arbitrator or any governmental authority, agency or official against or affecting the Business, the Transferred Assets or the Transferred Liabilities.

6.     EMPLOYEES

6.1     General

6.1.1     Schedule 6 to the Agreement contains a true and complete list of all Transferred Employees, including a true and complete statement of their names, addresses, duties, duration of their employment contract, possible protected employee status, age, length of service and, taking into account any applicable indexation, their current salary, commissions, remuneration in kind, bonuses, pensions, and any other extra--legal or fringe benefits, including pension entitlements. Save as set forth in Disclosure Schedule 2, there are no other employees employed in the Business than the Transferred Employees.

6.1.2     The Company has disclosed to the Purchaser all material facts and matters relating to all collective agreements, arrangements or other understandings with any trade union, staff association or other body representing the Transferred Employees.

6.2     Compliance with requirements

6.2.1     The Seller in relation to each of the Transferred Employees,

(A)     is and has at all times been in compliance with all applicable laws and regulations regarding employment, including, for the avoidance of doubt, social security, tax, individual labour agreements, collective bargaining agreements and employment practices and are not engaged in any unfair labour practices;

(B)     discharged fully its obligations to pay all salaries, wages, commissions, bonuses, overtime pay, holiday pay, sick pay accrued entitlement under incentive schemes and national insurance contributions and other benefits of or connected with employment.

6.2.2     All remuneration and moneys to be paid to the Transferred Employees have been calculated and paid in conformity with applicable law. All withholding tax payments due at or prior to the Closing Date have been made by the Seller in due time for the periods of employment of the Transferred Employees up to the Closing Date.

6.2.3     All social security and withholding tax payments have been made in due time for and with regard to all periods of employment of the Transferred Employees and which are due up to the Closing Date. No social security contributions have accrued with respect to or are due by the Seller for the Transferred Employees with regard to all periods of employment up to the Closing Date.

6.3     Employment contracts

6.3.1     The employment contracts with, or the terms of employment applicable to, any of the Transferred Employees do not contain any express provision regarding notice periods or termination modalities in excess of the requirements under applicable legislation.

6.3.2     There are no persons employed in the Business on the basis of consultancy or similar agreements.

6.4     Disputes

6.4.1     No dispute has arisen within the last 5 years between the Seller and any of the Transferred Employees and there are no present circumstances which are likely to give rise to any such dispute.

6.4.2     There are no complaints pending or threatened against the Seller of whatever nature in relation to any of the Transferred Employees and there is no industrial action or dispute or labour trouble, strike or other event or condition of any similar character threatened or existing or anticipated in respect of or concerning any of the Transferred Employees.

SCHEDULE 10

SELLER'S DISCLOSURES

1.     Potential liability in respect of the dismissal of an employee (cfr. Schedule 6);

2.     One employee of the Seller, [redacted], shall not be transferred to the Purchaser, but shall remain employed by the Seller until its retirement.

EX-10

Dated December 13, 2013

SCHRURS NV

as the Seller

AND

CRAILAR TECHNOLOGIES INC.
(acting in its own name and for its own account
as well as in the name and for the account of any Affiliate)

as the Purchaser

IN PRESENCE OF

Mr. Serge Schrurs

(For acceptance of its obligations under Clause 11.1)

ASSET PURCHASE AGREEMENT

TABLE OF CONTENTS

1.	DEFINITIONS AND INTERPRETATION	4
2.	SALE AND PURCHASE	4
3.	TRANSFER PROVISIONS	6
4.	PURCHASE CONSIDERATION	8
5.	CLOSING	8
6.	SELLER'S REPRESENTATIONS AND WARRANTIES	10
7.	INDEMNIFICATION	11
8.	CONDUCT OF CLAIMS	13
9.	SPECIFIC INDEMNITY	15
10.	LEASE AGREEMENT	15
11.	POST-CLOSING UNDERTAKINGS	15
12.	CONFIDENTIALITY AND ANNOUNCEMENTS	17
13.	GENERAL PROVISIONS	18
1.	CAPACITY AND AUTHORITY	35
2.	SELLER'S EQUIPMENT AND MACHINERY	36
3.	TRANSFERRED CONTRACTS	37
4.	TRANSFERRED PERMIT	38
5.	LITIGATION	38
6.	EMPLOYEES	39

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THIS ASSET PURCHASE AGREEMENT is made on December 13, 2013,

BETWEEN:

(1)     SCHRURS NV, an open limited liability company ("naamloze vennootschap / société anonyme") incorporated under the laws of Belgium, having its registered office at Pijpestraat 18, 8560 Wevelgem, registered with the Crossroads Databank for Enterprises under number (Kortrijk) 0452.656.339 (the "Seller"),

hereby represented by Mr. Serge Schrurs in his capacity as Managing Director;

AND:

(2)     CRAILAR TECHNOLOGIES INC., a company incorporated under the laws of Canada, having its registered office at Chatterton Way 305-4420, Victoria, British Columbia V8X 5J2 (Canada), acting in its own name and for its own account as well as in the name and for the account of an Affiliate (the "Purchaser"),

hereby represented by Ken Barker in his capacity as C.E.O.

The Seller and the Purchaser are hereinafter collectively referred to as the "Parties" and each individually (also) as a "Party".

IN PRESENCE OF:

(3)     Mr. SERGE SCHRURS, residing at Pijperstraat 18, 8560 Wevelgem, Belgium, ("Serge Schrurs"), for acceptance of its obligations under Clause 11.1.

WHEREAS:

(A)     The Seller is engaged in activities related to the dyeing, bleaching, processing and treatment of all natural and synthetic fibres for the textile industry (the "Business").

(B)     On August 30, 2013 the Purchaser and the Seller signed a letter of intent with respect to a possible transfer of certain assets related to the Seller's Business to the Purchaser (the "LOI").

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(C)     From September 9, 2013 until October 25, 2013 the Purchaser has performed an analysis and due diligence investigation with respect to the Seller, the Transferred Assets and the Transferred Liabilities on the basis of information and documents made available by the Seller in the Data Room. An index of all documents contained in the Data Room is attached as Schedule 2 to this Agreement.

(D)     On November 6, 2013 the Seller and the Purchaser have entered into an asset purchase agreement (the "Initial Agreement") relating to the transfer of the Transferred Assets and the Transferred Liabilities from the Seller to the Purchaser (the "Transaction"), such transfer being subject to certain condition precedents which have not been satisfied until the date hereof.

(E)     The Seller and the Purchaser now intend to amend the terms and conditions of such Transaction (as initially agreed upon and set forth in the Initial Agreement) by the terms and conditions set forth in this amended asset purchase agreement (the "Agreement") which shall be deemed to terminate and replace the Initial Agreement.

(F)     Parties hereby explicitly agree that this Amended Agreement shall not affect the services agreement entered into between the Purchaser and Serge Schrurs on November 6, 2013 (the "Services Agreement").

THEREFORE IT HAS BEEN AGREED AS FOLLOWS:

1.     DEFINITIONS AND INTERPRETATION

In addition to the terms defined elsewhere in this Agreement, capitalised words and expressions shall have the meaning set forth in Schedule 1, unless in case the context would require otherwise.

2.     SALE AND PURCHASE

2.1     Transferred Assets

2.1.1     Subject to the terms and conditions set forth in this Agreement, the Seller hereby sells, assigns, transfers, conveys and delivers to the Purchaser, and the Purchaser shall accept such sale, assignment, transfer, conveyance and delivery, free of any and all Encumbrances, of any and all rights, title, benefit and interest that the Seller has in and to the following assets (hereinafter collectively referred to as the "Transferred Assets"):

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(A)     any and all equipment, furniture, including office equipment and furniture, tools, fixtures, fittings and other tangible personal property located at the Leased Premises, as listed in Schedule 3 (the "Transferred Equipment and Machinery").

(B)     the environmental permit granted to the Seller by decision of the Deputation of the Provincial Council of the Province of West Flanders dated February 8, 1996, a copy of which is attached as Schedule 4 (the "Transferred Permit");

(C)     the rights, title and interests of the Seller in, to and under the employment contracts of the employees of the Seller, as listed in Schedule 5 (the "Transferred Employees").

2.1.2     Notwithstanding the above, Parties explicitly agree that the Seller will be allowed to continue to serve its current insulation customers provided that it does not interfere with the Purchaser's operations and that all fees related thereto shall be to the benefit of the Purchaser.

2.2     Excluded Assets

For the avoidance of doubts, it is hereby explicitly agreed upon that the following assets are not transferred to the Purchaser and are thus excluded from the terms and provisions of this Agreement (the "Excluded Assets"):

(A)     The following cars owned or leased by the Seller:

ii.     C5 763 BD2___________

ii.     _____________________

2.3     Transferred Liabilities

As of the Closing Date, the Purchaser shall assume the following obligations and liabilities of the Seller:

2.3.1     any and all obligations and liabilities of the Seller under the Transferred Contracts;

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2.3.2     any and all obligations and liabilities of the Seller under the employment agreements with the Transferred Employees.

2.4     Excluded Liabilities

All obligations, liabilities, debts, Taxes, expenses, costs, charges, commitments, accounts payable, breaches, warranties, guarantees or responsibilities of the Seller which are not Transferred Liabilities, including yet without limitation (i) the Seller's Debts and (ii) any legal, tax and accounting expenses incurred in connection with this Transaction, shall be excluded from the assumption of obligations and liabilities by the Purchaser under this Agreement and shall thus remain with the Seller, irrespective of whether known or unknown, due or not due, and payable or executable before, on or after the Closing Date (the "Excluded Liabilities").

3.     TRANSFER PROVISIONS

3.1     General

3.1.1     Title to and economic risk in respect of the Transferred Assets mentioned sub Clause 2.1.1 (B) and (C) and the Transferred Liabilities shall pass to the Purchaser on the Closing Date.

3.1.2     Title to the Transferred assets mentioned sub Clause 2.1.1 (A) shall only pass to the Purchaser subject to full payment of the Purchaser Consideration notwithstanding the fact that physical possession and economic risk in respect of such Transferred Assets shall pass to the Purchaser on the Closing Date.

The Purchaser shall not Transfer, pledge or otherwise Encumber the Transferred Assets mentioned sub Clause 2.1.1 (A) until the Purchase Consideration has been paid in full.

The retention of title on the Transferred Assets mentioned sub Clause 2.1.1 (A) resulting from this Clause 3.1.2 can be enforced by the Seller (and the Seller shall thus be entitled to regain such Transferred Assets mentioned sub Clause 2.1.1 (A)) at any point in time and regardless of the outstanding amount of the Purchase Consideration at that point in time, it being understood that such retention of title shall at any time be enforced in respect to all of the Transferred Assets mentioned sub Clause 2.1.1 (A).

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The Seller agrees and undertakes that, in the event that upon enforcement of the retention of title, the market value of the Transferred Assets mentioned sub Clause 2.1.1 (A) would exceed the outstanding amount of the Purchase Consideration, it shall pay a surcharge to the Purchaser (equal to the difference between the outstanding amount of the Purchase Consideration and the market value of the Transferred Assets mentioned sub Clause 2.1.1 (A).) so as to ensure that all Transferred Assets mentioned sub Clause 2.1.1 (A) are regained.

3.1.3     All monies or other items belonging to the Purchaser which are received by the Seller on or after the Closing Date in connection with the Transferred Assets shall immediately be paid or passed by the Seller to the Purchaser.

3.1.4     The Seller and the Purchaser jointly undertake to execute all documents and take all steps as may reasonably be required by the Purchaser to vest the title to the Transferred Assets in accordance with this Clause 3.1 in the name of the Purchaser and to give effect to this Agreement.

3.2     Transferred Employees

3.2.1     Parties acknowledge and agree that the transfer of Transferred Assets and Transferred Liabilities contemplated by this Agreement constitutes a transfer of an undertaking or part of an undertaking, within the meaning of the Collective Bargaining Agreement no. 32bis, as amended, implementing the provisions of the EC Directive 2001/23 dated 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, as interpreted by the ECJ and the Belgian national courts and any modification of that Directive and all other collective bargaining agreements or other legislation implementing that Directive ("CAO 32bis").

3.2.2     As of the Closing Date, the Purchaser shall employ the Transferred Employees listed in Schedule 5. The Purchaser shall continue to observe the terms and conditions of the employment agreements and shall maintain the working conditions of the Transferred Employees, including the acquired length of service, the salary and other benefits in kind, as applicable on the Closing Date.

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3.2.3     The Seller shall be solely responsible for the payment of all wages and the provision of accrued entitlement including premiums, end-of-year premiums, commission, loans, holiday pay) related to the Transferred Employees employment up to the working day immediately preceding the Closing Date. The Seller shall pay to the Purchaser an indemnity equal to all accrued entitlements of the Transferred Employees as if their employment contract would be terminated on the Closing Date including the social security contributions and taxes with respect to these amounts. This indemnity shall be paid within 15 Business Days following receipt by the Seller of a payment request from the Purchaser, duly evidencing the amount(s) for which the Seller is liable in accordance with this Clause 3.2.3.

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4.     PURCHASE CONSIDERATION

4.1     In consideration for the Transferred Assets and Transferred Liabilities, the Purchaser shall, (re)pay all outstanding amounts under the loans and debts as set forth in Schedule 6, the aggregate value of which as at October 4, 2013 amounts to EUR 881.056 (the "Seller's Debts") directly to the relevant creditors of such Seller's Debts, on behalf of the Seller and in accordance with the provisions of Clause 4.2 en 4.3.

4.2     Subject to Clause 4.3, the (re)payment of the Seller's Debts by the Purchaser shall be made as follows:

4.2.1     As of the Closing Date and until the fifth anniversary of such Closing Date, the repayment of the Seller's Debts by the Purchaser shall be made in accordance with the terms of such Seller's Debts and/or the repayment schemes agreed upon between the Seller and the respective creditors of the Seller's Debts. The repayment scheme shall run during a period of five years and the Purchaser shall not be entitled to prior payment.

4.2.2     On the fifth anniversary of the Closing Date, the aggregate outstanding amount under the Seller's Debts at that point in time, shall be (re)paid in whole by the Purchaser to the respective creditors of the Seller's Debts.

4.3     The sale and transfer of the Assets contemplated by the Agreement is a sale of an undertaking ("bedrijfstak" / "branche d'activités") and is therefore exempt from Belgian Value added Tax ("BTW" / "TVA") in accordance with Article 11 of the Belgian VAT Code. The Parties shall comply with all regulations and procedures required to ensure application of Article 11 of the Belgian VAT Code to the sale of the Assets.

Should the tax exempt status in accordance with Article 11 of the Belgian VAT Code be refused by the tax authorities and should VAT be due on the transfer as contemplated in this Agreement, the Purchaser shall pay such VAT on the Purchase Consideration and the Seller shall issue an appropriate invoice for VAT purposes.

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1. CLOSING
1. Date and place

The transfer of (i) title and economic risk in respect of the Transferred Assets mentioned in Clause 2.1.1 (B) and (C) and Transferred Liabilities and (ii) economic risk and physical possession in respect of the Transferred Assets mentioned in Clause 2.1.1 (A) (the "Closing') shall take place on the date hereof (the "Closing Date").

5.2     Closing Obligations

5.2.1     Seller's Closing Obligations

On the Closing Date, the Seller shall do all of the following (the "Seller's Closing Obligations"):

(A)     The Seller shall deliver to the Purchaser:

(1)     a copy of the minutes of a meeting of the board of directors of the Seller authorising the Seller to enter into and perform its obligations under this Agreement;

(2)     a declaration from each of KBC and BNP Paribas pursuant to which they explicitly and unconditionally approve and consent to (i) this Agreement and the Transaction contemplated hereby and (ii) the fact that the KBC Debts c.q. the BNP Paribas Debts shall be repaid by the Purchaser on behalf of the Seller and that any such repayment by the Purchaser of any amount of the KBC Debts c.q. the BNP Paribas Debts shall discharge the Seller from its payment obligation towards KBC resp. BNP Paribas for the same amount.

5.2.2     Purchaser's Closing Obligations

On the Closing Date, the Purchaser shall deliver to the Seller a copy of the minutes of a meeting of the board of directors of the Purchaser authorising the Purchaser to enter into and perform its obligations under this Agreement (the "Purchaser's Closing Obligation").

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5.2.3     Joint Closing Obligations

On the Closing Date, the Seller and the Purchaser shall send written information letters to each of the Transferred Employees mentioning the consequences of application of the CAO 32bis.

5.3     Simultaneous Closing

The effectiveness of any action taken at the Closing towards fulfillment of any Closing Obligation is conditional upon completion of all other actions taken towards fulfillment of all other Closing Obligations; failure to complete one of said actions shall automatically render all other such actions null and void.

6.     SELLER'S REPRESENTATIONS AND WARRANTIES

6.1     General

The Seller warrants to the Purchaser that the representations and warranties set out in Schedule 7 (the "Seller's Representations") are true, accurate and not-misleading on the Closing Date.

6.2     Disclosures

Each of the Seller's Representations shall be construed as a separate warranty and is given subject only to the matters which are disclosed in Schedule 9, which shall therefore limit the contents and scope of such Seller's Representations, provided that such matters are described in such detail allowing the Purchaser, assisted by its professional advisors, and taking into account the professional experience of the Purchaser to assess the nature, subject matter and scope and consequence of such matter.

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6.3     Purchaser's knowledge / Due diligence

The rights and remedies of the Purchaser in respect of a breach of any of the Representations shall not be affected by the signing of the Agreement, by the Due Diligence or any other investigation made by the Purchaser or by any other prior knowledge of the Purchaser (except as may result from the Disclosure Schedules and then only within the limits of Clause 7.2 hereof), by the giving of any time or other indulgence by the Purchaser to any person, by the Purchaser rescinding or not rescinding this Agreement, or by any other cause whatsoever except a specific waiver or release by the Purchaser in writing and any such waiver or release shall not prejudice or affect any remaining rights or remedies of the Purchaser.

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7.     INDEMNIFICATION

7.1     Liability for breaches

The Seller agrees to fully indemnify the Purchaser against any and all Damages incurred by the Purchaser, resulting from or being a consequence of:

(A)     any breach or inaccuracy of any of the Seller's Representations contained in this Agreement; or

(B)     any breach of any other covenant or obligation of the Seller contained in this Agreement.

7.2     Time limitation for Claims

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim unless notification of such claim is given by the Purchaser to the Seller in accordance with Clause 8.1 within 36 months after the Closing Date.

Notwithstanding the preceding, any agreement, representation or warranty in respect of which indemnification may be sought under this Clause 7 shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if a Claim Notice in respect of the inaccuracy, incompleteness or breach thereof giving rise to such right to indemnity shall have been given to the Party against whom such indemnity may be sought prior to such time.

7.3     Contingent liabilities

The Seller shall have no obligation to indemnify the Purchaser in respect of any liability which is contingent ("voorwaardelijke of latente verbintenis" / "obligation conditionnelle ou éventuelle"), unless and until such contingent liability has become an actual liability and is due and payable, provided, however, that this Clause 7.3 shall not have the effect of preventing the Purchaser from validly making a claim in respect of a contingent liability within the time limit specified in Clause 7.2, even though it has not become an actual liability.

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7.4     Maximum liability

Notwithstanding any other provision in this Agreement, the aggregate liability of the Seller under this Agreement shall not exceed the amount of the Purchase Consideration.

7.5     Minimum Claims

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim arising from any single Damage where the amount which would otherwise be recoverable under this Agreement in that respect does not exceed EUR 25.000. When the threshold of EUR 25.000 is met, the Purchaser shall only be entitled to recover the amount of the Damages, in excess of such threshold, without prejudice to the other limitations of liability set out herein.

7.6     Insurance proceeds and recoveries from third parties

7.6.1     The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim if and to the extent that the Damages in respect of which the Claim is made:

(A)     are effectively recovered under an insurance policy in force at the Closing Date or at the date of the occurrence of the Damage; or

(B)     are effectively recovered from any other third party.

7.6.2     Accordingly, any amount for which the Seller would otherwise have been liable in respect of any Claim shall be reduced by the amount of any insurance proceeds, indemnification or other recovery from any insurance company or any other third party in respect of the Damage which is the subject matter of the Claim.

7.6.3     If the Seller pays an amount in discharge of any Claim and the Purchaser subsequently recovers from any insurance company or any other third party a sum relating to the subject matter of the Claim, the Purchaser shall pay to the Seller an amount equal to the difference between:

(A)     the amount paid by the Seller to the Purchaser; and

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(B)     the amount that the Purchaser would have received if the amount of such recovery had been taken into account in determining the amount due by the Seller in accordance with this Clause 7.

7.6.4     If the Seller pays an amount in respect of any Claim, the Purchaser shall assign to the Seller all of its rights arising from the Damage which is the subject matter of that Claim against any insurance company or other third party, to the extent such assignment is permitted.

7.7     No cumulation (non bis in idem)

If the same event, matter or circumstances can give rise to a Claim under several provisions of this Agreement, the Purchaser shall only be indemnified once.

7.8     Mitigation

Without prejudice to Article 1134, Section 3 of the Belgian Civil Code, the Purchaser shall procure that all reasonable steps are taken to avoid or mitigate any Damages which might give rise to a Claim against the Seller.

7.9     Fraud Exception

None of the limitations contained in this Clause 7 shall apply in case of fraud ("fraude"/"bedrog") or wilful misconduct by the Seller.

8.     CONDUCT OF CLAIMS

8.1     Notification of a Claim

In order to make a Claim against the Seller, the Purchaser shall give a notice of such Claim to the Seller within the time limits provided in Clause 7.2 (the "Claim Notice"). Such notice shall set out in reasonable detail the legal and factual basis of the Claim, together with a first bona fide estimate of the amount of the Damages. A copy of all documents establishing the basis of the Claim shall be enclosed in the notice.

8.2     Notification of Seller's Objections

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8.2.1     The Seller shall give a notice to the Purchaser objecting to the Claim within thirty (30) days following notification of such Claim. Such notice shall contain a statement of the basis of the Seller's objections to the extent available.

8.2.2     If the Seller fails to notify the Purchaser that it objects to such Claim within the period of time provided under Clause 8.2.1, the amount of such Claim shall be conclusively deemed a liability of the Seller who did not object and shall be paid to the Purchaser.

8.2.3     If the Seller objects to a Claim within the period of time provided under Clause 8.2.1, the Parties shall use their best efforts to resolve such dispute and, in the absence of such resolution, such dispute shall be submitted to the courts in accordance with Clause 13.10.

8.3     Payment by the Seller

8.3.1     If the Seller has accepted the amount claimed by the Purchaser or if the Seller and the Purchaser have agreed on another amount, the Seller shall pay such amount within 15 (fifteen) calendar days of such acceptance or agreement.

8.3.2     If the matter giving rise to a Claim has been decided by the competent court and the Seller has been ordered to pay any amount pursuant to any enforceable judgement, the Seller shall pay such amount within fifteen calendar days after such judgement has become res judicata.

8.3.3     All payments shall be made in accordance with such instructions as shall be notified by the Purchaser to the Seller.

8.4     Third party claims

If the events, matters or circumstances that may give rise to a Claim against the Seller occur or arise as a result of or in connection with a claim by or a liability to a third party (a "Third Party Claim"), then:

8.4.1     the Purchaser shall provide the Seller with copies of all documents and correspondence from that third party, and all other correspondence and documents relating to the Third Party Claim as the Seller may reasonably request, subject to the Seller agreeing to keep all such information and documents confidential and to use them only for the purpose of dealing with the Third Party Claim;

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8.4.2     the Purchaser shall assume and control the defence in respect of such Third Party Claim;

8.4.3     the Seller shall have the right to participate in, but not control, any defence against any Third Party Claim at its sole cost and expense.

8.4.4     the Purchaser shall keep the Seller informed and, when appropriate consult with the Seller, on the status of any Third Party Claim including, without limitation, all proposed settlement negotiations.

8.4.5     the Purchaser shall not enter into any settlement of any Third Party Claim without the written prior consent of the Seller, which consent shall not be unreasonable withheld or delayed. In the absence of any response by such other Party within 30 calendar days following a written request to obtain the abovementioned consent, this non-response shall be deemed to express this Party's consent.

9.     SPECIFIC INDEMNITY

9.1     The Seller shall indemnify the Purchaser for any and all Damages, resulting from any and all payments made or to be made by the Purchaser under the Transferred Liabilities to the extent that such payments relate to the period up to the Closing Date or to events, circumstances or facts occurred prior to the Closing Date;

9.2     The limitations set out in Clause 6 and Clause 7 shall not apply to this specific indemnity.

10.     LEASE AGREEMENT

The Seller hereby grants a Belgian common law lease to the Purchaser with respect to the wet processing facility located at Oostkaai 46, 8900 Ieper for a term of 10 years. The terms and conditions of such lease, which will also include a purchase option for the Purchaser on aforementioned wet processing facility, will be negotiated in good faith between Parties immediately following the Closing Date in accordance with Belgian standard market practices, and will be formalized in a lease agreement to be entered into no later than January 31, 2014 (the "Lease Agreement").

