SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
Item 1.01 Entry into a Material Definitive Agreement.
On January 10, 2013, Crailar Technologies Inc. ("Crailar") entered into a Supply Agreement (the "Agreement") with Kowa Company Ltd. ("KOWA"), a Japanese company which is engaged in the design, development, manufacture, marketing and sale of textiles. Pursuant to the Agreement, KOWA agrees to purchase Crailar fiber (the "Goods"), which is natural fiber made from flax and other bast fibers, and which meets the specifications to be determined by the parties on or before April 10, 2013, for evaluation purposes in fabrics, apparel and non-woven goods. However, since Crailar has currently granted exclusivity for non-woven goods with respect to the Goods to a third party, if KOWA wishes to produce non-woven goods for the Japanese market, KOWA may do so using such third party's non-woven substrate made from the Goods.
The initial term of the agreement shall be for a period of six months and may be renewed for successive periods by written agreement between the parties. If KOWA develops any possible products for commercial purposes (the "KOWA Products") during the initial term or any renewal term of this agreement which contains or uses the Goods, then the parties shall make a good faith discussion to conclude a joint development agreement to facilitate the development of the KOWA Products.
Under the terms of the Agreement, the purchase price for the Goods shall be $1.25 per pound for the first six months and thereafter as negotiated between the parties pursuant to any renewal or subsequent agreement. The purchase price shall be due on a net 30 from receipt of Goods basis. If KOWA fails or refuses to make any payment on or before the date on which such payment is due, interest will accrue at a rate of 1.5% per month compounded monthly (or 19.56% per annum). Title to and risk of loss of or damage to the Goods shall pass to KOWA upon delivery to KOWA or KOWA's chosen shipper at Crailar's shipping point.
The foregoing description of the Agreement is not complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10.1 hereto.
SECTION 8 - OTHER EVENTS
Item 8.01 Other Events
On January 11, 2013, Crailar Technologies Inc. issued a press release announcing that it has signed a fiber supply agreement with Japan-based Kowa Company.
A copy of the 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
(b) Pro forma Financial Information
(c) Shell Company Transaction
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.