11.     POST-CLOSING UNDERTAKINGS

11.1     Competition

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11.1.1     The Seller and Serge Schrurs undertake to the Purchaser they shall not and that they shall procure that their respective Affiliates as well as Serge Schrurs' spouse and relatives in descending order shall not, directly or indirectly, for their own account or in conjunction with or on behalf of any person (as principal, agent, independent, contractor, partner, employee, consultant or otherwise), unless with the prior written consent of the Purchaser:

(A)     compete with the Business, as such business is carried on as of the Closing Date in the Territory;

(B)     solicit or endeavor to entice away from or discourage from dealing with the Purchaser or induce to trade on different terms any person who was a customer or client of the Business at the Closing Date; or

(C)     solicit or endeavor to entice away from or discourage from being employed by the Purchaser or any of its Affiliates any employee (including the Transferred Employees), whether or not such person would commit a breach of contract by reason of leaving employment; provided, however, that nothing in this paragraph shall prohibit hiring as a result of general solicitations or hiring of former employees, i.e. employees who have left the Purchaser or any of its Affiliates for more than six months.

11.1.2     It is hereby expressly understood that nothing in this Clause 12.1 shall prohibit (i) Serge Schrurs to enter into the Services Agreement and to provide, as an independent contractor, the Purchaser with general management services on the basis thereof or (ii) the Seller to continue serving its current insulation customers provided that it does not interfere with the Purchaser's operations and that all fees related thereto shall be to the benefit of the Purchaser.

11.1.3     The duty not to compete as described in this Clause 11.1 shall remain in full force and effect until the third anniversary of the Closing Date. The limitations set forth in this Clause 11.1 are considered as reasonable by the Parties. In the event a limitation is considered null and void, the provisions of Clause 13.7 shall apply.

11.1.4     In the event of any breach of the covenants contained in this Clause 11.1, the Purchaser shall be entitled to indemnification in cash from the Seller for the Damages caused, it being understood that such Damages will be equal to EUR 150.000. If the Damages effectively suffered by the Purchaser exceed the said amount of EUR 150.000, the Purchaser is entitled to claim from the Seller any excess amount so that he receives full payment of such Damages.

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11.2     Tax certificates and Notifications

11.2.1     As soon as practicably possible following the Closing Date, the Seller shall deliver to the Purchaser:

(A)     a tax certificate in accordance with Article 442bis of the Belgian Income Tax Code, stating that no income taxes are due by the Seller;

(B)     a tax certificate in accordance with Article 93Undecies of the Belgian VAT Code, stating that no VAT is due by;

(C)     a certificate in accordance with Article 41quinquies of the Act of 27 June 1969 to amend the decision Act of 28 December 1944, issued by the relevant social security authorities, stating that no social security obligations are due by the Seller;

11.2.2     Upon receipt of the certificates mentioned in Clause 11.2.1 the Purchaser shall procure:

(A)     the due notification of the content of this Agreement (together with the relevant certificates mentioned in Clause 11.2.1 to the competent tax and social security authorities in accordance with (i) Article 442bis, Section Section 2 and 3, of the Belgian Income Tax Code 1992, (ii) Article 93undeciesB of the Belgian VAT Code and (iii) Article 41quinquies of the Act of 27 June 1969 to amend the decision Act of 28 December 1944 regarding the social security of employees; and

(B)     the due notification of this Agreement and the Transaction contemplated hereby to the Deputation of the Provincial Council of the Province of West Flanders in accordance with article 42 of the Flemish Regulation on Environmental Permits.

12.     CONFIDENTIALITY AND ANNOUNCEMENTS

12.1     Subject to the exceptions provided in Clause 12.2, each Party shall treat as strictly confidential all information received or obtained by it or its agents or professional advisers as a precursor to or in connection with or as a result of entering into or performing this Agreement (the "Confidential Information") which relates to:

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(A)     the existence of and any of the contents of this Agreement;

(B)     the negotiations relating to this Agreement;

(C)     the Business or affairs of the Purchaser; or

(D)     the other Party.

12.2     Each Party may disclose Confidential Information if and to the extent:

(A)     required by the law of any relevant jurisdiction, by governmental order or by relevant stock exchange regulations;

(B)     to a court, arbitrator or administrative tribunal in the course of proceedings before it to which the disclosing party is a party in a case where such disclosure is required by such proceedings;

(C)     required to vest the full benefit of this Agreement in either Party or their successors or permitted assigns;

(D)     properly disclosed to the professional advisers, auditors and bankers of each Party (subject to the latter being bound by a confidentiality undertaking);

(E)     the information has come into the public domain other than by that Party's breach of this Agreement; or

(F)     with respect to the Confidential Information referred to in Clause  12.1(C), the information is known in its industry of principal use or independently developed by the Seller;

provided that, to the extent practicable, any such information disclosed pursuant to Clause 12.2 shall be disclosed only after consultation with the other Party.

12.3     The restrictions contained in Clause 12 shall continue to apply without limit in time and whether or not this Agreement is terminated in any manner whatsoever.

12.4     Announcements of the Transaction contemplated in this Agreement shall be allowed as from the Closing Date. The Parties will consult with each other on the form, content and timing of such announcement.

12.5     The Parties shall take all necessary actions to ensure that no accidental or unauthorised disclosure of the contents of this Agreement occurs.

13.     GENERAL PROVISIONS

13.1     Further assurance

The Seller shall after the Closing Date execute all such deeds and documents and do all such things as the Purchaser may require for perfecting the Transaction to be effected under or pursuant to this Agreement and for giving the Purchaser the full benefit of the provisions of this Agreement.

13.2     Notices

13.2.1     Any notice, approval, consent or other communication to be made under or in connection with the matters contemplated in this Agreement shall be made in writing and in English and be signed by or on behalf of the Party giving it and shall be delivered personally or sent by fax confirmed by registered mail:

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If to the Seller:	Name:	Schrurs NV
	Address:	Pijpestraat 18 8560 Wevelgem (Belgium)
	Attention:	Serge Schrurs
	Fax:	__________________
With a copy to:	Name:	De Wolf & Partners
	Address:	Koning Leopold I-straat 24 8500 Kortrijk (Belgium)
	Attention:	Jasper Caby
	Fax:	+32 56 21 59 53
If to the Purchaser:	Name:	Crailar Technologies Inc.
	Address:	Chatterton Way 305-4420, Victoria, British Columbia V8X 5J2 (Canada)
	Attention:	Ted Sanders
	Fax:	___________________
With a copy to:	Name:	Stibbe CVBA
	Address:	Loksumstraat 25, 1000 Brussels (Belgium)
	Attention:	Katrien Vorlat
	Fax:	+32 2 533 51 45

and shall be deemed to have been duly given or made as follows:

(A)     if personally delivered, upon delivery at the address of the relevant Party;

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(B)     if sent by express courier, three calendar days after the date of posting; and

(C)     if sent by fax, on production of a transmission report from the machine from which the fax was sent which indicates that the fax was sent in its entirety to the fax number of the recipient, subject to such fax being confirmed by registered letter sent the same day as the day of the fax transmission.

13.2.2     A Party may notify the other Party to this Agreement of a change to its name, relevant addressee, address or fax number for the purposes of the giving of notices or other communications provided that such notification shall only be effective:

(A)     on the date specified in the notification as the date on which the change is to take place; or

(B)     if no date is specified or the date specified is less than five calendar days after the date on which notice is given, the date falling five calendar days after notice of any such change has been given.

13.3     Costs and expenses

The Parties shall pay their own costs in connection with the preparation and negotiation of this Agreement and any matter contemplated by it.

13.4     Entire agreement

This Agreement (and the documents and agreements referred to herein) contains the entire agreement between the Parties with respect to its subject matter, including for the avoidance of doubts the Initial Agreement which shall be deemed to be terminated by mutual consent between Parties by the execution of this Amended Agreement.

13.5     Amendment

No amendment of this Agreement shall be effective unless it is made in writing and signed by duly authorised representatives of all Parties.

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13.6     Assignment

13.6.1     Except as otherwise provided herein, no Party may assign all or part of its rights and obligations under this Agreement to any third party (through a sale, a capital contribution, a donation or any other transaction, including the sale or contribution of a division ("bedrijfstak" / "branche d'activité") or of a business as a whole ("algemeenheid" / "universalité"), or a merger, spin-off or split-up) without the prior written consent of the other Party.

As long as such consent has not been obtained, the assigning Party shall continue to be liable for all obligations that it intended to assign (without prejudice to any other right or remedy that the other Parties may have for breach of this Clause) and the assignee shall not be entitled to exercise any of the rights under this Agreement.

13.6.2     Subject to the assignment restrictions set out in this Clause 13.6 the provisions of this Agreement shall inure to the benefit of and shall be binding upon the Parties and their respective heirs, successors and assigns.

13.7     Severability / Partial invalidity

13.7.1     If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, that provision shall be deemed not to form part of this Agreement, and the legality, validity or enforceability of the remainder of this Agreement shall not be affected.

13.7.2     In such case, each Party shall use its reasonable best efforts to immediately negotiate in good faith a valid replacement provision having a similar economic effect which is as close as possible to that of the invalid, void or unenforceable provision.

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13.8     No waiver

The rights and remedies of the Parties shall not be affected by any failure to exercise or delay in exercising any right or remedy or by the giving of any indulgence by any other Party or by anything whatsoever except a specific waiver or release in writing and any such waiver or release shall not prejudice or affect any other rights or remedies of the Parties. No single or partial exercise of any right or remedy shall prevent any further or other exercise thereof or the exercise of any other right or remedy.

13.9     Governing law

This Agreement shall be governed by and construed in accordance with Belgian law.

13.10     Jurisdiction

All disputes arising out of or in connection with this Agreement and which the Parties are unable to settle amicably shall be subject to the exclusive jurisdiction of the courts of Brussels, and the language of the procedure shall be Dutch.

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Done at _________________ on December 18, 2013 in 6 originals, each Party and Serge Schrurs recognizing having received its original and 3 originals for filing purposes.

For the Purchaser
/s/ Ken Barker
Name : Ken Barker	Name :
Title : Chief Executive Officer	Title :

For the Seller

/s/ Serge Schrurs

Name : Serge Schrurs

Title : Managing Director

For acceptance of its obligations under Clause 11.1

/s/ Serge Schrurs

Serge Schrurs

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SCHEDULE 1

Definitions and interpretation

1. Definitions

In this Agreement each of the following words and expressions shall have the following meanings:

Affiliate	:	means any person or entity controlling, controlled by, or under common control of a Party within the meaning of article 11 of the Companies Code.
Agreement	:	means this asset purchase agreement, including the Schedules hereto, which form an integral part thereof.
BNP Paribas Debts	:	means the debts and liabilities of the Seller towards BNP Paribas, as set forth in Schedule 6.
Business	:	has the meaning set out in Recital (A).
Claim	:	means a claim made by the Purchaser for Damages resulting from the inaccuracy, incompleteness or breach of any of the Seller's Representations.
Claim Notice	:	has the meaning as set out in Clause 8.1.
Clause	:	means any clause of this Amended Agreement.
Closing	:	has the meaning as set out in Clause 5.
Closing Date	:	means the date on which the Closing takes place, as set out in Clause 6.1.
Conditions Precedent	:	has the meaning set out in Clause Error! Reference source not found..
Confidential Information	:	has the meaning set out in Clause 12.1.
Damages	:	means any direct loss within the meaning of Articles 1149, 1150 and 1151 of the Belgian Civil Code.
Encumbrance	:	means any mortgage, lien, pledge, encumbrance, security interest, deed of trust, usufruct ("vruchtgebruik"/ "usufruit"), option, encroachment, reservation, order, decree, judgment, condition, restriction, charge, claim or any other third party right of any kind, however documented, whereby the word "Encumber" shall be construed accordingly.
Excluded Assets	:	has the meaning as set out in Clause 2.2.
Excluded Liabilities	:	has the meaning as set out in Clause 2.4.
Governmental Authority		means any nation or government, any state, regional, provincial, territorial, local or other political subdivision thereof, or any supranational authority and any entity or official exercising executive, legislative, judicial, quasi-judicial, regulatory or administrative functions of or pertaining to government.
Initial Agreement	:	has the meaning set out in Recital (D)
Joint Closing Obligations	:	has the meaning set out in Clause 5.2.3.
KBC Debts	:	means the debts and liabilities of the Seller towards KBC to the Seller, as set forth in Schedule 6.
Lease Agreement	:	has the meaning set out in Recital (F).
Leased Premises	:	shall mean the wet processing facility located at Oostkaai 46, 8900 Ieper.
Liabilities	:	means, as to any person, all past, present and future debts, adverse claims, fines, liabilities and obligations of any kind.
Purchase Consideration	:	means the aggregate price for the Assets as defined in Clause 4.1.
Purchaser's Closing Obligations	:	has the meaning as set out in Clause 5.2.2.
Seller's Closing Obligations	:	has the meaning as set out in Clause 5.2.1.
Seller's Debts	:	has the meaning as set out Clause 4.1.
Seller's Representations	:	means the representations and warranties made by the Seller to the Purchaser pursuant to Clause 6 and as set forth in Schedule 8.
Services Agreement	:	has the meaning set out in Recital (F).
Tax(es)	:	means all federal, state, local and foreign taxes (including, without limitation, income, profit, VAT, franchise, sales, use, real property, personal property, ad valorem, excise, employment, social security and wage withholding taxes) and instalments of estimated taxes, assessments, deficiencies, levies, imports, duties, license fees, registration fees, withholdings, or other similar charges of every kind, character or description and any interest, penalties or additions to tax imposed thereon or in connection therewith.
Territory	:	means Belgium.

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Third Party Claim	:	has the meaning set out in Clause 8.2.
Transaction	:	means the transfer of the Transferred Assets and the Transferred Liabilities by the Seller to the Purchaser and the corresponding acquisition of the Transferred Assets and the Transferred Liabilities by the Purchaser from the Seller, subject to the terms and conditions of this Agreement.
Transfer	:	means (i) any transfer of title completed with or without consideration in whatever manner and whatever form, including transfers by way of contribution, merger, demerger, exchange, distribution in kind, sale with option of repurchase, transfer to fiduciaries (fiducies) or on trust (or other similar transactions), gift, or (ii) the granting of rights such as options to purchase or sell or the conclusion of a swap or other agreement, which may result in a transfer mentioned sub (i).
Transferred Assets	:	has the meaning as set out in Clause 2.1.
Transferred Contracts	:	has the meaning as set out in Clause 2.1.2.
Transferred Employees	:	has the meaning as set out in Clause 2.1.1(C).
Transferred Equipment and Machinery	:	has the meaning as set out in Clause 2.1.1(A).
Transferred Liabilities	:	has the meaning as set out in Clause 0.
Transferred Permit	:	has the meaning as set out in Clause 2.1.1(B).

2     Interpretation

In this Agreement, except where the context otherwise requires:

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• in the event of any difficulty of interpretation, the rules set out in Articles 1156 to 1164 of the Belgian Civil Code ("Burgerlijk Wetboek /Code Civil") shall apply. However, the application of Article 1162 of the Belgian Civil Code is expressly waived.
• the original version of this Agreement has been drafted in English. Should this Agreement be translated into French, Dutch or any other language, the English version shall prevail among the Parties to the fullest extent permitted by Belgian law, provided, however, that whenever French and/or Dutch translations of certain words or expressions are contained in the original English version of this Agreement, such translations shall be conclusive in determining the Belgian legal concept(s) to which the Parties intended to refer.
• a reference to an enactment or statutory provision shall include a reference to any subordinate legislation made under the relevant enactment or statutory provision and is a reference to that enactment, statutory provision or subordinate legislation as from time to time amended, consolidated, modified, re-enacted or replaced.
• when using the words "shall cause" or "shall procure that" (or any similar expression or any derivation thereof), the Parties intend to refer to the Belgian law concept of "porte-fort" / "sterkmaking".
• in this Agreement, general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words and general words which follow particular or specific words shall not be given a restrictive meaning by reason of the fact that they are preceded by such words.
• reference to this Agreement includes this Agreement as amended and supplemented in accordance with its terms.
• reference in this Agreement to the "best efforts" of a person means the efforts that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible.
• for the calculation of a period of time, such period shall start the next following day after the day on which the event triggering such period of time has occurred. The expiry date shall be included in the period of time. If the expiry date is a Saturday, a Sunday or a bank holiday in Belgium, the expiry date shall be postponed until the next business day in Belgium. Unless otherwise provided herein, all periods of time shall be calculated in calendar days.

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SCHEDULE 2

INDEX DATA ROOM

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SCHEDULE 3

TRANSFERRED EQUIPMENT AND MACHINERY

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SCHEDULE 4

TRANSFERRED PERMIT

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SCHEDULE 5

TRANSFERRED EMPLOYEES

Name	Date of birth	Date of employment
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

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SCHEDULE 6

SELLER'S DEBTS as at October 4, 2013

Creditor	Initial amount	Amount due as at 4/10/2013	Interest (%)	End date
KBC DEBTS
Straight loan C11296374269	230,000	229978,94
Loan 726617340113	95,000	17416,83	3,95	29/09/2014
Loan 726799431442	154,720	136669,38	3,1	31/08/2022
Loan 726799432048	157,255	131045,88	3,1	4/09/2019
Leasing Dryer C11296374269	220,000	173178,32		4/09/2017
BNP PARIBAS DEBTS
Loan 245-7014859-09	99,000	71651,68	4,545	31/03/2017
Loan 245-5646297-20	19,000	5066,52	3,21	14/01/2015
Loan Le Relais	50,000	50.000	N/A	N/A
Loan Marc Schrurs	66,048.55	66.048,55	4	N/A
Potential liability in respect of dismissal employee	N/A	[Potential liability]	N/A	N/A
TOTAL		EUR 881.056

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SCHEDULE 7

AGREED FORM COPY OF THE SERVICES AGREEMENT

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SCHEDULE 8

SELLER'S REPRESENTATIONS

1.     CAPACITY AND AUTHORITY

1.1     Capacity, power, authority and action

1.1.1     The Seller is a corporation duly incorporated, organised, validly existing for an indefinite duration and duly registered under Belgian law, is duly qualified to do business in Belgium and is not involved in any (threatening) procedure of bankruptcy, liquidation or receivership.

1.1.2     The Seller has the requisite capacity, power and authority and has taken all action necessary, to execute, deliver and exercise its rights, and perform its obligations under the Agreement and any other document to be executed by the Seller.

1.1.3     The Seller has obtained all applicable governmental, statutory, regulatory or other consents, licences, waivers or exemptions to empower it to enter into and perform its obligations under the Agreement.

1.2     Binding agreements

The Seller's obligations under the Agreement and any other document to be executed by the Seller in connection with the Agreement are, or when the relevant document is executed will be, valid and enforceable in accordance with their respective terms.

1.3     No Breach

The execution of, and the fulfilment of, compliance and performance by the Seller of its obligations under the Agreement and any other documents to be executed by the Seller pursuant to or in connection with the Agreement will not:

1.3.1     conflict with the deed of incorporation ("oprichtingsakte" / "acte de constitution") or the articles of association of the Seller, or give rise to conflicts or liabilities as a consequence of said execution or performance;

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1.3.2     conflict with or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any Transferred Contract, the Transferred Permit or any law to which the Seller is a party or by which the Seller or any of the Transferred Assets or Transferred Liabilities are bound;

1.3.3     require the Seller to obtain any consent or approval of, or give any notice or make any registration with, any Governmental Authority or person which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked;

1.3.4     constitute a violation of any laws applicable to the Seller; or

1.3.5     result in the creation of any Encumbrance whatsoever upon any of the Transferred Assets.

2.     SELLER'S EQUIPMENT AND MACHINERY

2.1     The Seller has good, valid and marketable title to the Transferred Equipment and Machinery owned by the Seller, and all such Transferred Equipment and Machinery is in its possession and under its control, free and clear of any Encumbrances (other than the retention of title to which the Transferred Assets mentioned in Clause 2.1.1 (A) are subject), and no other person has or claims any rights in relation thereto. Upon delivery to the Purchaser on the Closing Date, the Seller will thereby transfer to the Purchaser good and marketable title to the Transferred Equipment and Machinery, subject to no Encumbrance of any nature whatsoever (except for the Transferred Assets mentioned in Clause 2.1.1 (A) which are subject to a retention of title in accordance with Clause 3.1.2).

2.2     All of the Transferred Equipment and Machinery owned, leased, used or occupied by the Seller is (i) in good repair and condition, subject to ordinary wear and tear, regularly maintained, fully serviceable and suitable for the purposes for which they are used, and (ii) used in accordance with all applicable laws.

2.3     The Seller has operated the Business and kept the Transferred Equipment and Machinery in conformity with all applicable laws, regulations, court decisions, arbitration awards and other legal requirements applicable to them (including, but not limited to, environment noise, safety and health requirements) and has made all registrations, transcriptions and notifications as are required or desirable under such laws, regulations, court decisions, arbitration awards or other legal requirements.

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2.4     The Seller has not been put on notice of any violation or non-compliance in connection with the operation of the Business or the use of any of the Transferred Equipment and Machinery.

2.5     Taking into account the Lease Agreement which shall be entered into by the Parties on Closing Date, the Transferred Equipment and Machinery, together with all other Transferred Assets comprises all assets which are necessary for the continued operation of the Business.

2.6     The Seller has complied in all material respects with all legal requirements to which the Seller or its Business or any of the Transferred Assets are subject, whether in Belgium or in any other country, and is not currently in violation of any of the foregoing.

3.     TRANSFERRED CONTRACTS

3.1     Each of the Transferred Contracts is valid and enforceable in accordance with its terms. Neither the Seller, nor any other party thereto is in default with respect to any provisions thereof. No event has occurred which, with or without the giving of notice or lapse of time, or both, would constitute a default thereunder.

3.2     None of the Transferred Contracts is of an unusual, abnormal or onerous nature taking into account the business and the nature of the operations of the Business.

3.3     To the best of the Seller's knowledge, there is no threat whereby any of the Transferred Contracts may be terminated or rescinded or whereby the terms may be worsened as against the Seller or, following the consummation of the Transaction, the Purchaser.

3.4     The Seller has not waived any rights or privileges under any of the Transferred Contracts.

3.5     There are no acts or facts that, separately or taken as a whole, could lead to another qualification as the one that parties gave to a Transferred Contract.

3.6     There has not been any adverse change in the business relationship of the Seller with any customer or supplier.

3.7     There are no special circumstances which might lead to the Business being restricted or hindered.

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4.     TRANSFERRED PERMIT

4.1     Other than the Transferred Permit, there are no licences, permits, consents, approvals or authorisations which are in any matter necessary for the Seller to own, lease or otherwise hold the Transferred Assets and to carry out the Business as it is presently conducted and as it has previously been conducted by it.

4.2     The Transferred Permit is not threatened with suspension or cancellation, in whole or in part, and has not expired and will not expire before the end of the term for which it has been delivered. The Seller has taken all appropriate action (including without limitation the necessary investments) that ought to have been taken with respect to the renewal or extension of such Transferred Permit.

4.3     The Seller is not aware of any circumstances indicating that the Transferred Permit is likely to be revoked or not renewed in the ordinary cause.

4.4     The Seller is not in default, nor has it received any notice of any claim of default, with respect to any such Transferred Permit.

4.5     The Transferred Permits will not be adversely affected by the consummation of the Transaction contemplated by this Agreement.

5.     LITIGATION

There is no action, suit, investigation or proceeding pending or to the best of the Seller's knowledge threatened before any court or arbitrator or any governmental authority, agency or official against or affecting the Business, the Transferred Assets or the Transferred Liabilities.

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6.     EMPLOYEES

6.1     General

6.1.1     Schedule 6 to the Agreement contains a true and complete list of all Transferred Employees, including a true and complete statement of their names, addresses, duties, duration of their employment contract, possible protected employee status, age, length of service and, taking into account any applicable indexation, their current salary, commissions, remuneration in kind, bonuses, pensions, and any other extra--legal or fringe benefits, including pension entitlements. Save as set forth in Disclosure Schedule 2, there are no other employees employed in the Business than the Transferred Employees.

6.1.2     The Company has disclosed to the Purchaser all material facts and matters relating to all collective agreements, arrangements or other understandings with any trade union, staff association or other body representing the Transferred Employees.

6.2     Compliance with requirements

6.2.1     The Seller in relation to each of the Transferred Employees,

(A)     is and has at all times been in compliance with all applicable laws and regulations regarding employment, including, for the avoidance of doubt, social security, tax, individual labour agreements, collective bargaining agreements and employment practices and are not engaged in any unfair labour practices;

(B)     discharged fully its obligations to pay all salaries, wages, commissions, bonuses, overtime pay, holiday pay, sick pay accrued entitlement under incentive schemes and national insurance contributions and other benefits of or connected with employment.

6.2.2     All remuneration and moneys to be paid to the Transferred Employees have been calculated and paid in conformity with applicable law. All withholding tax payments due at or prior to the Closing Date have been made by the Seller in due time for the periods of employment of the Transferred Employees up to the Closing Date.

39

6.2.3     All social security and withholding tax payments have been made in due time for and with regard to all periods of employment of the Transferred Employees and which are due up to the Closing Date. No social security contributions have accrued with respect to or are due by the Seller for the Transferred Employees with regard to all periods of employment up to the Closing Date.

6.3     Employment contracts

6.3.1     The employment contracts with, or the terms of employment applicable to, any of the Transferred Employees do not contain any express provision regarding notice periods or termination modalities in excess of the requirements under applicable legislation.

6.3.2     There are no persons employed in the Business on the basis of consultancy or similar agreements.

6.4     Disputes

6.4.1     No dispute has arisen within the last 5 years between the Seller and any of the Transferred Employees and there are no present circumstances which are likely to give rise to any such dispute.

6.4.2     There are no complaints pending or threatened against the Seller of whatever nature in relation to any of the Transferred Employees and there is no industrial action or dispute or labour trouble, strike or other event or condition of any similar character threatened or existing or anticipated in respect of or concerning any of the Transferred Employees.

40

SCHEDULE 10

SELLER'S DISCLOSURES

1.  Potential liability in respect of the dismissal of an employee (cfr. Schedule 6);

2.  One employee of the Seller, [redacted], shall not be transferred to the Purchaser, but shall remain employed by the Seller until its retirement.

EX-10

__________

AMENDED AND RESTATED PROMISSORY NOTE

From:

CRAILAR TECHNOLOGIES INC.

To:

JASON FINNIS

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

AMENDED AND RESTATED PROMISSORY NOTE

Principal Sum of CDN$51,689.89

Principal:     CDN$51,689.89.                                                                  Made at Victoria, B.C., Canada.

Interest:     12% per annum.

Maturing:     As indicated below.

THIS AMENDED AND RESTATED PROMISSORY NOTE (the "Promissory Note") is provided, dated and made effective as of the 21^st day of January, 2014 (the "Effective Date").

FROM:

CRAILAR TECHNOLOGIES INC., a company incorporated under the laws of the Province of British Columbia, Canada, and having an address for notice and delivery and executive offices located at Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

(the "Borrower");

OF THE FIRST PART

TO:

JASON FINNIS, businessperson, having an address for notice and delivery located at 4529 Rithetwood Drive, Victoria, British Columbia, Canada, V8X 4J5

(the "Lender");

OF THE SECOND PART

(and the Borrower and the Lender being hereinafter singularly also referred to as a "Party" and collectively referred to as the "Parties" as the context so requires).

WHEREAS:

A.     Pursuant to an original Convertible Promissory Note, dated for reference effective on October 11, 2013 (the "Original Promissory Note"), the Lender therein granted the Borrower a loan in the principal amount of CDN$100,000.00 (the "Loan"), and the Original Promissory Note provided that the Loan and the interest thereunder must be repaid by the Borrower to the Lender on December 11, 2013;

B.     Effective on November 7, 2013, the Borrower repaid to the Lender CDN$50,000.00 of the Loan, such that a principal amount of CDN$50,000 was then owing under the Loan pursuant to the Original Promissory Note;

-2-

C.     Pursuant to a Loan Extension Agreement, dated for reference effective on December 18, 2013 (the "Loan Extension"; which together with the Original Promissory Note being the "Underlying Agreements"), and as a then condition precedent to the completion by the Company of a certain non-brokered private placement (the "Private Placement") at that time, the Parties therein agreed to extend the term for repayment of the Loan and the interest under the Original Promissory Note on the following terms:

"... The Borrower and the Lender hereby agree that the due date for repayment of the Loan and the Interest shall be extended such that the Loan and the Interest will be repayable by the Borrower to the Lender, without the necessity of demand, on the earlier of (i) one year from the completion of the Borrower's currently proposed equity private placement of $2,000,000 (the "Placement"), and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower...."; and

D.     As a consequence of the completion by the Borrower of the Private Placement effective on December 20, 2013, the Parties have agreed to provide for this Promissory Note which now amends and replaces, in their entirety, each of the Underlying Agreements, together with all prior discussions, negotiations, understandings and agreements with respect to the Loan, and all in accordance with the terms and conditions of this Promissory Note.

NOW THEREFORE, this Promissory Note witnesses that in consideration for CDN$1.00 now paid by the Borrower to the Lender, together with the other covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties have agreed on the terms and conditions hereinafter set forth:

Principal and Interest of the Loan

FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, the undersigned, Borrower, hereby promises to pay to the Lender, or the holder of this Promissory Note, in accordance with the terms and conditions referenced herein, the aggregate principal sum of fifty-one thousand, six hundred and eighty-nine dollars and eighty-nine cents (CDN$51,689.89) in lawful money of Canada (hereinafter referred to as the "Principal Sum") together with simple interest accruing on the Principal Sum and commencing on the above-referenced Effective Date of this Promissory Note at the rate of twelve percent (12%) per annum, and not in advance, both before and after default, maturity and judgment (herein the "Interest"); with any such outstanding Interest to be payable in full to the Lender on repayment of the Principal Sum in the manner as set forth immediately hereinbelow (and with the totality of the within Principal Sum advance by the Lender to the Borrower being the "Loan" hereunder).

Repayment of the Loan

The Principal Sum of this Loan, together with all outstanding Interest accrued thereon as specified hereinabove (the "Loan Amount" from time to time), is hereby irrevocably and unconditionally due and payable by the Borrower to the order and direction of the Lender in Victoria, British Columbia, Canada, at or before 5:00 p.m. (Victoria, British Columbia, Canada, time) on the date which is the earlier of (i) December 20, 2014 (being one year from the completion of the Borrower's recent Private Placement) and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower (such earlier date being the "Final Principal Sum Payment Date").

-3-

The Borrower may prepay and redeem any portion of the Principal Sum portion of the Loan, and its then related Interest, in whole or in part at any time prior to the Final Principal Sum Payment Date (the "Right of Redemption") and in the manner as set forth immediately hereinbelow by providing the Lender with no less than two calendar days' prior written notice (the "Redemption Notice") of its Right of Redemption intention to redeem and repay all or any portion of the Loan Amount which would be due and owing by the Borrower to the Lender at the end of such two-day period (collectively, the "Redemption Amount") (such day at the end of such two-day period being the "Redemption Date" and, for clarity, such Redemption Date would be the date to which such Principal Sum and Interest would be calculated and due and payable to the Lender at the close of business, in Victoria, British Columbia, Canada, on such Redemption Date).

In order to provide such Redemption Notice the Borrower will be required, at the date of its delivery to the Lender of the Redemption Notice, to provide to the Lender, a certified cheque or bank draft representing the entire Redemption Amount and made payable to the Lender in Canadian funds, or funds by way of wire transfer to such designation as may be directed by the Lender in its sole and absolute discretion, in the amount of any such Redemption Amount. Thereupon, and should the proposed Redemption Amount in fact represent all of the Loan Amount which would be due and owing by the Borrower to the Lender under this Promissory Note at the Redemption Date, then the Lender will be required to immediately provide to the Borrower all such registerable discharges as may be necessary to relieve the Borrower of any obligation to the Lender under this Promissory Note

General provisions

The holder of this Promissory Note may, from time to time, grant written indulgences with respect to certain payment amounts or periods but such indulgences will not in any way affect the undersigned's liability upon this Promissory Note nor will such indulgences vary any other term to which indulgence has not specifically been granted. No indulgence will be enforceable against the holder unless granted in writing.

If any provision of this Promissory Note is held to be invalid, illegal or unenforceable, then such will not affect or impair the validity, legality or enforceability of the remaining provisions.

WITNESS the hand of the authorized representative of the undersigned Borrower given under seal as of the Effective Date determined hereinabove.

The COMMON SEAL of
CRAILAR TECHNOLOGIES INC.,
the Borrower herein,
was hereunto affixed in the presence of:
/s/ Guy Prevost           
Authorized Signatory) )
)
)
)
)
)
)
)




(C/S)

__________

EX-10

__________

AMENDED AND RESTATED PROMISSORY NOTE

From:

CRAILAR TECHNOLOGIES INC.

To:

KENNETH BARKER

Crailar Technologies Inc.

Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

AMENDED AND RESTATED PROMISSORY NOTE

Principal Sum of US$51,633.66

Principal:     US$51,633.66.                                                            Made at Victoria, B.C., Canada.

Interest:     12% per annum.

Maturing:     As indicated below.

     THIS AMENDED AND RESTATED PROMISSORY NOTE (the "Promissory Note") is provided, dated and made effective as of the 21^st day of January, 2014 (the "Effective Date").

FROM:

CRAILAR TECHNOLOGIES INC., a company incorporated under the laws of the Province of British Columbia, Canada, and having an address for notice and delivery and executive offices located at Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

(the "Borrower");

OF THE FIRST PART

TO:

KENNETH BARKER, businessperson, having an address for notice and delivery located at 2870 Brandywine Drive, West Lim, Oregon, U.S.A., 97068

(the "Lender");

OF THE SECOND PART

(and the Borrower and the Lender being hereinafter singularly also referred to as a "Party" and collectively referred to as the "Parties" as the context so requires).

WHEREAS:

A.     Pursuant to an original Convertible Promissory Note, dated for reference effective on October 11, 2013 (the "Original Promissory Note"), the Lender therein granted the Borrower a loan in the principal amount of US$50,000.00 (the "Loan"), and the Original Promissory Note provided that the Loan and the interest thereunder must be repaid by the Borrower to the Lender on December 11, 2013;

B.     Pursuant to a Loan Extension Agreement, dated for reference effective on December 18, 2013 (the "Loan Extension"; which together with the Original Promissory Note being the "Underlying Agreements"), and as a then condition precedent to the completion by the Company of a certain non-brokered private placement (the "Private Placement") at that time, the Parties therein agreed to extend the term for repayment of the Loan and the interest under the Original Promissory Note on the following terms:

-2-

"... The Borrower and the Lender hereby agree that the due date for repayment of the Loan and the Interest shall be extended such that the Loan and the Interest will be repayable by the Borrower to the Lender, without the necessity of demand, on the earlier of (i) one year from the completion of the Borrower's currently proposed equity private placement of $2,000,000 (the "Placement"), and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower...."; and

D.     As a consequence of the completion by the Borrower of the Private Placement effective on December 20, 2013, the Parties have agreed to provide for this Promissory Note which now amends and replaces, in their entirety, each of the Underlying Agreements, together with all prior discussions, negotiations, understandings and agreements with respect to the Loan, and all in accordance with the terms and conditions of this Promissory Note.

NOW THEREFORE, this Promissory Note witnesses that in consideration for US$1.00 now paid by the Borrower to the Lender, together with the other covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties have agreed on the terms and conditions hereinafter set forth:

Principal and Interest of the Loan

FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, the undersigned, Borrower, hereby promises to pay to the Lender, or the holder of this Promissory Note, in accordance with the terms and conditions referenced herein, the aggregate principal sum of fifty-one thousand, six hundred and thirty-three dollars and sixty-six cents (US$51,633.66) in lawful money of the United States (hereinafter referred to as the "Principal Sum") together with simple interest accruing on the Principal Sum and commencing on the above-referenced Effective Date of this Promissory Note at the rate of twelve percent (12%) per annum, and not in advance, both before and after default, maturity and judgment (herein the "Interest"); with any such outstanding Interest to be payable in full to the Lender on repayment of the Principal Sum in the manner as set forth immediately hereinbelow (and with the totality of the within Principal Sum advance by the Lender to the Borrower being the "Loan" hereunder).

Repayment of the Loan

The Principal Sum of this Loan, together with all outstanding Interest accrued thereon as specified hereinabove (the "Loan Amount" from time to time), is hereby irrevocably and unconditionally due and payable by the Borrower to the order and direction of the Lender in Victoria, British Columbia, Canada, at or before 5:00 p.m. (Victoria, British Columbia, Canada, time) on the date which is the earlier of (i) December 20, 2014 (being one year from the completion of the Borrower's recent Private Placement) and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower (such earlier date being the "Final Principal Sum Payment Date").

-3-

The Borrower may prepay and redeem any portion of the Principal Sum portion of the Loan, and its then related Interest, in whole or in part at any time prior to the Final Principal Sum Payment Date (the "Right of Redemption") and in the manner as set forth immediately hereinbelow by providing the Lender with no less than two calendar days' prior written notice (the "Redemption Notice") of its Right of Redemption intention to redeem and repay all or any portion of the Loan Amount which would be due and owing by the Borrower to the Lender at the end of such two-day period (collectively, the "Redemption Amount") (such day at the end of such two-day period being the "Redemption Date" and, for clarity, such Redemption Date would be the date to which such Principal Sum and Interest would be calculated and due and payable to the Lender at the close of business, in Victoria, British Columbia, Canada, on such Redemption Date).

In order to provide such Redemption Notice the Borrower will be required, at the date of its delivery to the Lender of the Redemption Notice, to provide to the Lender, a certified cheque or bank draft representing the entire Redemption Amount and made payable to the Lender in Canadian funds, or funds by way of wire transfer to such designation as may be directed by the Lender in its sole and absolute discretion, in the amount of any such Redemption Amount. Thereupon, and should the proposed Redemption Amount in fact represent all of the Loan Amount which would be due and owing by the Borrower to the Lender under this Promissory Note at the Redemption Date, then the Lender will be required to immediately provide to the Borrower all such registerable discharges as may be necessary to relieve the Borrower of any obligation to the Lender under this Promissory Note

General provisions

The holder of this Promissory Note may, from time to time, grant written indulgences with respect to certain payment amounts or periods but such indulgences will not in any way affect the undersigned's liability upon this Promissory Note nor will such indulgences vary any other term to which indulgence has not specifically been granted. No indulgence will be enforceable against the holder unless granted in writing.

If any provision of this Promissory Note is held to be invalid, illegal or unenforceable, then such will not affect or impair the validity, legality or enforceability of the remaining provisions.

WITNESS the hand of the authorized representative of the undersigned Borrower given under seal as of the Effective Date determined hereinabove.

The COMMON SEAL of
CRAILAR TECHNOLOGIES INC.,
the Borrower herein,
was hereunto affixed in the presence of:
/s/ Guy Prevost           
Authorized Signatory) )
)
)
)
)
)
)
)




(C/S)

__________

EX-10

__________

AMENDED AND RESTATED PROMISSORY NOTE

From:

CRAILAR TECHNOLOGIES INC.

To:

ROBERT EDMUNDS

Crailar Technologies Inc.

Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

AMENDED AND RESTATED PROMISSORY NOTE

Principal Sum of CDN$574,533.56

Principal:     CDN$574,533.56.                                                     Made at Victoria, B.C., Canada.

Interest:     20% per annum.

Maturing:     As indicated below.

THIS AMENDED AND RESTATED PROMISSORY NOTE (the "Promissory Note") is provided, dated and made effective as of the 21^st day of January, 2014 (the "Effective Date").

FROM:

CRAILAR TECHNOLOGIES INC., a company incorporated under the laws of the Province of British Columbia, Canada, and having an address for notice and delivery and executive offices located at Suite 305, 4420 Chatterton Way, Victoria, British Columbia, Canada, V8X 5J2

(the "Borrower");

OF THE FIRST PART

TO:

ROBERT EDMUNDS, businessperson, having an address for notice and delivery located at 23 Cambridge Road NW, Calgary, Alberta, Canada, T2K 1R1

(the "Lender");

OF THE SECOND PART

(and the Borrower and the Lender being hereinafter singularly also referred to as a "Party" and collectively referred to as the "Parties" as the context so requires).

WHEREAS:

A.     Pursuant to original Demand Convertible Promissory Notes, dated for reference effective on October 11, 2013 and December 4, 2013, respectively (collectively, the "Original Promissory Notes"), the Lender therein granted the Borrower an aggregate loan in the principal amount of CDN$545,000.00 (the "Loan"), and the Original Promissory Notes provided that the Loan and the interest thereunder must be repaid by the Borrower to the Lender on demand;

-2-

B. Pursuant to a Loan Extension And Bonus Share Agreement, dated for reference effective on December 18, 2013 (the "Loan Extension"; which together with the Original Promissory Notes being the "Underlying Agreements"), and as a then condition precedent to the completion by the Company of a certain non-brokered private placement (the "Private Placement") at that time, the Parties therein agreed to extend the term for repayment of the Loan and the interest under the Original Promissory Notes on the following terms:

"Extension of the Loan

1.     The Borrower and the Lender hereby agree that the due date for repayment of the Loan and the Interest shall be extended such that the Loan and the Interest will be repayable by the Borrower to the Lender, without the necessity of demand, on the earlier of (i) one year from the completion of the Borrower's currently proposed equity private placement of $2,000,000 (the "Placement"), and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower.

Bonus Shares

2.     In consideration of the extension of the maturity date for the Loan and Interest provided by the Lender to the Borrower hereunder, the Borrower hereby agrees, subject to the prior approval of the TSX Venture Exchange (the "TSXV"), to allot and issue to the Lender, as fully paid and non-assessable shares, an aggregate of up to 187,878 common shares of the Borrower (each a "Bonus Share"), representing a deemed value of 20% of the outstanding balance of the Loan and Interest based on an agreed value and deemed issuance price of CDN$0.60 per Bonus Share. In this regard the Lender has agreed that the extension for the payment of the Loan and Interest will be granted under all circumstances and has agreed to accept such final and maximum number of Bonus Shares as may be approved by the TSXV upon application by the Borrower therefore.";

C.     By letter dated January 20, 2014, the TSX Venture Exchange (the "TSXV") approved the issuance by the Borrower to the Lender of 181,666 common shares of the Borrower (collectively, the "Bonus Shares"), at a deemed value of CDN$0.60 per Bonus Share, in accordance with the terms of the Loan Extension;

D.     As a consequence of the completion by the Borrower of the Private Placement effective on December 20, 2013, together with the Borrower's recent receipt of TSXV approval to the Bonus Share issuance to the Lender, the Parties have agreed to provide for this Promissory Note which now amends and replaces, in their entirety, each of the Underlying Agreements, together with all prior discussions, negotiations, understandings and agreements with respect to the Loan, and all in accordance with the terms and conditions of this Promissory Note.

NOW THEREFORE, this Promissory Note witnesses that in consideration for the immediate issuance by the Borrower to the Lender of all Bonus Shares, together with the other covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties have agreed on the terms and conditions hereinafter set forth:

Principal and Interest of the Loan

FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged, the undersigned, Borrower, hereby promises to pay to the Lender, or the holder of this Promissory Note, in accordance with the terms and conditions referenced herein, the aggregate principal sum of five hundred and seventy-four thousand, five hundred and thirty-three dollars and fifty-six cents (CDN$574,533.56) in lawful money of Canada (hereinafter referred to

-3-

as the "Principal Sum") together with simple interest accruing on the Principal Sum and commencing on the above-referenced Effective Date of this Promissory Note at the rate of twenty percent (20%) per annum, and not in advance, both before and after default, maturity and judgment (herein the "Interest"); with any such outstanding Interest to be payable in full to the Lender on repayment of the Principal Sum in the manner as set forth immediately hereinbelow (and with the totality of the within Principal Sum advance by the Lender to the Borrower being the "Loan" hereunder).

Repayment of the Loan

The Principal Sum of this Loan, together with all outstanding Interest accrued thereon as specified hereinabove (the "Loan Amount" from time to time), is hereby irrevocably and unconditionally due and payable by the Borrower to the order and direction of the Lender in Calgary, Alberta, Canada, at or before 5:00 p.m. (Calgary, Alberta, Canada, time) on the date which is the earlier of (i) December 20, 2014 (being one year from the completion of the Borrower's recent Private Placement) and (ii) such time as the Borrower completes its next public offering of registered securities by way of registration statement on Form S-1 of not less than CDN$3,000,000 in gross proceeds to the Borrower (such earlier date being the "Final Principal Sum Payment Date").

The Borrower may prepay and redeem any portion of the Principal Sum portion of the Loan, and its then related Interest, in whole or in part at any time prior to the Final Principal Sum Payment Date (the "Right of Redemption") and in the manner as set forth immediately hereinbelow by providing the Lender with no less than two calendar days' prior written notice (the "Redemption Notice") of its Right of Redemption intention to redeem and repay all or any portion of the Loan Amount which would be due and owing by the Borrower to the Lender at the end of such two-day period (collectively, the "Redemption Amount") (such day at the end of such two-day period being the "Redemption Date" and, for clarity, such Redemption Date would be the date to which such Principal Sum and Interest would be calculated and due and payable to the Lender at the close of business, in Calgary, Alberta, Canada, on such Redemption Date).

In order to provide such Redemption Notice the Borrower will be required, at the date of its delivery to the Lender of the Redemption Notice, to provide to the Lender, a certified cheque or bank draft representing the entire Redemption Amount and made payable to the Lender in Canadian funds, or funds by way of wire transfer to such designation as may be directed by the Lender in its sole and absolute discretion, in the amount of any such Redemption Amount. Thereupon, and should the proposed Redemption Amount in fact represent all of the Loan Amount which would be due and owing by the Borrower to the Lender under this Promissory Note at the Redemption Date, then the Lender will be required to immediately provide to the Borrower all such registerable discharges as may be necessary to relieve the Borrower of any obligation to the Lender under this Promissory Note

General provisions

The holder of this Promissory Note may, from time to time, grant written indulgences with respect to certain payment amounts or periods but such indulgences will not in any way affect the undersigned's liability upon this Promissory Note nor will such indulgences vary any other term to which indulgence has not specifically been granted. No indulgence will be enforceable against the holder unless granted in writing.

-4-

If any provision of this Promissory Note is held to be invalid, illegal or unenforceable, then such will not affect or impair the validity, legality or enforceability of the remaining provisions.

WITNESS the hand of the authorized representative of the undersigned Borrower given under seal as of the Effective Date determined hereinabove.

The COMMON SEAL of
CRAILAR TECHNOLOGIES INC.,
the Borrower herein,
was hereunto affixed in the presence of:
/s/ Guy Prevost           
Authorized Signatory) )
)
)
)
)
)
)
)




(C/S)

__________

EX-10

LOAN AGREEMENT NO. 301998 by and between

Crailar Technologies Inc.

Canada and

IKEA Supply AG Switzerland

This Loan Agreement is made and effective as of the 29^th day of November, 2013.

BY AND BETWEEN

1. Crailar Technologies Inc.Suite 305-4420 CHATTERTON WAYVICTORIA BC VSX 5J2CANADAIncorporation number: BC0572867, hereinafter referred to as the "Borrower" and

2. IKEA Supply AG Grüssenweg 15CH-4133 PrattelnSWITZERLAND, hereinafter referred to as "IKEA" The parties have agreed as follows:

Article 1 THE LOAN

1.1 IKEA hereby as a lender grants to Borrower, who hereby accepts from IKEA, a loan (hereinafter referred to as the "Loan'') in an amount and in a currency of EUR 2'190'000.--, and in words two million one hundred ninety thousand Euro subject to the terms and conditions hereunder.

1.2 Borrower hereby accepts that IKEA at any time may transfer its rights and obligations, wholly or partially, arising out of or in connection with this Agreement to any company within the IKEA group of companies, without obtaining any prior consent from Borrower.

Article 2 PURPOSE

2.1 The purpose of this Loan is to provide Borrower with a long-term funding in order to finance Borrower's investment in:

460'000,-- EURShipping and installation cost of equipment, to be placed at the company Schrurs Textielveredeling in Belgium

530'000,-- EURworking capital (mainly purchase of raw material) in connection for the end-production of IKEAarticles

760'000,-- EURworking capital in order to secure the end-production of IKEA

articles

440'000,-- EURPurchase of [redacted]

2

Article 3 DRAW DOWN

3.1 Subject to approval in writing by IKEA for each and every draw down, the Loan will be drawn down successively starting from 29.11.2013 to 28.02.2014 at the latest. The Loan will be made available to Borrower through payment to an account in an international well recognised bank designated in writing by Borrower to IKEA, after such account having been registered by IKEA and after Borrower has duly presented to IKEA a written payment request, including relevant documentation to evidence that the investment or other expenses have materialised in accordance to the purpose of this Loan (Article 2), in a form acceptable to IKEA.

The following conditions have to be fulfilled before each and every draw down:

a) Machinery pledges of the amount paid out must be in place not later than January 31^st 2014. The pledges will be based on the invoice value of the machinery.

b) Signed Amendment of Licence Agreement between, National Research Council of Canada, the Borrower and IKEA, see Exhibit 1.

c) Signed IKEA Crailar Schrurs Textielveredeling Framework Development

Agreement

d) Signed General Agreement between IKEA and Borrower.

e) Signed Asset Purchase Agreement Crailar Schrurs updated with the changes requested by IKEA

Article 4 INTEREST

4.1 Borrower shall pay interest on the principal outstanding amount of the Loan in the currency of the Loan as set forth in Article 1.1above.

4.2 As of the day of the first draw down of the Loan, the applicable interest rate in the currency of the Loan is fixed at a rate of 1.9%, and in words one point nine percent, per annum.

4.3 Interest will be calculated based on a three hundred and sixty (360) days year.

Any interest shall be paid as set forth in Article 5 below.

4.4 Accrued interest will be yearly capitalised and put interest bearing on each anniversary of the first draw down of the Loan, until the Loan has been repaid in full together with any accrued interest.

Article 5 REPAYMENT

5.1 The principal amount of the Loan, including any interest accrued hereunder, shall be repaid by Borrower to IKEA, net of any withholding or similar taxes or fees collected at the source (if any),according to the following repayment schedule:

20.12.2014 to 20.06.2016    EUR 11'000.--; monthly

25.06.2016                                Outstanding amount including accrued and capitalised interest

and shall in all events be repaid in full by Borrower, 25.06.2016at the latest.

3

5.2 The repayment as stipulated above including any interest accrued hereunder shall be effected by cash transfer from Borrower to IKEA 's account with IBAN no. __________________________________________________________________.

If Borrower is more than ten (10) days in delay with cash remittance as mentioned above, for whatever reason, the repayment as stipulated above including any interest hereunder and in addition to a handling fee in the currency of the Loan, being the equivalent of one-hundred (100) EUR, may at IKEA 's discretion be executed by deductions from invoices issued by Borrower to IKEA, or any other company within the IKEA group of companies, for deliveries of goods or services ordered in accordance with any agreement for purchase of goods or services, as the case may be. IKEA shall issue debit notes for any such deductions made by IKEA or any other company within the IKEA group of companies.

5.3 Borrower is entitled to prepay, wholly or partially, the principal amount of the Loan subject to prior written notice from Borrower to IKEA, and provided that such prepayment has been accepted in advance by IKEA.

5.4 In the event that Borrower fails to pay any amount of the Loan- whether principal or any accrued interest thereto - on the day such amount is due and payable, Borrower shall pay to IKEA on such overdue amount a default interest at a rate per annum, being the one (1) month LIBOR rate (at the date of default) for the currency of the Loan plus ten (10) percent points, to be calculated from the day such amount became due and payable up to and including the actual day of payment.

5.5 Borrower hereby unconditionally and irrevocably grants to IKEA a right to set-off its claims against claims due, or which at any time may become due, which Borrower might have toward IKEA or any company within the IKEA group of companies.

Article 6 SECURITY

Borrower shall honour the following as a guarantee for Borrower's fulfilment of its obligations hereunder:

6.1.1 The fulfilment of Borrower's obligations hereunder shall be secured by pledge on machinery, partly financed by the means of this Loan in the amount of minimum EUR 2,190,000.--.Borrower shall register such pledge in favour of IKEA at the relevant local court or pledge registry in which the property is situated. Such pledge has to be registered no later than 31. January 2014and Borrower shall submit to IKEA, latest one week after the said date, signed and notarised orderly excerpts from relevant pledge registry confirming the proper registration of the pledge.

4

Detailed specification of machinery

Estimated Value in Euro

[redacted]	350 000
[redacted]	139 000
[redacted]	492 000
[redacted]	429 000
[redacted]	55 000
[redacted]	47 000
[redacted]	124 000
[redacted]	10 500
YALE Forklift SER# 04E101211SU cost $16,200	12 000
[redacted]	26 000
Stainless Steel Tanks [redacted]	20 000
[redacted]	85 000
[redacted]	447 000

6.1.2 Borrower hereby declares that the above mentioned objects of the pledge are his sole property and that they are not burdened with rights of third parties and there are no limitations as to the disposal of the pledge objects by the Borrower.

6.1.3 IKEA shall leave the objects of the pledge at the disposal of the Borrower who may only use these objects for the manufacture of goods being IKEA products supplied to IKEA companies, unless otherwise agreed by IKEA and Borrower.

6.1.4 In case any of the pledge objects should be used up, they will be replaced by other objects of the same kind, in the same quantity, of the same quality and of approximately the same value.

6.1.5 The Borrower shall provide the pledge objects with a visible sign with the inscription:

"Object of pledge in the name of IKEA Supply AG, Switzerland".

6.1.6 IKEA, or IKEA's authorised representatives, shall at any time during regular business hours have the right to inspect the objects of pledge.

6.1.7 The Borrower agrees to insure the machinery pledged in favour of IKEA, with an international reputable insurance company against all risks and in full value with IKEA as the co-beneficiary of the insurance policies, until the Loan has not been repaid in full. Evidence of such insurance shall be presented, upon request, to IKEA.

6.2 Seller shall deliver to IKEA in original a signed Amendment of Licence Agreement between , National Research Council of Canada, the Borrower , and IKEA, see Exhibit 1 prior to disbursement of any amounts hereunder.

Article 7 COVENANTS

7.1 Borrower hereby irrevocably covenants to IKEA that during the term of this Agreement Borrower shall use the property only for the purposes for which the Loan has been disbursed.

7.2 Borrower hereby irrevocably covenants to IKEA that during the term of this Agreement, Borrower shall not lease, sell, transfer, mortgage or otherwise dispose

of the property for which the Loan has been disbursed including through share transfer, without the prior written consent from IKEA.

5

7.3 Borrower hereby irrevocably covenants to IKEA that Borrower shall (at the Borrower's cost and expense) at all times during the term of this Agreement, provide for an adequate insurance of the property set forth in Article 2 and Article 6.

The insurance shall be concluded with an international reputable insurance company.

The insurance shall cover Natural Hazards, Fire, Explosion, Water Damage, Burglary and Robbery.

The Borrower shall at all times comply with the terms and conditions of the according insurance policy.

The Borrower shall, upon request, present to IKEA documentation evidencing the insurance coverage according to above.

Article 8 REPRESENTATIONS

8.1 Borrower warrants that:

a) the execution of this Agreement and the performance by Borrower of its obligations hereunder have been duly authorised by all necessary action of Borrower and all registrations and authorisations have been made and the required licenses have been received (subject to such registrations referred to under Article 6above, which shall be fulfilled within three (3)months from the signing of this Agreement), and do not and will not violate any provision of any law presently in effect having applicability to this Agreement; and

b) this Agreement and any other enclosed agreement have been duly signed by Borrower and constitute a legal, valid and binding obligation of Borrower enforceable against Borrower and that the obligations of Borrower hereunder are direct, unconditional and general obligations of Borrower; and

c) there is no income-tax or any other tax imposed by withholding or otherwise on any payment to be made by Borrower and/or IKEA pursuant to this Agreement.

Article 9 WARRANTIES

9.1 Borrower hereby undertakes towards IKEA as long as the Loan or any part hereof remains outstanding that:

a) Borrower will provide IKEA, upon request, within five (5) months after the end of each financial year with the annual reports on the financial standing (balance sheets); and

b) all necessary actions have been taken by Borrower to execute this Agreement and to authorise the performance of the terms hereof, and the required licences will be valid for the full credit period; and

6

c) Borrower has not executed and will not execute any security agreement or financial statement covering any of its collateral or assets except for what is stipulated in Article 6 above, and will keep the collateral or assets free from all liens, claims, security interests and encumbrances of any kind or nature except the security interest of IKEA; and

d) do all such acts and take all such steps as may be necessary or appropriate to implement or perfect any security given hereunder under any applicable law; and

e) IKEA, or its authorised representatives, will upon demand be presented all invoices for purchase of the goods for which the Loan has been disbursed; and

f) IKEA, or its authorised representative, may at all times during regular business hours inspect the premises where the goods for which the Loan has been disbursed (including the goods) is situated.

Article 10 EVENTS OF DEFAULT

10.1The total outstanding principal sum of the Loan together with accrued interest and any other charges due under this Agreement will immediately be due and payable without IKEA having to give notice to Borrower or observe any other formality;

i) if Borrower shall default in the due payment of any amount payable hereunder and/or any other agreement for borrowed money on due date; or

ii) if Borrower shall default in the due performance or observance of any provision hereunder and such default has not been remedied within fifteen (15) days after such event has occurred; or

iii) if any covenant, representation or warranty made by Borrower in this Agreement shall at any time prove to be incorrect in any material respect; or

iv) if any licence or authorisation, necessary to enable Borrower to comply with its obligations hereunder shall fail to remain in force and effect; or

v) if Borrower is declared bankrupt or granted a suspension of payment; or vi)if the security as provided in Article 6 above of this Agreement is not

existing or no longer enforceable; or

vii)if Borrower is in material breach of any agreement referred to in Article 6 above; or

viii)if Borrower's ownership structure or the direction of the business is substantially changed.

10.2 Borrower undertakes to promptly notify IKEA forthwith in writing of any occurrence of an event of default.

10.3 In the event that the Loan should become immediately due and payable as aforesaid, Borrower will indemnify IKEA for all losses, costs or expenses, including but not limited to legal fees, incurred by IKEA in connection therewith.

7

Article 11 NO SET-OFF OR COUNTERCLAIM

11.1 All payments to be made by Borrower under this Agreement shall be made to IKEA without set-off or counter-claim and without deduction for any present or future taxes of any nature, unless Borrower is compelled by law to make payments subject to such tax. In such event Borrower shall pay to IKEA such additional amounts as may be necessary to ensure that IKEA receives a net amount in equal to the full amount which IKEA would have received if payment had not been made subject to tax. Borrower shall promptly forward to IKEA certificate of official tax receipts covering all such withholdings.

11.2 Any taxes or fees required to be collected at the source from any amount payable to IKEA shall be paid by Borrower on behalf of IKEA and for the account of IKEA, and the amount to be remitted to IKEA shall be the amount after deduction of such taxes as stipulated in Article 5.1 above.

Article 12 COMMUNICATIONS

12.1 Any notice required to be given to either party hereto shall be deemed sufficient if addressed:

in case of Borrower to the address of the Borrower, and in case of IKEA to:IKEA Supply AGSupplier Finance & AdministrationGrüssenweg 15CH-4133 PrattelnSWITZERLAND

or to such other addresses as may be notified in writing by either party to the other.

Article 13 REIMBURSEMENT OUT OF POCKET EXPENSES

13.1 Borrower shall reimburse IKEA on demand for all out-of-pocket costs and expenses (including legal fees) incurred by IKEA in connection with the enforcement of this Agreement or the protection or preservation of any other right or claim of IKEA in connection with this Agreement.

Article 14 MISCELLANEOUS

14.1 This Agreement and the interpretation thereof shall be construed under and governed by the internal laws of the Kingdom of Sweden without regard to its conflict of laws rules. Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the Arbitration Institute at the Stockholm Chamber of Commerce. The place of arbitration shall be Stockholm and the proceedings performed in the English language. The arbitral tribunal shall be composed of three arbitrators.

14.2 Notwithstanding Article 14.1, IKEA may instigate proceedings against Borrower at any competent court having jurisdiction over Borrower.

8

14.3 This Agreement sets forth the entire agreement between the parties with respect

to the subject matter hereof and replaces any other agreements or understandings, written or oral, which may have existed between them.

14.4 Any amendment and alteration to this Agreement shall be made in writing and signed by both parties, in order to be valid as between the parties hereunder.

14.5 The failure on the part of either party hereto to exercise or enforce any right conferred upon it hereunder shall not be deemed to be a waiver of any such right or operate to bar the exercise or enforcement thereof at any time or times thereafter.

14.6 In case any of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, any such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had been limited or modified (consistent with its general intent) to the extent necessary to make it valid, legal and enforceable, or if it shall not be possible to so limit or modify such invalid, illegal or unenforceable provision or part of a provision, this Agreement shall be construed as if such invalid, illegal or unenforceable provision or part of a provision had never been contained in this Agreement.

14.7 This Agreement enters into force when the following events have been satisfied:

a) The necessary licence, permits, authorisations and approvals as set forth in this Agreement have been obtained from the relevant authorities; and

b) The agreements referred to in Article 6 above has been signed and entered into force.

This Agreement has been executed in two (2) originals, one (1) for Borrower and one

(1) for IKEA.

Pratteln, 29.11.2013

/s/ Sven Skadinn/s/ Magnus HolmquistIKEA Supply AGGrüssenweg 15CH-4133 PrattelnSwitzerland /s/ Ken Barker                Crailar Fiber Technologies Inc.Ken Barker, C.E.O.Printed name of signatory

EX-10 11 f8k12132013ex10-7.htm

GENERAL AGREEMENT

Entered into by and between

IKEA Supply AG,
Grüssenweg 154133 PrattelnSwitzerland

Hereinafter referred to as "IKEA"

and

Crailar Technologies Inc.,
Supplier number 22780Suite 305 - 4420 Chatterton WayVictoria BC V8X 5J2CANADAIncorporation number: BC0572867Hereinafter referred to as "Seller"

1.Preamble

1.1IKEA of Sweden AB has developed a well co-ordinated range of furniture furnishings and thereto related products for interior decoration, optimal for

production, to be distinguished by "Design and Quality IKEA of Sweden". Articles and components specified in Appendix 1, hereinafter referred to as the "Components" are used as parts of articles included in such range.

1.2The IKEA group of companies has various suppliers throughout the world that needs access to the Components. Such suppliers are hereinafter referred to as "Manufacturers, and are specified by IKEA from time to time. IKEA has been assigned by the Manufacturers to source and make available the Components for the Manufacturers, and the IKEA Group has decided to concentrate manufacturing of components. IKEA shall be entitled to amend the list of Manufacturers from time to time, at its own discretion.

1.3This General Agreement on Components establishes the terms and conditions for making the Components available to the Manufacturers, subject to specific agreements by and between Seller and each Manufacturer. Seller shall not be entitled to assign any of his rights or obligations under this agreement and/or any agreement with the Manufacturers to a third party without the prior written consent of IKEA. IKEA shall have the right to assign any of its rights or obligations, wholly or partially, to any affiliated company to IKEA without the prior consent of Seller.

2.Orders by Manufacturers

2.1Seller hereby undertakes to supply to Manufacturers the Components, on the terms and conditions specified herein and according to Manufacturers orders from time to time. Deviations from the terms and conditions contained herein may be agreed in a Delivery Agreement between the Manufacturer and Seller.

2.2As the Components will be manufactured according to specifications from IKEA, and the incorporeal rights to the Components belongs to IKEA of Sweden AB, the parties agree that IKEA has the exclusive right to define Manufacturers, and their respective share, of the Components available from the Seller.

2.3The Manufacturer shall be entitled to issue orders with reference to this agreement by electronic message, fax, letter or other form of communication agreed by Seller and Manufacturer.

3.Prices and Terms of Delivery

3.1The terms of delivery specified below shall be valid should Seller and

Manufacturer not agree on deviating terms.

3.2The prices shall be valid FCA Sellers premises as per appendix 1, according to incoterms 2000, unless otherwise agreed.

4.Furnished Materials and Handling Aids

4.1If IKEA furnishes materials, handling materials and/or equipment ("Materials") to Seller, all such Materials are to be used exclusively for the manufacture and/or delivery of products to IKEA. All Materials provided by IKEA shall remain

the sole property of IKEA unless paid in full by the Seller. Any unused supply of such Materials shall be returned to IKEA immediately upon IKEA's request. Seller shall mark and store such Materials so the Materials belonging to IKEA do not become incorporated into or commingled with any property of Seller.

4.2Seller shall upon receipt inspect Materials furnished in order to ensure that the Materials correspond to agreed quantities and are free from defects. Any shortages or defects in Materials furnished shall immediately be notified in writing by Seller to IKEA. After receipt of Materials the risk regarding the Materials shall be borne by Seller.

5.Minimum quantity

5.1IKEA will advise manufacturers to place order of no less than 1 x 20ft container, equal to approximately 20,000 lbs

6.Order-, Shipping-, and Delivery- Confirmation

6.1Seller shall promptly confirm all orders within 5 working days from receipt of the order. Seller shall within 4 weeks dispatch all Components in the agreed manner. Seller shall notify dispatch consignment details to Manufacturer in written or electronic form on the date of dispatch.

6.2If the Seller cannot perform delivery as agreed or if a delay in delivery is likely to occur, the Seller shall immediately inform the Manufacturer hereof in writing, indicating the cause of the delay, the new time of delivery and the means of transportation to be used. The Seller shall in such case deliver the goods by such means of transportation, which so far as possible will reduce the delay. All additional costs for such means of transportation shall be borne by the Seller.

6.3Seller shall forthwith obtain and supply certificates and/or declaration of origin, including duplicates thereof to Manufacturer in a form required by Manufacturer at Sellers own cost and expense.

7.Quality, Insurance and Warranty

7.1Seller warrants that each Component will be produced in accordance with the specifications established by IKEA of Sweden, and the Product Description listed in Appendix 1 hereto or any later issued version of the Product Description which has been, or will be, handed over to Seller by IKEA.

7.2IKEA and/or the Manufacturer or their appointed representatives shall be entitled to be present, monitor and review all Sellers facilities (as well as its sub-contractors) at any time, and shall have the right to request any relevant information in relation thereto. IKEA may, in its sole discretion, decide and undertake quality inspections, either by conducting tests at Seller's premises or by testing samples sent to it by Seller/Manufacturer.

7.3Should IKEA or Manufacturer not have forwarded specific package instruction, Seller shall ensure that the Components are packed to withstand delivery, damage and deterioration before they reach the Manufacturer. Seller shall only mark the products and packaging in accordance with instructions from IKEA, including use of the IKEA trade name and trademark. Nothing herein shall be interpreted as granting Seller a right or a license to use the IKEA trade name or the IKEA trademark.

7.4Prior to delivery, the Seller shall provide evidence that quality control has been performed. The Seller shall keep all such documents and copies shall be sent to the Manufacturer and/or IKEA on demand.

7.5Seller remains liable at all times for design, materials or workmanship of any sub-supplier.

7.6Seller warrants all Components delivered to be free from all defects and that design, materials and workmanship conform strictly to the specifications furnished or otherwise presented or agreed. This warranty shall continue in full force notwithstanding inspection, acceptance and delivery of the Components and payment for the Components.

7.7Sellers liability is limited to defects which appear within a period of 6 months from the date on which the product is received by Manufacturer. This shall not apply in the case of defects caused by sellers negligence when there shall be no time limit. This is also not applicable after the fibre has been transformed into yarn/textile products at the manufacturer.

7.8Seller warrants that in complying with its obligations hereunder, it will at all times comply with all relevant national and international laws, conventions, regulations and provisions applicable in the country of production and ultimate retail destination. Seller further undertakes to, at all times, fulfil environmental-, working-, social- and other conditions set forth in "The IKEA Way on Purchasing Home Furnishing Products".

7.9Seller undertakes to indemnify and hold harmless IKEA and/or Manufacturer for any and all damages, claims, costs and expenses which IKEA and/or Manufacturer might incur out of or in connection with any defect or non- conformity to specifications of any Component supplied by Seller hereunder.

8.Complaints and Defects

8.1 Manufacturer shall notify Seller in writing of any defects that have appeared, including a description of the defect. Any complaints are to be handled directly between Seller and Manufacturers.

8.2Seller is entitled to inspect the defective Component at its own cost at Manufacturer's site. If Seller fails to exercise this right within five days, calculated from the date of notice under Clause 8.1, Manufacturer may return the defective Component to Seller at Seller's risk and expense and Seller shall be deemed to have accepted the Components as defective.

8.3Shipments by Seller considered defect or incorrect in their entirety, may be refused by the Manufacturer and returned at the cost and expense of the Seller. Should shipment be considered defect or incorrect in part, Manufacturer has the right to separate the defective products at the expense of the Seller.

8.4Subject to Clause 7.7, Seller shall remedy any defect in the Components without delay and at its own cost and expense, including costs of transportation, and when a defect has been remedied, Seller shall be liable for defects in the repaired or replaced Component under the same terms and conditions as those applicable to the original Component.

8.5In case of defects, a replacement delivery shall be made by Seller in time to be dispatched within [redacted].

9.Payment conditions

9.1If not otherwise agreed directly with Manufacturers, terms of payment shall be

L/C or D/P on sight. For avoidance of doubt, IKEA does not guarantee any payment to be made by Manufacturers.

10.Forecasts

10.1IKEA will on a yearly basis provide Seller with a forecast of estimated future demands of the Components, specified in LB,s per article number. The parties agree and understand that such forecast is made solely for the benefit of the Seller in order to provide a guide for Sellers production planning purposes only, and is not a guarantee from IKEA on future order volumes placed by Manufacturers.

Quantities can vary by +/-20% to agreement due to unforeseen sales fluctuations. Seller should be ready to follow these changes in terms of production capacity and raw materials needs.

Manufacturer will provide Seller with a forecasted need covering a rolling 6 months period. This is forecast only with the sole purpose to allow seller to plan production.

11.Reporting

11.1Seller shall supply statistics of volumes classified by type and dimension to IKEA every 4 months commencing January 1 each year.

12.IKEA Models

12.1IKEA of Sweden AB ("IoS") has created and developed a unique range of furniture, furnishings and related products for interior decorating ("IKEA

Range"). The IKEA Range consists mainly of models developed by IoS, or any of its affiliated companies, ("IKEA Models"). IKEA Models and/or model concepts, improvements or modifications thereof or further developments of the underlying idea behind IKEA Models shall remain the sole property of IoS and be vested in the intellectual property rights of IoS, regardless of which party has suggested or developed such improvement, modification or further development. If a model is not considered an IKEA Model, this section does not apply.

12.2All samples, drawings, specifications or other documents relating to IKEA Models or production thereof submitted to Seller shall remain the sole property of IoS, and may not be used for any other purpose than production of IKEA Models and/or copied or reproduced without the consent of IKEA and shall be promptly returned to IKEA, including all copies thereof, upon instruction by IKEA.

12.3Seller agrees that IKEA Models are intended for the exclusive sale and marketing by thereto authorized IKEA stores, and undertakes not directly or indirectly manufacture, exhibit, sell or supply IKEA Models to any other party than IKEA or the Manufacturers.

12.4Seller may not directly or indirectly manufacture, exhibit, sell or supply any plagiarism of an IKEA Model. Plagiarism shall mean any product which is based on an IKEA Model and/or which appears to IKEA, in its reasonable judgment, with regard to design, material or workmanship, to be the same or similar to an IKEA Model.

13.Intellectual Property Rights

13.1Notwithstanding anything contained in these terms, Seller shall not at any time acquire or have been granted a right to use any rights whatsoever, of whatever kind they may be, to any intellectual property right belonging to IKEA.

13.2Seller shall be solely responsible for any infringement by a product - other than an IKEA Model according to Clause 12 - in any intellectual property right of a third party and undertakes to indemnify and hold IKEA and Manufacturers harmless for any claims or loss in connection with an infringement.

14.Term and Termination

14.1This Agreement shall be in effect up until and including December 31 2016 when it shall expire without either party having to give notice thereof. Notwithstanding the foregoing, IKEA may in its sole discretion extend the contract maximum two (2) times at thirty six (36) month each time by notifying Seller no later than six (6) month prior to expiration of any term of the Agreement.

14.2Either party shall be entitled to terminate this Agreement to expire at any time by notice in writing to the other party upon occurrence of any of the following events which if such breach is remediable is not cured within thirty (30) days after receipt of written notice thereof:

i) In case of repeated delays in delivery, low service level, repeated claims, or insufficient product quality. The product quality requirement is valid from December 1st 2014 according to the Crailar fiber property requirement, see appendix 1; or

ii) If either party becomes insolvent, enters into liquidation (whether compulsory or voluntarily) otherwise than for the purpose of amalgamation or reconstruction or shall compound with its creditors or have a receiver or any external administrator appointed over all or any part of its assets or hall take or suffer any similar action in consequence of debt.

15.Severability

15.1If any provisions of these conditions or any portion thereof is or becomes invalid or unenforceable, the remainder of these conditions shall not be affected andsuch provisions shall be valid and enforceable to the fullest extent.

16.Disputes and Applicable Law

16.1The construction and validity of this Agreement shall be governed by the Substantive legislation (without regard to its conflict of law regulations) of Switzerland.

16.2All disputes arising from, or connected with this Agreement, shall be finally settled under the rules of Conciliation and Arbitration of the International Chamber of Commerce, by one or more arbitrators appointed according to said Rules. The Arbitration shall take place in Paris, and the proceedings shall be performed in the English language.

17.Confidentiality

17.1     Seller may not during the term of this agreement as well as thereafter disclose to any third party any technical or commercial information pertaining to IKEA and shall not use such information other than for the agreed purpose. Seller undertakes to ensure that any sub-supplier engaged by Seller for production of IKEA Models undertakes this provision.

This General Agreement has been drawn up in two identical copies, whereof the two parties have received one copy each.

IKEA Supply AG /s/ Magnus Holmquist Signature Magnus Holmquist Printed name Date: 21.01.2014	Crailar Technologies Inc. /s/ Ken Barker Signature Ken Barker, CEO Printed name Date: 9th December, 2013
/s/ Sven Skadinn Signature (2) Sven Skadinn Printed name Date: 21.01.2014

Reviewed by, Initials

Components information

Appendix 1

IKEA art.name	Components description	Sale Price EURO/KG	Security stock
Flax/Hemp spinning Fiber	Enzymatically processed Flax and/or Hemp fibres for spinning yarn Fibres are available in either bleached or natural colour. Colour will be defined at time of order by manufacturer. See below table "Crailar fiber property requirements"	[redacted]	10% annual FC

Crailar fiber property requirements

Fibre properties	value	Measurement method
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

Valid for orders placed as of December 1st 2014

Note: Ordering and distribution of Components supplied by Seller for the use in IKEA

products will be coordinated between Seller and Manufacturer.

IKEA Supply AG /s/ Magnus Holmquist     /s/ Sven Skadinn
Signature Magnus Holmquist     Sven Skadinn
Printed name Date: 21.01.2014 CRAILAR Technologies Inc /s/ Ken Barker
Signature Ken Barker, CEO
Printed name Date: 9^th December, 2013

Reviewed by, Initials

Date

Crailar locations and structure

Appendix 2

Legal Entities

Name	Address
Crailar Technologies Inc	Head Office
	4420 Chatterton Way
	Suite 305
	Victoria, BC
	V8X 5J2 CANADA
Name	Address
Crailar Technologies Inc	US Office
	696 McVey Avenue
	Suite 202
	Lake Oswego, OR
	97034 USA

Production/Distribution Units

Name	Address
Schrurs NV	BE
	Schrurs
	Oostkaai 46
	B-8900 Ieper
	Belgium

Contact Details

IKEA Foreign Trade Ltd. Co.
Icerenkoy mahallesi Degirmenyolu cad.Asia Ofis Park binasi B Giris No: 28 kat: 134752 Atasehir Istanbul - TURKEY Tel : +90 216 544 22 00

CRAILAR Technologies Inc696 McVey Ave. Suite 202Lake OswegoOR 97034USA

Email: Jay.nalbach@crailar.comPhone: 001 503 3873941Fax: 001 250 6588586

Appendix 3

"[redacted]",

Formulas for calculating price

[redacted]

[redacted]

[redacted]

						Target	Maximum sales price Price
						sales
						price
Year	Targeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted
	variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
	cost	Euro/kg	cost			Euro/kg	today
	Euro/kg		Euro/kg				(ceiling)
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEY OND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

Year     Targeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted	Price
variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
cost	Euro/kg	cost			Euro/kg	today
Euro/kg		Euro/kg				(ceiling)
[redacted] [redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEY OND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

YearTargeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted	Price
variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
cost	Euro/kg	cost			Euro/kg	today
Euro/kg		Euro/kg				(ceiling)
[redacted] [redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEYOND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEYOND THE FIRST PROLONGATION TERM, THE PARTIES AGREE AS FOLLOWS:

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

Appendix 3

In no event, the Price may exceed the Maximum sales price during the commitment period [redacted].

In the event that the market forces move feedstock prices for flax/hemp and consequently increase the cost for the Seller to manufacture the Crailar fibre prices to levels beyond Euro [redacted] during all periods except for the period [redacted], the parties shall in good faith discuss a potential increase in the Maximum sales price, to agree no later than [redacted] and [redacted] respectively.

Appendix 4

Agreement

IKEA is interested in Seller developing it's business to grow and establish a stable financial foundation. In return for making significant investments in time and financial means to develop applications for the components within the homefurnishing industry, together with the long term agreement and financing support, Seller hereby undertakes to solely supply the products specified in Appendix 1 to by IKEA appointed Manufacturers, and not to supply to others such products for consumption within the following fields of application:

Home Textile Application:

- Upholstery fabrics (including slip covers) - Excluding high end custom furniture (as agreed by IKEA on a case by case basis.)
- Mattress tickings
- Bed linen
- Quilts & pillows
- Decorative cushion covers
- Rugs & mats (not wall to wall, but area rugs)
- Kitchen textiles
- Table textiles, in the woven segment only
- Blankets & throws
- Chair pads
- Curtains, blinds and panels
- Retail fabrics by the meter
- Bed spreads
- Construction textiles-boxes and storage applications
- Office textile

This appendix 4 is only applicable should IKEA fullfill the commitment to Capacity as stated in the Capacity Commitment documentation, Appendix 5.

If IKEA prolongs the commitment according to 14.1 the volumes in the capacity commitment are set at 15,000 tons +/- 20% for the first time period of 36 months and 20,000 tons +/- 20% for the second time period of 36 months for appendix 4 to be applicable.

This volume is estimated not to exceed 30% of the Sellers total capacity according to its growth plan.

Appendix 5

Agreement on Sales and Purchase Volumes

1.     Scope

1.1     The purpose of this General Agreement is for IKEA or its nominated Manufacturers to purchase components from Seller and for Seller to sell such components to IKEA or its nominated Manufacturers in order ensure sufficient and secure deliveries thereof. Furthermore, IKEA and Seller shall by entering into the co-operation and business relationship hereunder make its best joint efforts to develop and improve the competitiveness of Seller and IKEA.

2.Sales and purchase volumes

2.1IKEA agrees to procure for purchase through appointed Manufacturers, components from Seller and Seller agrees to sell components to Manufacturers

nominated by IKEA within a specified production type (hereinafter referred to as

the "Components") and pursuant to any Committed Value, as defined in the

General Agreement, at least up to a value and within the periods specified below.

CY 2014/15/16Agreed Value: 7.000 tonnes fibre in total for the total period.

The Agreed Value as stated above subtracted with 20 percent shall be defined as the "Minimum value"; and the Agreed Value added with 20 percent shall be defined as the "Maximum Value". Seller shall make reasonable efforts to carry out deliveries of the Products ordered by Manufacturers in excess of the Maximum Value, maintaining a price level which at least complies with the provisions set forth in Article 3 below.

2.2If at the end of the last CY specified above IKEA's balance shall show a deficit in relation to the Minimum Value, calculated as per the foregoing paragraphs of this Article 2, then IKEA and Seller shall, upon written demand of Seller within [redacted] days of the expiration of the last FY specified above use its best endeavours to find a proper and reasonable solution in good faith.

2.3IKEA's Minimum Value obligations provided for above are subject to Seller fulfilling all its obligations towards IKEA with respect to quality, timely deliveries and in all other respect hereunder. In the event that Seller should in any year fail to fulfil any of its material obligations hereunder, then IKEA shall, without prejudice to any other rights of IKEA, automatically be released from its Minimum Value obligation.

2.6     A material obligation for Seller hereunder, which has substantial effect on the business of IKEA and Manufacturer's, is included but not limited to the fulfilment by Seller of the agreed quality level, delivery security, price and requirements stated in IKEA way on purchasing Home Furnishing Products.

3.     Price etc

3.1     The main area of production hereunder will be Enzamatically processed Flax and/or Hemp fibres for spinning yarn and are available in either bleached or natural colour (hereinafter referred to as the "Production Type"). The price to be paid for the deliveries of the Products shall be as set out in the General Agreement.

3.2IKEA is entitled to amend the list of Products by adding or deleting products thereto, provided that such products are included by IKEA in the Production Type. Any amendment is subject to separate price negotiations between the parties.

3.3Seller undertakes to IKEA as an average to [redacted] for each CY as specified in the General Agreement.

4.     Prior Termination

4.1.     Notwithstanding anything to the contrary stated herein, IKEA may at any time and without compensation to the Seller terminate this Agreement to immediately expire and cancel existing orders, should the Seller be subject to change of ownership, or become insolvent, or a receiver is appointed for Seller, or for a substantial portion of its assets, or if Seller commits a breach of

material or serial nature of any of the provisions set forth herein, in the General Agreement or in any delivery agreement with the Manufacturers, which if such breach is remediable is not cured within fifteen (15) days after receipt of written

notice thereof.

IN WITNESS WHEREOF, this Agreement has been executed in duplicate, each party taking one (1) copy.

IKEA Supply AG /s/ Magnus Holmquist Signature Magnus Holmquist Printed name Date: 21.01.2014	Crailar Technologies Inc. /s/ Ken Barker Signature Ken Barker, CEO Printed name Date: 9th December, 2013
/s/ Sven Skadinn Signature (2) Sven Skadinn Printed name Date: 21.01.2014

Reviewed by, Initials

EX-10 12 f8k12132013ex10-8.htm

DATED                 2013-12-13

IKEA SUPPLY AG

and

CRAILAR TECHNOLOGIES, INC.

and

SCHRURS NV

___________________________________________

FRAMEWORK AGREEMENT

DEVELOPMENT WORK

___________________________________________

CONTENTS

1	DEFINITIONS	3
2	ENGAGEMENT	4
3	CALL-OFF PROCESS	5
4	TERM OF AGREEMENT, REVOCATION AND SUSPENSION OF ASSIGNMENT ORDER	5
5	PERFORMANCE	5
6	FEE AND PAYMENT	6
7	COST CONTROL	7
8	CONFIDENTIALITY	7
9	INTELLECTUAL PROPERTY RIGHTS	8
10	LIABILITIES ETC	9
11	ASSIGNMENT AND SUBCONTRACTING	10
12	GOVERNANCE OF THE RELATIONSHIP	10
13	TERMINATION	11
14	SEVERABILITY	11
15	ENTIRE AGREEMENT	11
17	GOVERNING LAW AND DISPUTE RESOLUTION	11
EXHIBIT 1		1
EXHIBIT 2		1
EXHIBIT 3		1

THIS AGREEMENT is made on December 13^th, 2013

BETWEEN

IKEA Supply AG, Grüssenweg 15, 4133 Pratteln, Switzerland ("IKEA");

and

Crailar Technologies, Inc., ("Crailar") (formerly Crailar Fiber Technologies Inc.),

4420 Chatterton Way
Suite 301
Victoria, BC
V8X 5J2 CANADA
Incorporation number BC0572867

and

Schrurs NV, Pijpestraat 18, 8560 Wevelgem, Belgium ("Schrurs")

Crailar and Schrurs individually a "Development Partner" and together the "Development Partners". IKEA, Crailar and Schrurs individually a "Party" and together the "Parties".

BACKGROUND

(A)     The Development Partners possess valuable expertise in dyeing, bleaching, processing and treatment of natural fibers for the textile industry.

(B)     IKEA wishes to retain the Development Partners and the Development Partners have agreed to provide development services to IKEA upon the terms and subject to the conditions set out in this Agreement.

The Parties agree as follows:

1     DEFINITIONS

1.1     In this Agreement, the following definitions shall apply:

(i)     "Agreement" means this framework agreement, its Exhibits as well as any Assignment Orders called off under this framework agreement;

(ii)     "Assignment Order" means each separate assignment order issued by IKEA and confirmed by the relevant Development Partner(s);

(viii)     "Background Information" means any Intellectual Property owned or controlled by either Party when entering this Agreement;

(iv)     "Commencement Date" means 2013-12-03;

(v)     "Deliverables" means the deliverables to be created and provided by the Development Partners to IKEA during the Development Work;

(vi)     "Development Work" means development work contracted to be supplied under this Agreement;

(vii)     "Fee" means the fee to be paid by IKEA to the Development Partners for the performance of the Development Work in accordance with section 6 and as detailed in the relevant Assignment Order;

(viii)     "Foreground Information" means all Intellectual Property generated in the execution of this Agreement;

(ix)     "Group Company" means:

a)     any Holding Company of IKEA at any time;

b)     any Subsidiary of IKEA or of IKEA's Holding Company at any time;

c)     any Associated Company.

(x)     "Intellectual Property" means all patents, trademarks, registered designs, design rights, copyrights, database rights, rights in computer software, rights in confidential information, trade secrets, inventions and know-how, logos and trade dress (in each case whether or not registered), any applications for or rights to apply for any of the above, any other intellectual property rights recognised in any part of the world and any accrued rights of action in respect of any of the above;

(xi)     "Project Leader" means a person appointed by IKEA to whom the Development Partners shall report during the Development Work;

(xii)     "Term" means the period set out in section 4.1 and subject to earlier termination as herein provided;

(xiii)     "Works" means any and all works, materials, information, data, designs, discoveries, inventions, developments, improvements, products, processes, methods, formulas or programs which are made, created, devised, developed or discovered by the Development Partners or their employees specially and solely for the execution of the Development Work.

2     ENGAGEMENT

2.1     IKEA shall engage the Development Partners and the Development Partners shall pursue Development Work to IKEA on the terms set out in this Agreement.

2.2     Each of the Development Partners warrants that by entering into this Agreement it will not be in breach of any obligations to or agreements with any third party.

3     CALL-OFF PROCESS

3.1     At any time during the Term, IKEA shall be entitled to request Development Work from one or both Development Partners and each Development Partner shall be entitled to either accept or deny a request it received from IKEA, Once the arrangements for the requested Development Work have been agreed by the relevant Parties, IKEA shall place an Assignment Order which shall be substantially in the form attached hereto as Exhibit 1.

3.2     In order to be valid, an Assignment Order shall be confirmed by the relevant Development Partner in writing.

3.3     Any confirmed Assignment Order shall be valid and binding even if delivery dates according to such Assignment Order are beyond the date of expiry or termination of this Agreement.

3.4     In the event of any conflict between the terms and conditions of this Agreement and the terms of any particular Assignment Order, the terms of such Assignment Order shall prevail, but only to the extent of such conflict.

3.5     Nothing in this Agreement shall oblige IKEA to place Assignment Orders with the Development Partners, or conversely, the Development Partners to accept such Assignment Order from IKEA. Hence, no such obligations shall arise upon the Parties unless an Assignment Order is signed by both Parties.

4     TERM OF AGREEMENT, REVOCATION AND SUSPENSION OF ASSINGEMENT ORDER

4.1     This Agreement shall begin on the Commencement Date and, subject to the provisions of this Agreement, shall continue until terminated by either Party giving no less than 6 months' prior notice.

4.2     IKEA may, at its option, either revoke or suspend the performance of a particular Assignment Order or any part thereof at any time by giving written notice to the relevant Development Partner(s).

4.3     In the event of revocation or suspension of the performance of a particular Assignment Order, IKEA shall pay the relevant Development Partner according to the relevant Assignment Order in proportion to the work already carried out and for reasonable and unavoidable costs for putting the revocation or suspension into effect.

4.4     Notwithstanding any revocation or suspension of an Assignment Order, all Work up to the revocation or suspension, and the Intellectual Property to such Work shall be governed by the provisions of this Agreement.

5     PERFORMANCE

5.1     The Development Work shall be performed at a location as set out in each separate Assignment Order. If travel outside the place of performance is instructed by the Project Leader, travel expenses shall be reimbursed in accordance with the Assignment Order.

5.2     When performing the Development Work, the Development Partners shall procure:

(i)     that the Development Work is performed by dedicated qualified personnel that are using all reasonable skill, expertise and care in accordance with generally recognised commercial standards and practices;

(ii)     to comply with reasonable requests and instructions of IKEA;

(iii)     to use its/their best endeavours to promote the interests of IKEA and the Group Companies;

(iv)     to keep IKEA informed of its/their progress as set out in the Time tables/Project Plan of each particular Assignment Order or as reasonable requested by IKEA;

(v)     to attend such meetings and reviews in relation to the provision of the different Development Work as set out in the applicable Assignment Order or as reasonably requested by IKEA; and

(vi)     to comply with all relevant laws and regulations, codes and other similar provisions so far as they affect the Development Work.

5.3     The Development Partners undertakes to place the resources more closely defined in the relevant Assignment Order for the Development Work.

5.4     The Project Leader for each Assignment Order to whom the Development Partners shall report during the Development Work at issue, is specified in the relevant Assignment Order. The Project Leader may gradually define the content and the extent of the Development Work in writing under the written approval of the relevant Development Partner(s).

5.5     IKEA shall have the right during normal working hours to inspect the progress of the Development Work at each Development Partner's premises.

6     FEE and payment

6.1     In consideration of the provision of particular Assignment Order, IKEA shall pay to the Development Partners a Fee as stated in the relevant Assignment Order. However, the fixed fees to be applied as a base for the remuneration shall follow from the Price List, Exhibit 2.

6.2     Each Development Partner shall issue an invoice at the end of each calendar month in respect of the Development Work provided during that month or in accordance with the invoicing schedule set out in the relevant Assignment Order. Any IKEA approved expenses shall be invoiced monthly, at cost. The invoice shall be sent to the invoice address of IKEA: IKEA of Sweden AB, Box 317, SE-83023 Hackas and shall be marked with a contact name and cost centre number as communicated by IKEA.

6.3     IKEA shall pay the Fee within 30 days of receipt of the properly drawn up invoice.

6.4     No other remuneration than stated above shall be payable for any work performed under this Agreement.

7     COST CONTROL

7.1     The Development Partners undertake to keep appropriate records of all IKEA approved costs incurred in the course of this Agreement in the following manner:

• manpower: detailed time sheets indicating name and Grade of the each Development Partner's employees, involved, if diversified in price list, and time spent by such employees exclusively for the purpose of this Agreement

• material, at cost: invoices

• other expenses at cost: invoices or other evidence of expenditure.

7..2     The Development Partners shall retain the documents and shall on request submit a list thereof with each respective invoice to IKEA, or as otherwise instructed by IKEA.

8     CONFIDENTIALITY

8.1     The Parties acknowledge that in the course of the provision of the Agreement, each Party and their employees will have access to Confidential Information belonging to the other Parties. The Parties also acknowledge that the disclosure of such trade secrets or confidential information to an actual or potential competitor of one Party is likely to cause serious damage to its business and cause immense harm.

8.2     Accordingly, the Parties agree that they shall keep secret and confidential all Confidential Information, and shall not at any time whether during the Term or after the termination of this Agreement (except in the proper provision of the Development Work, or with the express written consent of the other Parties) disclose such information or permit it to be disclosed to any third party or otherwise use such information or permit it to be used.

8.3     For the purposes of this Clause, "Confidential Information" means:

(i)     all information which relates to the business, finances, affairs, products, manufacturing methods, processes, equipment or activities of a Party, any Group Company or Inter IKEA Systems BV which is designated by a Party or any Group Company as confidential; and

(ii)     all information relating to the matters set out above which comes to the knowledge of a Party in the course of the provision of the Development Work and which, by reason of its character and/or the manner of its coming to his knowledge, is evidently confidential or is evidently deemed confidential by a Party; and

(iii)     all information which relates to the business, services, finances, affairs, products, processes, equipment or activities of actual or potential suppliers or other persons which has been given to either Party or any Group Company in confidence.

8.4     The obligations of confidentiality set out in this section 8 shall not apply to Confidential Information which:

(i)     is independently developed by a Party;

(ii)     at the time of its disclosure is already in the possession of the Recipient or thereafter is properly obtained from any third party;

(iii)     is or becomes publicly available other than through a breach of this Agreement by a Party; and/or

(iv)     is required to be disclosed by law or regulations.

8.5     Each Party shall, in case of having a legitimate interest, at any time and in any event on the termination of this Agreement (whether lawful or otherwise) upon written request:

(i)     immediately deliver to the other Party without keeping any copies, all documents, materials, correspondence, and information (on whatever media and wherever located) relating to the business or affairs of the other Party or any Group Company or suppliers and containing Confidential Information.

8.6     Each Party shall secure that all of their employees performing the Development Work and any subcontractors hired by a Development Partner under this Agreement are bound by confidentiality equal to the terms set out in this section 8.

8.7     The Development Partners shall not disclose any confidential information outside the scope of the Development work to be carried out by the Development Partners, i.e.the industrial process related to the patented enzymatic process, to IKEA and IKEA will therefore regard all information outside the scope mentioned above from the Development Partners as non-confidential unless IKEA is notified otherwise in writing, in which case this section 8 shall apply mutually in respect of such confidential information, upon agreement in writing between the Parties.

8.8     The Development Partners shall not, via press releases, customer/client compilations, (including but not limited to, reference on the website of a Development Partner), present IKEA as a client or customer of a Development Partner unless prior written approval has been obtained from IKEA.

Notwithstanding any such written approval, reference should always be in a non-excessive manner and gives no right to use the IKEA logotype.

8.9     The provisions of this section 8 shall survive the expiry or termination of this Agreement and any Assignment Order for a period of ten (10) years.

9     INTELLECTUAL PROPERTY RIGHTS

9.1     Except for the National Research Council of Canada's rights to use for government purposes certain additions or changes to the NRC technology produced by Crailar, IKEA or anyone, to whom IKEA may assign its rights, shall be the exclusive owner of all Works and Foreground Information created during the provision of the Development Work. Notwithstanding the above, the Parties may stipulate in the individual Order that Crailar, or anyone to whom Crailar may assign its rights, shall be the exclusive owner of the Works and Foreground Information.

9.2     Where IKEA will be the exclusive owner of the Works, IKEA shall have the right to revise, further develop, adapt, alter, display, copy, manufacture, sell, advertise, or otherwise dispose of the Works in any way IKEA deems suitable for technical, business, economic or other reasons, including moving or starting up production at/to other suppliers.

9.3     The Development Partners shall give full disclosure to IKEA of all Works which are created or developed under this Agreement.

9.4     All Background Information shall remain the whole and exclusive property of the Party who provided such information.

9.5     Unless otherwise is stated in the individual Order, notwithstanding section 9.4 above, IKEA shall be entitled to, in perpetuity, use such Background Information owned by the Development Partners needed for the functionality or revision, further development, adaption, alteration, display, sale, advertisement or other disposition of the Works, including moving or starting up production at/to other suppliers, and the Development Partners undertake to provide IKEA with a royalty free, worldwide, non-exclusive, irrevocable and sub-licensable license to unlimited use of such Intellectual Property embodied in the Background Information. Upon request, the Development Partners shall furnish IKEA with necessary documents confirming such license rights.

9.6     IKEA, or any one to whom IKEA may assign the rights, may at its own discretion carry out registrations of Intellectual Property rights capable of registration emanating from the Foreground Information. The Development Partners shall procure that their employees and any subcontractors hired by a Development Partner under this Agreement will execute and deliver to IKEA, such documents as may be necessary to obtain, defend and enforce the Intellectual Property.

9.7     Notwithstanding anything contained in this Agreement, the Development Partners shall not at any time acquire any rights whatsoever; of whatever kind they may be, to any Intellectual Property right belonging to IKEA, any Group Company or Inter IKEA Systems B.V. or IKEA of Sweden AB.

9.8     The provisions of this section 9 shall survive the expiry or termination of this Agreement and any Assignment Order.

10     LIABILITIES ETC

10.1     Each Development Partner is responsible for any direct damage incurred by IKEA by reason of any act or omission of such Development Partner or such Development Partner's employee or by any subcontractors hired by such Development Partner under this Agreement and resulting from or in connection with the Deliverables or Development Work under this Agreement. Each Development Partner's aggregated liability for each Assignment Order shall be limited to an amount equivalent to the Fees paid by IKEA under relevant Assignment Order. Notwithstanding the above, no limitation of liability shall apply to damages relating to a Development Partner's willful misconduct or gross negligence with exception that the Development Partners shall never be responsible for indirect damages.

10.2     The Development Partners are responsible for that the final Deliverables of the Development Work do not infringe any third party's Intellectual Property rights and shall, during the execution of the Development Work, inform IKEA of any potential Intellectual Property infringement risks the Development Partners may foresee. In

case of an act of willful misconduct or gross negligence of a Development Partner, such Development Partner shall hold harmless and indemnify IKEA and/or any Group Company from and against any claim, suit, judgment or award and pay all damages and costs connected therewith, which may be made against or imposed on IKEA or any Group Company by reason of any result of the Development Work or any part thereof constituting an infringement of any Intellectual Property right of a third party.

10.3     IKEA's approval of the Development Work or parts thereof shall not release the Development Partners from their liability hereunder.

10.4     The provisions of this section 10 shall survive the expiration and any termination of this Agreement.

11     Assignment and subcontracting

11.1     The Development Partners may not, without the prior written permission of IKEA, transfer any rights or obligations under this Agreement to any third party. IKEA shall be entitled to transfer its rights and obligations, wholly or partially, under this Agreement to any Group Company.

11.2     The Development Partners may not subcontract any part of the Development Work without IKEA's prior written approval. No such approval shall relieve the Development Partners from any of its obligations under this Agreement. The Development Partners shall procure that any subcontractor is bound by equal confidential obligations as set out in section 8 and that the subcontractor shall do all things and sign all such documents necessary to enable IKEA to obtain and enforce its rights to the Foreground Information.

12     GOVERNANCE OF THE RELATIONSHIP

12.1     A governance function shall be established consisting of key account representatives from each of the Parties. The contact details of the individuals appointed for this function are specified in Exhibit 3.

12.2     The governance function shall meet on a regular basis, as decided by the Parties, in order to review the Parties ongoing relationship under this Agreement including issues such as:

(i)     to carry out a review of the performance of the Development Work;

(ii)    to review each Development Partner's anticipated required capacity for the Development Work;

(iii)     to review circumstances warranting changes of the prices of the Development Work;

(iv)     to discuss new/changed activities;

(v)     to follow-up on earlier agreed actions; and

(vi)     to discuss the anticipated remaining duration of the Agreement.

12.3     Unless otherwise authorized to represent a Party, none of the members of the governance function shall be authorized to amend or add to this Agreement.

13.     TERMINATION

If either Party commits a material breach of any of the provisions set forth herein and does not remedy the situation within fourteen days after receiving a written notification stating the extent of the breach, this Agreement shall immediately expire and become null and void except sections 8, 9, and 10 which shall survive termination as stated above in this Agreement.

14.     SEVERABILITY

In the event that any of the terms of this Agreement are determined by any competent authority to be invalid or unenforceable to any extent, such term shall to that extent be severed from the body of this Agreement which shall continue to be valid and enforceable to the fullest extent permitted by law.

15.     ENTIRE AGREEMENT

This Agreement sets out the entire agreement and understanding between the Parties and supersedes all prior agreements and understandings, verbal or written, between the Parties relating to the subject matter of this Agreement.

16.     VARIATION

Neither this Agreement nor any of its terms or conditions can be varied or waived unless expressly agreed in writing and signed by the Parties to this Agreement.

17     GOVERNING LAW AND DISPUTE RESOLUTION

17.1     This Agreement is subject to the substantive laws of Switzerland. The parties agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement.

17.2     Any dispute, controversy or claim arising out of or in relation to this Agreement, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the Notice of Arbitration is submitted in accordance with these Rules. The number of arbitrators shall be three. The seat of the arbitration shall be in Zurich. The arbitral proceedings shall be conducted in English.

This Agreement is executed in three copies, each Party taking one.

Date:

IKEA Supply AG
/s/ Magnus Holmquist
Magnus Holmquist
Per Procura IKEA Supply AG
/s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________
Reviewed by, (IKEA Business owner)

Date: 12^th December 2013

Crailar Technologies, Inc.

/s/ Ken Barker                                    Ken Barker, C.E.O.
________________________              ________________________
Authorized signatory                           Authorized signatory

Date: 18 December 2013

Schrurs NV

/s/ Serge Schrurs                                    Serge Schrurs
________________________                 ________________________
Authorized signatory                               Authorized signatory

Exhibit 1-1

THE ASSIGNEMENT ORDER - DEVELOPMENT WORK ON
FIBER QUALITY CONSISTENCY

This Assignment Order is entered into pursuant to the Framework Agreement executed by IKEA Supply AG and Crailar and Schrurs on Dec 13^th, 2013.

Description:	The development agenda specified in this assignment has the objective to further develop the enzymatic bast fiber refinement process developed by Crailar and Schrurs. The goal is to be able to produce flax fiber which has properties that it can be used in existing unmodified cotton spinning setups with a performance close to cotton. It is key to the process that the quality of the incoming raw material (decorticated flax straw) is of minor influence to the achieved final fiber quality.
Deliverables:	Fiber samples (1kg from 800kg batches) made from two different raw material sources (flax tow, flax total fiber), taken from three different batches, which conform to the technical parameters specified in this assignment.
Technical Specifications:	See exhibit 1-1A
Division of Task between Development Partners:	IKEA to provide product demands. Crailar and Schrurs undertake the development work
Instructions for handling the Deliverables:	Fiber samples shall be sent to [redacted] for testing according to exhibit 1-1C, and batches of the material shall be spared for test processing at least two weeks after lab tests are completed
Time table, Project Plan:	See exhibit B. Process shall be followed up by bi-monthly meeting (Crailar-IoS), either physical or web-based. Progress shall be summarized in bi-monthly summary. Project final deadline Nov 30th, 2014
Location:	Test shall preferrably be undertaken on production scale at Schrurs in Belgium or supplier mentioned in exhibit 1-1B. If applicable, lab scale running shall be undertaken at [redacted].
Reference Persons:	For IKEA ("Project Leader"): [redacted] For Crailar: Jason Finnis For Schrurs: Serge Schrurs
Specified resources at the Development Partner to have the Development Work performed:	See exhibit 1C
Fee and expenses:	Crailar covers the cost for this quality consistency agenda, as the outcome of the work will become Crailar's property.

IKEA Supply AG

Date:

/s/ Magnus Holmquist
Magnus Holmquist
Per Procura /s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________

Reviewed by, (IKEA Business owner)

Confirmed:

Date: 12 December 2013

Crailar Technologies, Inc.

/s/ Ken Barker
________________________
Ken Barker, C.E.O.

Confirmed:

Date:18 December 2013

Schrurs NV

/s/ Serge Schrurs
________________________
Serge Schrurs

Exhibit 1-2

THE ASSIGNEMENT ORDER - DEVELOPMENT WORK ON
HEMP FIBER DEVELOPMENT

This Assignment Order is entered into pursuant to the Framework Agreement executed by IKEA Supply AG and Crailar and Schrurs on Dec 13^th, 2013.

Description:	The development agenda specified in this assignment has the objective to further develop the enzymatic bast fiber refinement process owned by Crailar. The goal is to be able to produce hemp fiber which has properties that it can be used in existing unmodified cotton spinning setups with a performance close to cotton. It is key to the process that the quality of the incoming raw material (decorticated hemp straw) is of minor influence to the achieved final fiber quality.
Deliverables:	Fiber samples (1kg from 800kg batches) made from two different raw material sources (hemp tow, hemp total fiber), taken from three different batches, which conform to the technical parameters specified in this assignment.
Technical Specifications:	See exhibit 1-1A
Division of Task between Development Partners:	IKEA to provide product demands. Crailar and Schrurs undertake the development work
Instructions for handling the Deliverables:	Fiber samples shall be sent to [redacted] for testing according to exhibit 1-1C, and batches of the material shall be spared for test processing at least two weeks after lab tests are completed
Time table, Project Plan:	See exhibit 1-2B. Process shall be followed up by bi-monthly meeting (Crailar-IoS), either physical or web-based. Progress shall be summarized in bi-monthly summary. Project final deadline Nov 30th, 2014
Location:	Test shall preferrably be undertaken on production scale at Schrurs in Belgium or supplier mentioned in exhibit 1-2B. If applicable, lab scale running shall be undertaken at [redacted].
Reference Persons:	For IKEA ("Project Leader"): [redacted] For Crailar: Jason Finnis For Schrurs: Serge Schrurs

Specified resources at the
Development Partner to have the
Development Work performed: See exhibit 1-1C

Fee and expenses:   Crailar covers the cost for this project, as the outcome of the work will become Crailar's property.

IKEA Supply AG

Date:

/s/ Magnus Holmquist
Magnus Holmquist
Per Procura /s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________

Reviewed by, (IKEA Business owner)

Confirmed:

Date: 12 December 2013

Crailar Technologies, Inc.

/s/ Ken Barker
________________________

Ken Barker, C.E.O.

Confirmed:

Date: 18 December 2013

Schrurs NV

/s/ Serge Schrurs
________________________

Serge Schrurs

Exhibit 2

Price list

Grade of Individual	Fee per hour/day/week
Grade A - Basic Rate
Grade B - Advanced Rate

Exhibit 3

Governance Function

For IKEA:     [redacted]

For Crailar:     Jason Finnis

For Schrurs:     Serge Schrurs

Exhibit 1A

Crailar fiber property requirements

Fibre properties	Preferred value	Measurement method
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

Exhibit 1B Project scope and time planning

Fibre Consistency Development Plan - UPDATED November 12, 2013

Areas of Research and Development

[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted]

[redacted]

[redacted]	[redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]

Exhibit 1C: Resources available for project execution

Research Personnel

[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted]	[redacted]	[redacted] [redacted]
[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted]	[redacted] [redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted]

Equipment currently on order or to be purchased critical to the development plan

[redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]

[redacted]

Exhibit 1-2B Project scope and time planning

[redacted]	[redacted]	[redacted]	[redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]

EX-10 13 f8k12132013ex10-9.htm

Tripartite Agreement

AMONGST:

NATIONAL RESEARCH COUNCIL OF CANADAwhose head office address is:1200 Montreal Road, Ottawa, Ontario, K1A OR6, Canada(called "NRC")

AND:

CRAILAR TECHNOLOGIES, INC. (formerly Crailar Fiber Technologies, Inc.)a corporation under the laws of British Columbia, whose address is:305- 4420 Chatterton Way, Victoria, BC VSX 5J2, Canada (called "Licensee")

AND:

IKEA SUPPLY AGa corporation under the laws of Switzerland, whose address is:Grüssenweg 15, 4133 Pratteln, Switzerland (called "IKEA")

WHEREAS

(a)NRC and Licensee entered into a Licensing Agreement, signed by NRC on 25

October 2006 and amended on 25 March 2011, which provided the Licensee with the worldwide right to use NRC technologies for the extraction of hemp fiber and the enzymatic extraction of plant fiber (NRC file numbers 11816 and 12104 respectively); ·

(b) Licensee and IKEA have entered into a General Agreement, signed by the Licensee on 9th of December 2013, whereby the Licensee undertakes to supply IKEA's manufacturers with enzymatically processed Flax and/or Hemp fibers for spinning yarn (the "Components");

(c) Licensee and IKEA have entered into a Loan Agreement, signed by the Licensee on the 29^th of November 2013, whereby IKEA agreed to provide the Licensee with long- term funding to finance the Licensee's investment in capital equipment and working capital required in connection with supply of the Components for the end- production of IKEA articles;

(d)IKEA desires to ensure that it is able to maintain security of supply in the event that the Licensee is unable to meet its obligations to supply the Components;

In consideration of the mutual covenants hereunder, the parties agree as follows: Definitions:

NRC Intellectual Property Rights means Patents, copyright and other exclusionary rights in respect of the NRC Technology, and rights in respect of confidential information included in the NCR Technology.

NRC Technology means NRC inventions (not necessarily patentable), trade secrets, know- how, designs, written works, samples, biological material, and technical information created by or on behalf of the NRC relating to:

Extraction of Hemp Fibers - NRC File # 11816; and

Enzymatic Extraction of Plant Fiber- NRC File #12104

Termination Event means termination by NRC of the Licensing Agreement in accordance with Article 11 thereof, which includes, but is not necessarily limited to, (i) termination upon bankruptcy, insolvency, or assignment for the benefit of creditors, of or in respect of Licensee or any substantial part of its assets; (ii) termination upon preparation of a petition to have a receiver, administrator, liquidator, assignee, trustee, sequestrator, secured creditor or other similar official appointed over or in respect of Licensee; or (iii) termination if any other event occurs which under any applicable law would have an effect analogous to the situations described above, (a 'Termination Event').

1. At any time before the repayment in full by Licensee to IKEA of the outstanding loan, including interest, pursuant to the Loan Agreement and for two years thereafter, upon occurrence of a Termination Event, NRC hereby grants to IKEA a new license that allows IKEA to substitute Licensee with either an IKEA affiliate or a third party mutually agreed with NRC, and to permit such new licensee to operate IKEA's business related to the NRC Technology under substantially the same conditions as set out in the Licensing Agreement with the limitation stated below. In such case any payments owed by IKEA are to be paid directly to the NRC. Upon occurrence of a Termination Event, the NRC and IKEA shall enter into a new license agreement that adequately reflects the new situation, on similar terms and conditions as the Licensing Agreement and reasonably taking into account any changes resulting from the Termination Event. IKEA's license to the NRC Intellectual Property shall however be limited to applications relevant for enzymatically processed Flax and/or Hemp fibers for spinning yarn in which applications relevant for the product applications listed in Appendix 1 shall be granted on an exclusive basis until 31.12.2016 and non- exclusive thereafter.

2. Warranty of Licensing Rights: Each of NRC and Licensee warrants to IKEA that it has not previously granted any rights that would conflict with the rights granted in this amendment. Each of NRC and Licensee also warrants to IKEA that it is either the current owner or licensee (with power to sub-license) of the NRC Technology, as defined in the Licensing Agreement.

3. Notices: Any notice related to this agreement, including a notice of change of address, must be sent to the addresses stated at the beginning of this Agreement, either by registered mail, which is deemed to be effective notice five days after mailing, or by courier or facsimile, which are effective notices only when acknowledged by a courier's delivery receipt or by a specific non-automatic return facsimile transmission.

4. No Bribes: Each of Licensee and IKEA represents and warrants to NRC that no bribe, gift, reward, benefit or other inducement has been or will be paid, given, promised or offered directly or indirectly to any federal government official or employee or to a member of the family of such person, with a view to influencing the entry into this agreement or the administration of this Agreement.

5. No Direct Benefit: Each of Licensee and IKEA represents and warrants to NRC that the following individuals shall not derive a direct benefit from this Agreement:

(a) a current or former public office holder who is not in compliance with the Conflict of Interest Act, 2006, c.9, s.2;

(b) a current or former member of the House of Commons who is not in compliance with the Conflict of Interest Code for Members of the House of Commons;

(c) a current or former public servant who is not in compliance with the Values and

Ethics Code for the Public Service; or

(d) a current or former NRC employee who is not in compliance with NRC's Conflict of Interest Policy.

6. No Misrepresentation: Each of Licensee and IKEA represents and warrants to NRC that it, including its Directors, officers, employees or agents, has made no material misrepresentation, whether by omission or commission, with a view to the obtaining of this agreement.

7. No Contingency Fee: Each of Licensee and IKEA represents and warrants to NRC that it has not directly or indirectly paid or agreed to pay and that it will not directly or indirectly pay a contingency fee for the solicitation, negotiation or obtaining of this agreement to any person, other than an employee acting in the normal course of the employee's duties. In this section, "contingency fee" means any payment or other compensation that depends or is calculated based on the degree of success in soliciting, negotiating or obtaining this Agreement and "person" includes any individual who is required to file a return with the registrar pursuant to the Lobbying Act, R.S.C.,1985,c. 44 (4^th Supplement) as amended.

8. Choice of Law: This Agreement shall be interpreted according to the laws of the Province of Ontario and the laws of Canada in force there.

9. Counterparts and Facsimile Execution: This amendment may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one valid and binding agreement. A facsimile copy or portable document format (PDF) copy of an executed counterpart signature page will be as valid as an originally executed counterpart for purposes of signing this amendment.

4

SIGNEDby NRC in three copies at Ottawa, Ontario, CANADA

Date: Dec 17, 2013 NATIONAL RESEARCH COUNCIL OF CANADA Per: /s/ Roman Szumski
Name and title: Roman Szumski
Vice-President, Life Sciences

SIGNED by Licensee in three copies at Vancouver, British Columbia, CANADA

Date: 18^th December, 2013 CRAILAR TECHNOLOGIES, INC. Per: /s/ Ken Barker
Name and title: Ken Barker
Chief Executive Officer

SIGNEDby IKEA in three copies at Pratteln, Switzerland

Date: _____________________________ IKEA SUPPLY AG Per: /s/ Magnus Holmquist
Name and title: Magnus Holmquist
Per Procura Per: /s/ Sven Skadinn
Name and title: Sven Skadinn
Per Procura

Appendix 1

Application to which IKEA shall be granted an exclusive license within the - Home Textile

Application, i.e.:

- Upholstery fabrics (including slip covers)

- Mattress tickings

- Bed linen

- Quilts & pillows

- Decorative cushion covers

- Rugs & mats (not wall to wall, but area rugs)

- Kitchen textiles

- Table textiles, in the woven segment only

- Blankets & throws

-Chair pads

- Curtains, blinds and panels

- Retail fabrics by the meter

- Bed spreads

-Construction textiles-boxes and storage applications

- Office textile

EX-10

GENERAL AGREEMENT

Entered into by and between

IKEA Supply AG,
Grüssenweg 154133 PrattelnSwitzerland

Hereinafter referred to as "IKEA"

and

Crailar Technologies Inc.,
Supplier number 22780Suite 305 - 4420 Chatterton WayVictoria BC V8X 5J2CANADAIncorporation number: BC0572867Hereinafter referred to as "Seller"

1.Preamble

1.1IKEA of Sweden AB has developed a well co-ordinated range of furniture furnishings and thereto related products for interior decoration, optimal for

production, to be distinguished by "Design and Quality IKEA of Sweden". Articles and components specified in Appendix 1, hereinafter referred to as the "Components" are used as parts of articles included in such range.

1.2The IKEA group of companies has various suppliers throughout the world that needs access to the Components. Such suppliers are hereinafter referred to as "Manufacturers, and are specified by IKEA from time to time. IKEA has been assigned by the Manufacturers to source and make available the Components for the Manufacturers, and the IKEA Group has decided to concentrate manufacturing of components. IKEA shall be entitled to amend the list of Manufacturers from time to time, at its own discretion.

1.3This General Agreement on Components establishes the terms and conditions for making the Components available to the Manufacturers, subject to specific agreements by and between Seller and each Manufacturer. Seller shall not be entitled to assign any of his rights or obligations under this agreement and/or any agreement with the Manufacturers to a third party without the prior written consent of IKEA. IKEA shall have the right to assign any of its rights or obligations, wholly or partially, to any affiliated company to IKEA without the prior consent of Seller.

2.Orders by Manufacturers

2.1Seller hereby undertakes to supply to Manufacturers the Components, on the terms and conditions specified herein and according to Manufacturers orders from time to time. Deviations from the terms and conditions contained herein may be agreed in a Delivery Agreement between the Manufacturer and Seller.

2.2As the Components will be manufactured according to specifications from IKEA, and the incorporeal rights to the Components belongs to IKEA of Sweden AB, the parties agree that IKEA has the exclusive right to define Manufacturers, and their respective share, of the Components available from the Seller.

2.3The Manufacturer shall be entitled to issue orders with reference to this agreement by electronic message, fax, letter or other form of communication agreed by Seller and Manufacturer.

3.Prices and Terms of Delivery

3.1The terms of delivery specified below shall be valid should Seller and

Manufacturer not agree on deviating terms.

3.2The prices shall be valid FCA Sellers premises as per appendix 1, according to incoterms 2000, unless otherwise agreed.

4.Furnished Materials and Handling Aids

4.1If IKEA furnishes materials, handling materials and/or equipment ("Materials") to Seller, all such Materials are to be used exclusively for the manufacture and/or delivery of products to IKEA. All Materials provided by IKEA shall remain

the sole property of IKEA unless paid in full by the Seller. Any unused supply of such Materials shall be returned to IKEA immediately upon IKEA's request. Seller shall mark and store such Materials so the Materials belonging to IKEA do not become incorporated into or commingled with any property of Seller.

4.2Seller shall upon receipt inspect Materials furnished in order to ensure that the Materials correspond to agreed quantities and are free from defects. Any shortages or defects in Materials furnished shall immediately be notified in writing by Seller to IKEA. After receipt of Materials the risk regarding the Materials shall be borne by Seller.

5.Minimum quantity

5.1IKEA will advise manufacturers to place order of no less than 1 x 20ft container, equal to approximately 20,000 lbs

6.Order-, Shipping-, and Delivery- Confirmation

6.1Seller shall promptly confirm all orders within 5 working days from receipt of the order. Seller shall within 4 weeks dispatch all Components in the agreed manner. Seller shall notify dispatch consignment details to Manufacturer in written or electronic form on the date of dispatch.

6.2If the Seller cannot perform delivery as agreed or if a delay in delivery is likely to occur, the Seller shall immediately inform the Manufacturer hereof in writing, indicating the cause of the delay, the new time of delivery and the means of transportation to be used. The Seller shall in such case deliver the goods by such means of transportation, which so far as possible will reduce the delay. All additional costs for such means of transportation shall be borne by the Seller.

6.3Seller shall forthwith obtain and supply certificates and/or declaration of origin, including duplicates thereof to Manufacturer in a form required by Manufacturer at Sellers own cost and expense.

7.Quality, Insurance and Warranty

7.1Seller warrants that each Component will be produced in accordance with the specifications established by IKEA of Sweden, and the Product Description listed in Appendix 1 hereto or any later issued version of the Product Description which has been, or will be, handed over to Seller by IKEA.

7.2IKEA and/or the Manufacturer or their appointed representatives shall be entitled to be present, monitor and review all Sellers facilities (as well as its sub-contractors) at any time, and shall have the right to request any relevant information in relation thereto. IKEA may, in its sole discretion, decide and undertake quality inspections, either by conducting tests at Seller's premises or by testing samples sent to it by Seller/Manufacturer.

7.3Should IKEA or Manufacturer not have forwarded specific package instruction, Seller shall ensure that the Components are packed to withstand delivery, damage and deterioration before they reach the Manufacturer. Seller shall only mark the products and packaging in accordance with instructions from IKEA, including use of the IKEA trade name and trademark. Nothing herein shall be interpreted as granting Seller a right or a license to use the IKEA trade name or the IKEA trademark.

7.4Prior to delivery, the Seller shall provide evidence that quality control has been performed. The Seller shall keep all such documents and copies shall be sent to the Manufacturer and/or IKEA on demand.

7.5Seller remains liable at all times for design, materials or workmanship of any sub-supplier.

7.6Seller warrants all Components delivered to be free from all defects and that design, materials and workmanship conform strictly to the specifications furnished or otherwise presented or agreed. This warranty shall continue in full force notwithstanding inspection, acceptance and delivery of the Components and payment for the Components.

7.7Sellers liability is limited to defects which appear within a period of 6 months from the date on which the product is received by Manufacturer. This shall not apply in the case of defects caused by sellers negligence when there shall be no time limit. This is also not applicable after the fibre has been transformed into yarn/textile products at the manufacturer.

7.8Seller warrants that in complying with its obligations hereunder, it will at all times comply with all relevant national and international laws, conventions, regulations and provisions applicable in the country of production and ultimate retail destination. Seller further undertakes to, at all times, fulfil environmental-, working-, social- and other conditions set forth in "The IKEA Way on Purchasing Home Furnishing Products".

7.9Seller undertakes to indemnify and hold harmless IKEA and/or Manufacturer for any and all damages, claims, costs and expenses which IKEA and/or Manufacturer might incur out of or in connection with any defect or non- conformity to specifications of any Component supplied by Seller hereunder.

8.Complaints and Defects

8.1 Manufacturer shall notify Seller in writing of any defects that have appeared, including a description of the defect. Any complaints are to be handled directly between Seller and Manufacturers.

8.2Seller is entitled to inspect the defective Component at its own cost at Manufacturer's site. If Seller fails to exercise this right within five days, calculated from the date of notice under Clause 8.1, Manufacturer may return the defective Component to Seller at Seller's risk and expense and Seller shall be deemed to have accepted the Components as defective.

8.3Shipments by Seller considered defect or incorrect in their entirety, may be refused by the Manufacturer and returned at the cost and expense of the Seller. Should shipment be considered defect or incorrect in part, Manufacturer has the right to separate the defective products at the expense of the Seller.

8.4Subject to Clause 7.7, Seller shall remedy any defect in the Components without delay and at its own cost and expense, including costs of transportation, and when a defect has been remedied, Seller shall be liable for defects in the repaired or replaced Component under the same terms and conditions as those applicable to the original Component.

8.5In case of defects, a replacement delivery shall be made by Seller in time to be dispatched within [redacted].

9.Payment conditions

9.1If not otherwise agreed directly with Manufacturers, terms of payment shall be

L/C or D/P on sight. For avoidance of doubt, IKEA does not guarantee any payment to be made by Manufacturers.

10.Forecasts

10.1IKEA will on a yearly basis provide Seller with a forecast of estimated future demands of the Components, specified in LB,s per article number. The parties agree and understand that such forecast is made solely for the benefit of the Seller in order to provide a guide for Sellers production planning purposes only, and is not a guarantee from IKEA on future order volumes placed by Manufacturers.

Quantities can vary by +/-20% to agreement due to unforeseen sales fluctuations. Seller should be ready to follow these changes in terms of production capacity and raw materials needs.

Manufacturer will provide Seller with a forecasted need covering a rolling 6 months period. This is forecast only with the sole purpose to allow seller to plan production.

11.Reporting

11.1Seller shall supply statistics of volumes classified by type and dimension to IKEA every 4 months commencing January 1 each year.

12.IKEA Models

12.1IKEA of Sweden AB ("IoS") has created and developed a unique range of furniture, furnishings and related products for interior decorating ("IKEA

Range"). The IKEA Range consists mainly of models developed by IoS, or any of its affiliated companies, ("IKEA Models"). IKEA Models and/or model concepts, improvements or modifications thereof or further developments of the underlying idea behind IKEA Models shall remain the sole property of IoS and be vested in the intellectual property rights of IoS, regardless of which party has suggested or developed such improvement, modification or further development. If a model is not considered an IKEA Model, this section does not apply.

12.2All samples, drawings, specifications or other documents relating to IKEA Models or production thereof submitted to Seller shall remain the sole property of IoS, and may not be used for any other purpose than production of IKEA Models and/or copied or reproduced without the consent of IKEA and shall be promptly returned to IKEA, including all copies thereof, upon instruction by IKEA.

12.3Seller agrees that IKEA Models are intended for the exclusive sale and marketing by thereto authorized IKEA stores, and undertakes not directly or indirectly manufacture, exhibit, sell or supply IKEA Models to any other party than IKEA or the Manufacturers.

12.4Seller may not directly or indirectly manufacture, exhibit, sell or supply any plagiarism of an IKEA Model. Plagiarism shall mean any product which is based on an IKEA Model and/or which appears to IKEA, in its reasonable judgment, with regard to design, material or workmanship, to be the same or similar to an IKEA Model.

13.Intellectual Property Rights

13.1Notwithstanding anything contained in these terms, Seller shall not at any time acquire or have been granted a right to use any rights whatsoever, of whatever kind they may be, to any intellectual property right belonging to IKEA.

13.2Seller shall be solely responsible for any infringement by a product - other than an IKEA Model according to Clause 12 - in any intellectual property right of a third party and undertakes to indemnify and hold IKEA and Manufacturers harmless for any claims or loss in connection with an infringement.

14.Term and Termination

14.1This Agreement shall be in effect up until and including December 31 2016 when it shall expire without either party having to give notice thereof. Notwithstanding the foregoing, IKEA may in its sole discretion extend the contract maximum two (2) times at thirty six (36) month each time by notifying Seller no later than six (6) month prior to expiration of any term of the Agreement.

14.2Either party shall be entitled to terminate this Agreement to expire at any time by notice in writing to the other party upon occurrence of any of the following events which if such breach is remediable is not cured within thirty (30) days after receipt of written notice thereof:

i) In case of repeated delays in delivery, low service level, repeated claims, or insufficient product quality. The product quality requirement is valid from December 1st 2014 according to the Crailar fiber property requirement, see appendix 1; or

ii) If either party becomes insolvent, enters into liquidation (whether compulsory or voluntarily) otherwise than for the purpose of amalgamation or reconstruction or shall compound with its creditors or have a receiver or any external administrator appointed over all or any part of its assets or hall take or suffer any similar action in consequence of debt.

15.Severability

15.1If any provisions of these conditions or any portion thereof is or becomes invalid or unenforceable, the remainder of these conditions shall not be affected andsuch provisions shall be valid and enforceable to the fullest extent.

16.Disputes and Applicable Law

16.1The construction and validity of this Agreement shall be governed by the Substantive legislation (without regard to its conflict of law regulations) of Switzerland.

16.2All disputes arising from, or connected with this Agreement, shall be finally settled under the rules of Conciliation and Arbitration of the International Chamber of Commerce, by one or more arbitrators appointed according to said Rules. The Arbitration shall take place in Paris, and the proceedings shall be performed in the English language.

17.Confidentiality

17.1     Seller may not during the term of this agreement as well as thereafter disclose to any third party any technical or commercial information pertaining to IKEA and shall not use such information other than for the agreed purpose. Seller undertakes to ensure that any sub-supplier engaged by Seller for production of IKEA Models undertakes this provision.

This General Agreement has been drawn up in two identical copies, whereof the two parties have received one copy each.

IKEA Supply AG /s/ Magnus Holmquist Signature Magnus Holmquist Printed name Date: 21.01.2014	Crailar Technologies Inc. /s/ Ken Barker Signature Ken Barker, CEO Printed name Date: 9th December, 2013
/s/ Sven Skadinn Signature (2) Sven Skadinn Printed name Date: 21.01.2014

Reviewed by, Initials

Components information

Appendix 1

IKEA art.name	Components description	Sale Price EURO/KG	Security stock
Flax/Hemp spinning Fiber	Enzymatically processed Flax and/or Hemp fibres for spinning yarn Fibres are available in either bleached or natural colour. Colour will be defined at time of order by manufacturer. See below table "Crailar fiber property requirements"	[redacted]	10% annual FC

Crailar fiber property requirements

Fibre properties	value	Measurement method
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

Valid for orders placed as of December 1st 2014

Note: Ordering and distribution of Components supplied by Seller for the use in IKEA

products will be coordinated between Seller and Manufacturer.

IKEA Supply AG /s/ Magnus Holmquist     /s/ Sven Skadinn
Signature Magnus Holmquist     Sven Skadinn
Printed name Date: 21.01.2014 CRAILAR Technologies Inc /s/ Ken Barker
Signature Ken Barker, CEO
Printed name Date: 9^th December, 2013

Reviewed by, Initials

Date

Crailar locations and structure

Appendix 2

Legal Entities

Name	Address
Crailar Technologies Inc	Head Office
	4420 Chatterton Way
	Suite 305
	Victoria, BC
	V8X 5J2 CANADA
Name	Address
Crailar Technologies Inc	US Office
	696 McVey Avenue
	Suite 202
	Lake Oswego, OR
	97034 USA

Production/Distribution Units

Name	Address
Schrurs NV	BE
	Schrurs
	Oostkaai 46
	B-8900 Ieper
	Belgium

Contact Details

IKEA Foreign Trade Ltd. Co.
Icerenkoy mahallesi Degirmenyolu cad.Asia Ofis Park binasi B Giris No: 28 kat: 134752 Atasehir Istanbul - TURKEY Tel : +90 216 544 22 00

CRAILAR Technologies Inc696 McVey Ave. Suite 202Lake OswegoOR 97034USA

Email: Jay.nalbach@crailar.comPhone: 001 503 3873941Fax: 001 250 6588586

Appendix 3

"[redacted]",

Formulas for calculating price

[redacted]

[redacted]

[redacted]

						Target	Maximum sales price Price
						sales
						price
Year	Targeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted
	variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
	cost	Euro/kg	cost			Euro/kg	today
	Euro/kg		Euro/kg				(ceiling)
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEY OND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

Year     Targeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted	Price
variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
cost	Euro/kg	cost			Euro/kg	today
Euro/kg		Euro/kg				(ceiling)
[redacted] [redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEY OND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

YearTargeted	Targeted	Targeted	Mgmt fee	Mark-up	Targeted	Price
variable	fixed cost	total plant	Euro/kg	Euro/kg	price	Euro/kg
cost	Euro/kg	cost			Euro/kg	today
Euro/kg		Euro/kg				(ceiling)
[redacted] [redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEYOND THE INITIAL TERM, THE PARTIES AGREE AS FOLLOWS:

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

UNDER THE CONDITION THAT IKEA DECIDE TO PROLONG THE AGREEMENT BEYOND THE FIRST PROLONGATION TERM, THE PARTIES AGREE AS FOLLOWS:

Calendar Year [redacted]

Management fee[redacted] Mark Up[redacted]

Appendix 3

In no event, the Price may exceed the Maximum sales price during the commitment period [redacted].

In the event that the market forces move feedstock prices for flax/hemp and consequently increase the cost for the Seller to manufacture the Crailar fibre prices to levels beyond Euro [redacted] during all periods except for the period [redacted], the parties shall in good faith discuss a potential increase in the Maximum sales price, to agree no later than [redacted] and [redacted] respectively.

Appendix 4

Agreement

IKEA is interested in Seller developing it's business to grow and establish a stable financial foundation. In return for making significant investments in time and financial means to develop applications for the components within the homefurnishing industry, together with the long term agreement and financing support, Seller hereby undertakes to solely supply the products specified in Appendix 1 to by IKEA appointed Manufacturers, and not to supply to others such products for consumption within the following fields of application:

Home Textile Application:

- Upholstery fabrics (including slip covers) - Excluding high end custom furniture (as agreed by IKEA on a case by case basis.)
- Mattress tickings
- Bed linen
- Quilts & pillows
- Decorative cushion covers
- Rugs & mats (not wall to wall, but area rugs)
- Kitchen textiles
- Table textiles, in the woven segment only
- Blankets & throws
- Chair pads
- Curtains, blinds and panels
- Retail fabrics by the meter
- Bed spreads
- Construction textiles-boxes and storage applications
- Office textile

This appendix 4 is only applicable should IKEA fullfill the commitment to Capacity as stated in the Capacity Commitment documentation, Appendix 5.

If IKEA prolongs the commitment according to 14.1 the volumes in the capacity commitment are set at 15,000 tons +/- 20% for the first time period of 36 months and 20,000 tons +/- 20% for the second time period of 36 months for appendix 4 to be applicable.

This volume is estimated not to exceed 30% of the Sellers total capacity according to its growth plan.

Appendix 5

Agreement on Sales and Purchase Volumes

1.     Scope

1.1     The purpose of this General Agreement is for IKEA or its nominated Manufacturers to purchase components from Seller and for Seller to sell such components to IKEA or its nominated Manufacturers in order ensure sufficient and secure deliveries thereof. Furthermore, IKEA and Seller shall by entering into the co-operation and business relationship hereunder make its best joint efforts to develop and improve the competitiveness of Seller and IKEA.

2.Sales and purchase volumes

2.1IKEA agrees to procure for purchase through appointed Manufacturers, components from Seller and Seller agrees to sell components to Manufacturers

nominated by IKEA within a specified production type (hereinafter referred to as

the "Components") and pursuant to any Committed Value, as defined in the

General Agreement, at least up to a value and within the periods specified below.

CY 2014/15/16Agreed Value: 7.000 tonnes fibre in total for the total period.

The Agreed Value as stated above subtracted with 20 percent shall be defined as the "Minimum value"; and the Agreed Value added with 20 percent shall be defined as the "Maximum Value". Seller shall make reasonable efforts to carry out deliveries of the Products ordered by Manufacturers in excess of the Maximum Value, maintaining a price level which at least complies with the provisions set forth in Article 3 below.

2.2If at the end of the last CY specified above IKEA's balance shall show a deficit in relation to the Minimum Value, calculated as per the foregoing paragraphs of this Article 2, then IKEA and Seller shall, upon written demand of Seller within [redacted] days of the expiration of the last FY specified above use its best endeavours to find a proper and reasonable solution in good faith.

2.3IKEA's Minimum Value obligations provided for above are subject to Seller fulfilling all its obligations towards IKEA with respect to quality, timely deliveries and in all other respect hereunder. In the event that Seller should in any year fail to fulfil any of its material obligations hereunder, then IKEA shall, without prejudice to any other rights of IKEA, automatically be released from its Minimum Value obligation.

2.6     A material obligation for Seller hereunder, which has substantial effect on the business of IKEA and Manufacturer's, is included but not limited to the fulfilment by Seller of the agreed quality level, delivery security, price and requirements stated in IKEA way on purchasing Home Furnishing Products.

3.     Price etc

3.1     The main area of production hereunder will be Enzamatically processed Flax and/or Hemp fibres for spinning yarn and are available in either bleached or natural colour (hereinafter referred to as the "Production Type"). The price to be paid for the deliveries of the Products shall be as set out in the General Agreement.

3.2IKEA is entitled to amend the list of Products by adding or deleting products thereto, provided that such products are included by IKEA in the Production Type. Any amendment is subject to separate price negotiations between the parties.

3.3Seller undertakes to IKEA as an average to [redacted] for each CY as specified in the General Agreement.

4.     Prior Termination

4.1.     Notwithstanding anything to the contrary stated herein, IKEA may at any time and without compensation to the Seller terminate this Agreement to immediately expire and cancel existing orders, should the Seller be subject to change of ownership, or become insolvent, or a receiver is appointed for Seller, or for a substantial portion of its assets, or if Seller commits a breach of

material or serial nature of any of the provisions set forth herein, in the General Agreement or in any delivery agreement with the Manufacturers, which if such breach is remediable is not cured within fifteen (15) days after receipt of written

notice thereof.

IN WITNESS WHEREOF, this Agreement has been executed in duplicate, each party taking one (1) copy.

IKEA Supply AG /s/ Magnus Holmquist Signature Magnus Holmquist Printed name Date: 21.01.2014	Crailar Technologies Inc. /s/ Ken Barker Signature Ken Barker, CEO Printed name Date: 9th December, 2013
/s/ Sven Skadinn Signature (2) Sven Skadinn Printed name Date: 21.01.2014

Reviewed by, Initials

EX-10

DATED                 2013-12-13

IKEA SUPPLY AG

and

CRAILAR TECHNOLOGIES, INC.

and

SCHRURS NV

___________________________________________

FRAMEWORK AGREEMENT

DEVELOPMENT WORK

___________________________________________

CONTENTS

1	DEFINITIONS	3
2	ENGAGEMENT	4
3	CALL-OFF PROCESS	5
4	TERM OF AGREEMENT, REVOCATION AND SUSPENSION OF ASSIGNMENT ORDER	5
5	PERFORMANCE	5
6	FEE AND PAYMENT	6
7	COST CONTROL	7
8	CONFIDENTIALITY	7
9	INTELLECTUAL PROPERTY RIGHTS	8
10	LIABILITIES ETC	9
11	ASSIGNMENT AND SUBCONTRACTING	10
12	GOVERNANCE OF THE RELATIONSHIP	10
13	TERMINATION	11
14	SEVERABILITY	11
15	ENTIRE AGREEMENT	11
17	GOVERNING LAW AND DISPUTE RESOLUTION	11
EXHIBIT 1		1
EXHIBIT 2		1
EXHIBIT 3		1

THIS AGREEMENT is made on December 13^th, 2013

BETWEEN

IKEA Supply AG, Grüssenweg 15, 4133 Pratteln, Switzerland ("IKEA");

and

Crailar Technologies, Inc., ("Crailar") (formerly Crailar Fiber Technologies Inc.),

4420 Chatterton Way
Suite 301
Victoria, BC
V8X 5J2 CANADA
Incorporation number BC0572867

and

Schrurs NV, Pijpestraat 18, 8560 Wevelgem, Belgium ("Schrurs")

Crailar and Schrurs individually a "Development Partner" and together the "Development Partners". IKEA, Crailar and Schrurs individually a "Party" and together the "Parties".

BACKGROUND

(A)     The Development Partners possess valuable expertise in dyeing, bleaching, processing and treatment of natural fibers for the textile industry.

(B)     IKEA wishes to retain the Development Partners and the Development Partners have agreed to provide development services to IKEA upon the terms and subject to the conditions set out in this Agreement.

The Parties agree as follows:

1     DEFINITIONS

1.1     In this Agreement, the following definitions shall apply:

(i)     "Agreement" means this framework agreement, its Exhibits as well as any Assignment Orders called off under this framework agreement;

(ii)     "Assignment Order" means each separate assignment order issued by IKEA and confirmed by the relevant Development Partner(s);

(viii)     "Background Information" means any Intellectual Property owned or controlled by either Party when entering this Agreement;

(iv)     "Commencement Date" means 2013-12-03;

(v)     "Deliverables" means the deliverables to be created and provided by the Development Partners to IKEA during the Development Work;

(vi)     "Development Work" means development work contracted to be supplied under this Agreement;

(vii)     "Fee" means the fee to be paid by IKEA to the Development Partners for the performance of the Development Work in accordance with section 6 and as detailed in the relevant Assignment Order;

(viii)     "Foreground Information" means all Intellectual Property generated in the execution of this Agreement;

(ix)     "Group Company" means:

a)     any Holding Company of IKEA at any time;

b)     any Subsidiary of IKEA or of IKEA's Holding Company at any time;

c)     any Associated Company.

(x)     "Intellectual Property" means all patents, trademarks, registered designs, design rights, copyrights, database rights, rights in computer software, rights in confidential information, trade secrets, inventions and know-how, logos and trade dress (in each case whether or not registered), any applications for or rights to apply for any of the above, any other intellectual property rights recognised in any part of the world and any accrued rights of action in respect of any of the above;

(xi)     "Project Leader" means a person appointed by IKEA to whom the Development Partners shall report during the Development Work;

(xii)     "Term" means the period set out in section 4.1 and subject to earlier termination as herein provided;

(xiii)     "Works" means any and all works, materials, information, data, designs, discoveries, inventions, developments, improvements, products, processes, methods, formulas or programs which are made, created, devised, developed or discovered by the Development Partners or their employees specially and solely for the execution of the Development Work.

2     ENGAGEMENT

2.1     IKEA shall engage the Development Partners and the Development Partners shall pursue Development Work to IKEA on the terms set out in this Agreement.

2.2     Each of the Development Partners warrants that by entering into this Agreement it will not be in breach of any obligations to or agreements with any third party.

3     CALL-OFF PROCESS

3.1     At any time during the Term, IKEA shall be entitled to request Development Work from one or both Development Partners and each Development Partner shall be entitled to either accept or deny a request it received from IKEA, Once the arrangements for the requested Development Work have been agreed by the relevant Parties, IKEA shall place an Assignment Order which shall be substantially in the form attached hereto as Exhibit 1.

3.2     In order to be valid, an Assignment Order shall be confirmed by the relevant Development Partner in writing.

3.3     Any confirmed Assignment Order shall be valid and binding even if delivery dates according to such Assignment Order are beyond the date of expiry or termination of this Agreement.

3.4     In the event of any conflict between the terms and conditions of this Agreement and the terms of any particular Assignment Order, the terms of such Assignment Order shall prevail, but only to the extent of such conflict.

3.5     Nothing in this Agreement shall oblige IKEA to place Assignment Orders with the Development Partners, or conversely, the Development Partners to accept such Assignment Order from IKEA. Hence, no such obligations shall arise upon the Parties unless an Assignment Order is signed by both Parties.

4     TERM OF AGREEMENT, REVOCATION AND SUSPENSION OF ASSINGEMENT ORDER

4.1     This Agreement shall begin on the Commencement Date and, subject to the provisions of this Agreement, shall continue until terminated by either Party giving no less than 6 months' prior notice.

4.2     IKEA may, at its option, either revoke or suspend the performance of a particular Assignment Order or any part thereof at any time by giving written notice to the relevant Development Partner(s).

4.3     In the event of revocation or suspension of the performance of a particular Assignment Order, IKEA shall pay the relevant Development Partner according to the relevant Assignment Order in proportion to the work already carried out and for reasonable and unavoidable costs for putting the revocation or suspension into effect.

4.4     Notwithstanding any revocation or suspension of an Assignment Order, all Work up to the revocation or suspension, and the Intellectual Property to such Work shall be governed by the provisions of this Agreement.

5     PERFORMANCE

5.1     The Development Work shall be performed at a location as set out in each separate Assignment Order. If travel outside the place of performance is instructed by the Project Leader, travel expenses shall be reimbursed in accordance with the Assignment Order.

5.2     When performing the Development Work, the Development Partners shall procure:

(i)     that the Development Work is performed by dedicated qualified personnel that are using all reasonable skill, expertise and care in accordance with generally recognised commercial standards and practices;

(ii)     to comply with reasonable requests and instructions of IKEA;

(iii)     to use its/their best endeavours to promote the interests of IKEA and the Group Companies;

(iv)     to keep IKEA informed of its/their progress as set out in the Time tables/Project Plan of each particular Assignment Order or as reasonable requested by IKEA;

(v)     to attend such meetings and reviews in relation to the provision of the different Development Work as set out in the applicable Assignment Order or as reasonably requested by IKEA; and

(vi)     to comply with all relevant laws and regulations, codes and other similar provisions so far as they affect the Development Work.

5.3     The Development Partners undertakes to place the resources more closely defined in the relevant Assignment Order for the Development Work.

5.4     The Project Leader for each Assignment Order to whom the Development Partners shall report during the Development Work at issue, is specified in the relevant Assignment Order. The Project Leader may gradually define the content and the extent of the Development Work in writing under the written approval of the relevant Development Partner(s).

5.5     IKEA shall have the right during normal working hours to inspect the progress of the Development Work at each Development Partner's premises.

6     FEE and payment

6.1     In consideration of the provision of particular Assignment Order, IKEA shall pay to the Development Partners a Fee as stated in the relevant Assignment Order. However, the fixed fees to be applied as a base for the remuneration shall follow from the Price List, Exhibit 2.

6.2     Each Development Partner shall issue an invoice at the end of each calendar month in respect of the Development Work provided during that month or in accordance with the invoicing schedule set out in the relevant Assignment Order. Any IKEA approved expenses shall be invoiced monthly, at cost. The invoice shall be sent to the invoice address of IKEA: IKEA of Sweden AB, Box 317, SE-83023 Hackas and shall be marked with a contact name and cost centre number as communicated by IKEA.

6.3     IKEA shall pay the Fee within 30 days of receipt of the properly drawn up invoice.

6.4     No other remuneration than stated above shall be payable for any work performed under this Agreement.

7     COST CONTROL

7.1     The Development Partners undertake to keep appropriate records of all IKEA approved costs incurred in the course of this Agreement in the following manner:

• manpower: detailed time sheets indicating name and Grade of the each Development Partner's employees, involved, if diversified in price list, and time spent by such employees exclusively for the purpose of this Agreement

• material, at cost: invoices

• other expenses at cost: invoices or other evidence of expenditure.

7..2     The Development Partners shall retain the documents and shall on request submit a list thereof with each respective invoice to IKEA, or as otherwise instructed by IKEA.

8     CONFIDENTIALITY

8.1     The Parties acknowledge that in the course of the provision of the Agreement, each Party and their employees will have access to Confidential Information belonging to the other Parties. The Parties also acknowledge that the disclosure of such trade secrets or confidential information to an actual or potential competitor of one Party is likely to cause serious damage to its business and cause immense harm.

8.2     Accordingly, the Parties agree that they shall keep secret and confidential all Confidential Information, and shall not at any time whether during the Term or after the termination of this Agreement (except in the proper provision of the Development Work, or with the express written consent of the other Parties) disclose such information or permit it to be disclosed to any third party or otherwise use such information or permit it to be used.

8.3     For the purposes of this Clause, "Confidential Information" means:

(i)     all information which relates to the business, finances, affairs, products, manufacturing methods, processes, equipment or activities of a Party, any Group Company or Inter IKEA Systems BV which is designated by a Party or any Group Company as confidential; and

(ii)     all information relating to the matters set out above which comes to the knowledge of a Party in the course of the provision of the Development Work and which, by reason of its character and/or the manner of its coming to his knowledge, is evidently confidential or is evidently deemed confidential by a Party; and

(iii)     all information which relates to the business, services, finances, affairs, products, processes, equipment or activities of actual or potential suppliers or other persons which has been given to either Party or any Group Company in confidence.

8.4     The obligations of confidentiality set out in this section 8 shall not apply to Confidential Information which:

(i)     is independently developed by a Party;

(ii)     at the time of its disclosure is already in the possession of the Recipient or thereafter is properly obtained from any third party;

(iii)     is or becomes publicly available other than through a breach of this Agreement by a Party; and/or

(iv)     is required to be disclosed by law or regulations.

8.5     Each Party shall, in case of having a legitimate interest, at any time and in any event on the termination of this Agreement (whether lawful or otherwise) upon written request:

(i)     immediately deliver to the other Party without keeping any copies, all documents, materials, correspondence, and information (on whatever media and wherever located) relating to the business or affairs of the other Party or any Group Company or suppliers and containing Confidential Information.

8.6     Each Party shall secure that all of their employees performing the Development Work and any subcontractors hired by a Development Partner under this Agreement are bound by confidentiality equal to the terms set out in this section 8.

8.7     The Development Partners shall not disclose any confidential information outside the scope of the Development work to be carried out by the Development Partners, i.e.the industrial process related to the patented enzymatic process, to IKEA and IKEA will therefore regard all information outside the scope mentioned above from the Development Partners as non-confidential unless IKEA is notified otherwise in writing, in which case this section 8 shall apply mutually in respect of such confidential information, upon agreement in writing between the Parties.

8.8     The Development Partners shall not, via press releases, customer/client compilations, (including but not limited to, reference on the website of a Development Partner), present IKEA as a client or customer of a Development Partner unless prior written approval has been obtained from IKEA.

Notwithstanding any such written approval, reference should always be in a non-excessive manner and gives no right to use the IKEA logotype.

8.9     The provisions of this section 8 shall survive the expiry or termination of this Agreement and any Assignment Order for a period of ten (10) years.

9     INTELLECTUAL PROPERTY RIGHTS

9.1     Except for the National Research Council of Canada's rights to use for government purposes certain additions or changes to the NRC technology produced by Crailar, IKEA or anyone, to whom IKEA may assign its rights, shall be the exclusive owner of all Works and Foreground Information created during the provision of the Development Work. Notwithstanding the above, the Parties may stipulate in the individual Order that Crailar, or anyone to whom Crailar may assign its rights, shall be the exclusive owner of the Works and Foreground Information.

9.2     Where IKEA will be the exclusive owner of the Works, IKEA shall have the right to revise, further develop, adapt, alter, display, copy, manufacture, sell, advertise, or otherwise dispose of the Works in any way IKEA deems suitable for technical, business, economic or other reasons, including moving or starting up production at/to other suppliers.

9.3     The Development Partners shall give full disclosure to IKEA of all Works which are created or developed under this Agreement.

9.4     All Background Information shall remain the whole and exclusive property of the Party who provided such information.

9.5     Unless otherwise is stated in the individual Order, notwithstanding section 9.4 above, IKEA shall be entitled to, in perpetuity, use such Background Information owned by the Development Partners needed for the functionality or revision, further development, adaption, alteration, display, sale, advertisement or other disposition of the Works, including moving or starting up production at/to other suppliers, and the Development Partners undertake to provide IKEA with a royalty free, worldwide, non-exclusive, irrevocable and sub-licensable license to unlimited use of such Intellectual Property embodied in the Background Information. Upon request, the Development Partners shall furnish IKEA with necessary documents confirming such license rights.

9.6     IKEA, or any one to whom IKEA may assign the rights, may at its own discretion carry out registrations of Intellectual Property rights capable of registration emanating from the Foreground Information. The Development Partners shall procure that their employees and any subcontractors hired by a Development Partner under this Agreement will execute and deliver to IKEA, such documents as may be necessary to obtain, defend and enforce the Intellectual Property.

9.7     Notwithstanding anything contained in this Agreement, the Development Partners shall not at any time acquire any rights whatsoever; of whatever kind they may be, to any Intellectual Property right belonging to IKEA, any Group Company or Inter IKEA Systems B.V. or IKEA of Sweden AB.

9.8     The provisions of this section 9 shall survive the expiry or termination of this Agreement and any Assignment Order.

10     LIABILITIES ETC

10.1     Each Development Partner is responsible for any direct damage incurred by IKEA by reason of any act or omission of such Development Partner or such Development Partner's employee or by any subcontractors hired by such Development Partner under this Agreement and resulting from or in connection with the Deliverables or Development Work under this Agreement. Each Development Partner's aggregated liability for each Assignment Order shall be limited to an amount equivalent to the Fees paid by IKEA under relevant Assignment Order. Notwithstanding the above, no limitation of liability shall apply to damages relating to a Development Partner's willful misconduct or gross negligence with exception that the Development Partners shall never be responsible for indirect damages.

10.2     The Development Partners are responsible for that the final Deliverables of the Development Work do not infringe any third party's Intellectual Property rights and shall, during the execution of the Development Work, inform IKEA of any potential Intellectual Property infringement risks the Development Partners may foresee. In

case of an act of willful misconduct or gross negligence of a Development Partner, such Development Partner shall hold harmless and indemnify IKEA and/or any Group Company from and against any claim, suit, judgment or award and pay all damages and costs connected therewith, which may be made against or imposed on IKEA or any Group Company by reason of any result of the Development Work or any part thereof constituting an infringement of any Intellectual Property right of a third party.

10.3     IKEA's approval of the Development Work or parts thereof shall not release the Development Partners from their liability hereunder.

10.4     The provisions of this section 10 shall survive the expiration and any termination of this Agreement.

11     Assignment and subcontracting

11.1     The Development Partners may not, without the prior written permission of IKEA, transfer any rights or obligations under this Agreement to any third party. IKEA shall be entitled to transfer its rights and obligations, wholly or partially, under this Agreement to any Group Company.

11.2     The Development Partners may not subcontract any part of the Development Work without IKEA's prior written approval. No such approval shall relieve the Development Partners from any of its obligations under this Agreement. The Development Partners shall procure that any subcontractor is bound by equal confidential obligations as set out in section 8 and that the subcontractor shall do all things and sign all such documents necessary to enable IKEA to obtain and enforce its rights to the Foreground Information.

12     GOVERNANCE OF THE RELATIONSHIP

12.1     A governance function shall be established consisting of key account representatives from each of the Parties. The contact details of the individuals appointed for this function are specified in Exhibit 3.

12.2     The governance function shall meet on a regular basis, as decided by the Parties, in order to review the Parties ongoing relationship under this Agreement including issues such as:

(i)     to carry out a review of the performance of the Development Work;

(ii)    to review each Development Partner's anticipated required capacity for the Development Work;

(iii)     to review circumstances warranting changes of the prices of the Development Work;

(iv)     to discuss new/changed activities;

(v)     to follow-up on earlier agreed actions; and

(vi)     to discuss the anticipated remaining duration of the Agreement.

12.3     Unless otherwise authorized to represent a Party, none of the members of the governance function shall be authorized to amend or add to this Agreement.

13.     TERMINATION

If either Party commits a material breach of any of the provisions set forth herein and does not remedy the situation within fourteen days after receiving a written notification stating the extent of the breach, this Agreement shall immediately expire and become null and void except sections 8, 9, and 10 which shall survive termination as stated above in this Agreement.

14.     SEVERABILITY

In the event that any of the terms of this Agreement are determined by any competent authority to be invalid or unenforceable to any extent, such term shall to that extent be severed from the body of this Agreement which shall continue to be valid and enforceable to the fullest extent permitted by law.

15.     ENTIRE AGREEMENT

This Agreement sets out the entire agreement and understanding between the Parties and supersedes all prior agreements and understandings, verbal or written, between the Parties relating to the subject matter of this Agreement.

16.     VARIATION

Neither this Agreement nor any of its terms or conditions can be varied or waived unless expressly agreed in writing and signed by the Parties to this Agreement.

17     GOVERNING LAW AND DISPUTE RESOLUTION

17.1     This Agreement is subject to the substantive laws of Switzerland. The parties agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement.

17.2     Any dispute, controversy or claim arising out of or in relation to this Agreement, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the Notice of Arbitration is submitted in accordance with these Rules. The number of arbitrators shall be three. The seat of the arbitration shall be in Zurich. The arbitral proceedings shall be conducted in English.

This Agreement is executed in three copies, each Party taking one.

Date:

IKEA Supply AG
/s/ Magnus Holmquist
Magnus Holmquist
Per Procura IKEA Supply AG
/s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________
Reviewed by, (IKEA Business owner)

Date: 12^th December 2013

Crailar Technologies, Inc.

/s/ Ken Barker                                    Ken Barker, C.E.O.
________________________              ________________________
Authorized signatory                           Authorized signatory

Date: 18 December 2013

Schrurs NV

/s/ Serge Schrurs                                    Serge Schrurs
________________________                 ________________________
Authorized signatory                               Authorized signatory

Exhibit 1-1

THE ASSIGNEMENT ORDER - DEVELOPMENT WORK ON
FIBER QUALITY CONSISTENCY

This Assignment Order is entered into pursuant to the Framework Agreement executed by IKEA Supply AG and Crailar and Schrurs on Dec 13^th, 2013.

Description:	The development agenda specified in this assignment has the objective to further develop the enzymatic bast fiber refinement process developed by Crailar and Schrurs. The goal is to be able to produce flax fiber which has properties that it can be used in existing unmodified cotton spinning setups with a performance close to cotton. It is key to the process that the quality of the incoming raw material (decorticated flax straw) is of minor influence to the achieved final fiber quality.
Deliverables:	Fiber samples (1kg from 800kg batches) made from two different raw material sources (flax tow, flax total fiber), taken from three different batches, which conform to the technical parameters specified in this assignment.
Technical Specifications:	See exhibit 1-1A
Division of Task between Development Partners:	IKEA to provide product demands. Crailar and Schrurs undertake the development work
Instructions for handling the Deliverables:	Fiber samples shall be sent to [redacted] for testing according to exhibit 1-1C, and batches of the material shall be spared for test processing at least two weeks after lab tests are completed
Time table, Project Plan:	See exhibit B. Process shall be followed up by bi-monthly meeting (Crailar-IoS), either physical or web-based. Progress shall be summarized in bi-monthly summary. Project final deadline Nov 30th, 2014
Location:	Test shall preferrably be undertaken on production scale at Schrurs in Belgium or supplier mentioned in exhibit 1-1B. If applicable, lab scale running shall be undertaken at [redacted].
Reference Persons:	For IKEA ("Project Leader"): [redacted] For Crailar: Jason Finnis For Schrurs: Serge Schrurs
Specified resources at the Development Partner to have the Development Work performed:	See exhibit 1C
Fee and expenses:	Crailar covers the cost for this quality consistency agenda, as the outcome of the work will become Crailar's property.

IKEA Supply AG

Date:

/s/ Magnus Holmquist
Magnus Holmquist
Per Procura /s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________

Reviewed by, (IKEA Business owner)

Confirmed:

Date: 12 December 2013

Crailar Technologies, Inc.

/s/ Ken Barker
________________________
Ken Barker, C.E.O.

Confirmed:

Date:18 December 2013

Schrurs NV

/s/ Serge Schrurs
________________________
Serge Schrurs

Exhibit 1-2

THE ASSIGNEMENT ORDER - DEVELOPMENT WORK ON
HEMP FIBER DEVELOPMENT

This Assignment Order is entered into pursuant to the Framework Agreement executed by IKEA Supply AG and Crailar and Schrurs on Dec 13^th, 2013.

Description:	The development agenda specified in this assignment has the objective to further develop the enzymatic bast fiber refinement process owned by Crailar. The goal is to be able to produce hemp fiber which has properties that it can be used in existing unmodified cotton spinning setups with a performance close to cotton. It is key to the process that the quality of the incoming raw material (decorticated hemp straw) is of minor influence to the achieved final fiber quality.
Deliverables:	Fiber samples (1kg from 800kg batches) made from two different raw material sources (hemp tow, hemp total fiber), taken from three different batches, which conform to the technical parameters specified in this assignment.
Technical Specifications:	See exhibit 1-1A
Division of Task between Development Partners:	IKEA to provide product demands. Crailar and Schrurs undertake the development work
Instructions for handling the Deliverables:	Fiber samples shall be sent to [redacted] for testing according to exhibit 1-1C, and batches of the material shall be spared for test processing at least two weeks after lab tests are completed
Time table, Project Plan:	See exhibit 1-2B. Process shall be followed up by bi-monthly meeting (Crailar-IoS), either physical or web-based. Progress shall be summarized in bi-monthly summary. Project final deadline Nov 30th, 2014
Location:	Test shall preferrably be undertaken on production scale at Schrurs in Belgium or supplier mentioned in exhibit 1-2B. If applicable, lab scale running shall be undertaken at [redacted].
Reference Persons:	For IKEA ("Project Leader"): [redacted] For Crailar: Jason Finnis For Schrurs: Serge Schrurs

Specified resources at the
Development Partner to have the
Development Work performed: See exhibit 1-1C

Fee and expenses:   Crailar covers the cost for this project, as the outcome of the work will become Crailar's property.

IKEA Supply AG

Date:

/s/ Magnus Holmquist
Magnus Holmquist
Per Procura /s/ Sven Skadinn
Sven Skadinn
Per Procura

_________________________

Reviewed by, (IKEA Business owner)

Confirmed:

Date: 12 December 2013

Crailar Technologies, Inc.

/s/ Ken Barker
________________________

Ken Barker, C.E.O.

Confirmed:

Date: 18 December 2013

Schrurs NV

/s/ Serge Schrurs
________________________

Serge Schrurs

Exhibit 2

Price list

Grade of Individual	Fee per hour/day/week
Grade A - Basic Rate
Grade B - Advanced Rate

Exhibit 3

Governance Function

For IKEA:     [redacted]

For Crailar:     Jason Finnis

For Schrurs:     Serge Schrurs

Exhibit 1A

Crailar fiber property requirements

Fibre properties	Preferred value	Measurement method
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]
[redacted]	[redacted]	[redacted]

Exhibit 1B Project scope and time planning

Fibre Consistency Development Plan - UPDATED November 12, 2013

Areas of Research and Development

[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted]

[redacted]

[redacted]	[redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]

Exhibit 1C: Resources available for project execution

Research Personnel

[redacted]	[redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted]	[redacted]	[redacted]
[redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted]	[redacted]	[redacted] [redacted]
[redacted] [redacted] [redacted] [redacted] [redacted] [redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted] [redacted]	[redacted]	[redacted] [redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted]	[redacted]	[redacted] [redacted] [redacted]

Equipment currently on order or to be purchased critical to the development plan

[redacted]	[redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted]	[redacted] [redacted] [redacted] [redacted]
[redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]

[redacted]

Exhibit 1-2B Project scope and time planning

[redacted]	[redacted]	[redacted]	[redacted]
[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted] [redacted]	[redacted] [redacted] [redacted]

EX-10

Tripartite Agreement

AMONGST:

NATIONAL RESEARCH COUNCIL OF CANADAwhose head office address is:1200 Montreal Road, Ottawa, Ontario, K1A OR6, Canada(called "NRC")

AND:

CRAILAR TECHNOLOGIES, INC. (formerly Crailar Fiber Technologies, Inc.)a corporation under the laws of British Columbia, whose address is:305- 4420 Chatterton Way, Victoria, BC VSX 5J2, Canada (called "Licensee")

AND:

IKEA SUPPLY AGa corporation under the laws of Switzerland, whose address is:Grüssenweg 15, 4133 Pratteln, Switzerland (called "IKEA")

WHEREAS

(a)NRC and Licensee entered into a Licensing Agreement, signed by NRC on 25

October 2006 and amended on 25 March 2011, which provided the Licensee with the worldwide right to use NRC technologies for the extraction of hemp fiber and the enzymatic extraction of plant fiber (NRC file numbers 11816 and 12104 respectively); ·

(b) Licensee and IKEA have entered into a General Agreement, signed by the Licensee on 9th of December 2013, whereby the Licensee undertakes to supply IKEA's manufacturers with enzymatically processed Flax and/or Hemp fibers for spinning yarn (the "Components");

(c) Licensee and IKEA have entered into a Loan Agreement, signed by the Licensee on the 29^th of November 2013, whereby IKEA agreed to provide the Licensee with long- term funding to finance the Licensee's investment in capital equipment and working capital required in connection with supply of the Components for the end- production of IKEA articles;

(d)IKEA desires to ensure that it is able to maintain security of supply in the event that the Licensee is unable to meet its obligations to supply the Components;

In consideration of the mutual covenants hereunder, the parties agree as follows: Definitions:

NRC Intellectual Property Rights means Patents, copyright and other exclusionary rights in respect of the NRC Technology, and rights in respect of confidential information included in the NCR Technology.

NRC Technology means NRC inventions (not necessarily patentable), trade secrets, know- how, designs, written works, samples, biological material, and technical information created by or on behalf of the NRC relating to:

Extraction of Hemp Fibers - NRC File # 11816; and

Enzymatic Extraction of Plant Fiber- NRC File #12104

Termination Event means termination by NRC of the Licensing Agreement in accordance with Article 11 thereof, which includes, but is not necessarily limited to, (i) termination upon bankruptcy, insolvency, or assignment for the benefit of creditors, of or in respect of Licensee or any substantial part of its assets; (ii) termination upon preparation of a petition to have a receiver, administrator, liquidator, assignee, trustee, sequestrator, secured creditor or other similar official appointed over or in respect of Licensee; or (iii) termination if any other event occurs which under any applicable law would have an effect analogous to the situations described above, (a 'Termination Event').

1. At any time before the repayment in full by Licensee to IKEA of the outstanding loan, including interest, pursuant to the Loan Agreement and for two years thereafter, upon occurrence of a Termination Event, NRC hereby grants to IKEA a new license that allows IKEA to substitute Licensee with either an IKEA affiliate or a third party mutually agreed with NRC, and to permit such new licensee to operate IKEA's business related to the NRC Technology under substantially the same conditions as set out in the Licensing Agreement with the limitation stated below. In such case any payments owed by IKEA are to be paid directly to the NRC. Upon occurrence of a Termination Event, the NRC and IKEA shall enter into a new license agreement that adequately reflects the new situation, on similar terms and conditions as the Licensing Agreement and reasonably taking into account any changes resulting from the Termination Event. IKEA's license to the NRC Intellectual Property shall however be limited to applications relevant for enzymatically processed Flax and/or Hemp fibers for spinning yarn in which applications relevant for the product applications listed in Appendix 1 shall be granted on an exclusive basis until 31.12.2016 and non- exclusive thereafter.

2. Warranty of Licensing Rights: Each of NRC and Licensee warrants to IKEA that it has not previously granted any rights that would conflict with the rights granted in this amendment. Each of NRC and Licensee also warrants to IKEA that it is either the current owner or licensee (with power to sub-license) of the NRC Technology, as defined in the Licensing Agreement.

3. Notices: Any notice related to this agreement, including a notice of change of address, must be sent to the addresses stated at the beginning of this Agreement, either by registered mail, which is deemed to be effective notice five days after mailing, or by courier or facsimile, which are effective notices only when acknowledged by a courier's delivery receipt or by a specific non-automatic return facsimile transmission.

4. No Bribes: Each of Licensee and IKEA represents and warrants to NRC that no bribe, gift, reward, benefit or other inducement has been or will be paid, given, promised or offered directly or indirectly to any federal government official or employee or to a member of the family of such person, with a view to influencing the entry into this agreement or the administration of this Agreement.

5. No Direct Benefit: Each of Licensee and IKEA represents and warrants to NRC that the following individuals shall not derive a direct benefit from this Agreement:

(a) a current or former public office holder who is not in compliance with the Conflict of Interest Act, 2006, c.9, s.2;

(b) a current or former member of the House of Commons who is not in compliance with the Conflict of Interest Code for Members of the House of Commons;

(c) a current or former public servant who is not in compliance with the Values and

Ethics Code for the Public Service; or

(d) a current or former NRC employee who is not in compliance with NRC's Conflict of Interest Policy.

6. No Misrepresentation: Each of Licensee and IKEA represents and warrants to NRC that it, including its Directors, officers, employees or agents, has made no material misrepresentation, whether by omission or commission, with a view to the obtaining of this agreement.

7. No Contingency Fee: Each of Licensee and IKEA represents and warrants to NRC that it has not directly or indirectly paid or agreed to pay and that it will not directly or indirectly pay a contingency fee for the solicitation, negotiation or obtaining of this agreement to any person, other than an employee acting in the normal course of the employee's duties. In this section, "contingency fee" means any payment or other compensation that depends or is calculated based on the degree of success in soliciting, negotiating or obtaining this Agreement and "person" includes any individual who is required to file a return with the registrar pursuant to the Lobbying Act, R.S.C.,1985,c. 44 (4^th Supplement) as amended.

8. Choice of Law: This Agreement shall be interpreted according to the laws of the Province of Ontario and the laws of Canada in force there.

EX-99

For Immediate Release

Media Contact:
Jay Nalbach, CMO
(503) 387 3941
pr@crailar.com

Investor Relations Contact:
Ted Sanders, CFO
(503) 387-3941
ir@crailar.com

CRAiLAR Closes CAD$3.2 Million Loan Financing with IKEA and
CRAiLAR Closes CAD$2.0 Million Private Placement Financing with

Hydra Ventures

Portland, Ore. (December 24, 2013) - CRAiLAR Technologies Inc. (TSXV: CL) (OTCQB: CRLRF), which produces and markets CRAiLAR(R) Flax fiber The Friendliest Fiber On The Planet(TM), today announced the closing of its previously announced CAD$3.2 million loan financing with IKEA ("Loan). The term of the Loan is 30 months, bears interest at 1.9% fixed rate and is designated for the installation of equipment to support and expand CRAiLAR's European production facility and working capital for IKEA orders. The Loan is to be secured by certain assets to be purchased with the proceeds as well as a portion of the secured assets used to originally secure the Company's July 26, 2013 10% secured, subordinated, convertible debentures (the "Debentures").

In conjunction with the completion of the Loan, the Company and its present Debenture holders have agreed to amend, in exchange for the release of certain secured assets, the conversion terms of the Debentures; in the principal amount of $3,535,000; such that, at the Debenture holders' option, the Debentures may now be converted into common shares in the capital of the Company at $1.25 instead of $2.00 per Share.

In conjunction with the completion of the Loan, the Company has now closed upon its previously announced CAD$2.0 million private placement investment (the "Private Placement") with Hydra Ventures B.V. ("Hydra Ventures"), the corporate venture arm of the adidas Group (FRA: ADS). Hydra Ventures has been issued an aggregate of 3,333,333 units of the Company (each a "Unit"), at a subscription price of CAD$0.60 per Unit, with each Unit being comprised of one common share and one common share purchase warrant (each a "Warrant") of the Company, and with each Warrant being exercisable for a period of five years from the date of closing at an exercise price of CAD$0.70 per Warrant common share. The proceeds from the Private Placement will be utilized for general corporate and working capital purposes.

In conjunction with the completion of the Private Placement certain Company creditors have agreed to extend the term of their current loans to the Company and, in consideration thereof, one such Company creditor and director will receive an aggregate of 187,878 bonus common shares of the Company, at a deemed issuance price of CAD$0.60 per common share, for such extension.

Each of the proposed reduction in Debenture conversion price and bonus share issuance is still subject to prior TSX Venture Exchange approval prior to the completion thereof.

About IKEA

IKEA, the world's largest home furnishings retailer, was founded in 1943 in Sweden. Since that time, IKEA has offered home furnishings of good design, quality and function at low prices so the majority of people can afford them. There are currently more than 340 IKEA stores in 42 countries, including 38 in the U.S. IKEA incorporates sustainability into day-to-day business and supports initiatives that benefit children and the environment. For more information, see IKEA-USA.com, facebook.com/IKEAUSA, @DesignByIKEA, and http://pinterest.com/IKEAUSA/.

About HYDRA VENTURES

Launched in 2011, Hydra Ventures is the corporate venture arm of adidas AG, and is dedicated to exploiting new market opportunities by creating and developing new consumer brands and trends in the apparel, footwear and sports-related areas. In addition special consideration is given to companies with sustainable or socially responsible attributes. For more information, see www.hydra-ventures.com

About CRAiLAR Technologies Inc.

CRAiLAR(R) Technologies Inc. offers cost-effective and environmentally sustainable natural fiber in the form of flax, hemp and other bast fibers for use in textile, industrial, energy, medical and composite material applications. Produced using a fraction of water and chemical inputs compared with other natural fibers, CRAiLAR Flax is the newest natural fiber introduction to the market in decades. The Company supplies its CRAiLAR Flax to HanesBrands, Georgia-Pacific, Tuscarora Yarns, Target Corp. and Kowa Company for commercial use, and to Levi Strauss & Co., Carhartt, Ashland, PVH Corp., Cotswold Industries, Cone Mills and Lenzing for evaluation and development. The Company was founded in 1998 as a provider of environmentally friendly, socially responsible clothing. For more information, visit www.crailar.com.

Safe Harbor Statement

This news release includes certain statements that may be deemed "forward-looking statements". All statements in this news release, other than statements of historical facts, are forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements or information and including, without limitation, risks and uncertainties relating to: completion of a definitive agreement and acquisition of the European Wet Processing facility, any market interruptions that may delay the trading of the Company's shares, technological and operational challenges, needs for additional capital, changes in consumer preferences, market acceptance and technological changes, dependence on manufacturing and material supplies providers, international operations, competition, regulatory restrictions and the loss of key employees. In addition, the Company's business and operations are subject to the risks set forth in the Company's most recent Form 10-K, Form 10-Q and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The Company assumes no obligation to update the forward-looking statements.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release

Media Contact:
Jay Nalbach, CMO
(503) 387-3941
pr@crailar.com

Investor Relations Contact:
Ted Sanders, CFO
(503) 387-3941
ir@crailar.com

# # #