Exhibit 10.3
 

 

 
 
REGISTRATION RIGHTS AGREEMENT
 

 

 
 
 
 

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Table of Contents
 

   
Page
     
REGISTRATION RIGHTS AGREEMENT
1
       
ARTICLE 1 DEFINITIONS
1
 
            
1.1
Defined Terms
1
   
1.2
General Interpretive Principles
3
           
ARTICLE 2 REGISTRATION RIGHTS
3
   
2.1
Registration Rights
3
   
2.2
Number of Demand Qualifications
4
   
2.3
Exceptions
4
           
ARTICLE 3 PIGGY-BACK RIGHTS
6
   
3.1
Piggyback Registrations
6
           
ARTICLE 4 OBLIGATIONS OF THE COMPANY
8
   
4.1
Registration Procedures
8
   
4.2
Information Regarding the Purchasers
12
   
4.3
Discontinuance of Distribution
12
           
ARTICLE 5 EXPENSES
13
   
5.1
Registration Expenses
13
           
ARTICLE 6 INDEMNIFICATION
14
   
6.1
Indemnification by the Company
14
   
6.2
Indemnification by the Purchasers
14
   
6.3
Conduct of Indemnification Proceedings
15
   
6.4
Contribution
16
           
ARTICLE 7 MISCELLANEOUS
17
   
7.1
Rules 144 and 144A
17
   
7.2
Free Writing Prospectuses
17
   
7.3
No Inconsistent Agreements; Additional Rights
17
   
7.4
Term and Termination
17
   
7.5
Fees and Expenses
17
   
7.6
Entire Agreement
18
   
7.7
Notices
18
   
7.8
Amendments; Waivers
18
   
7.9
Successors and Assigns
18
   
7.10
No Third-Party Beneficiaries
19
   
7.11
Governing Law
19
   
7.12
Execution
19
   
7.13
Severability
19
   
7.14     
Construction
19
 

 
 
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REGISTRATION RIGHTS AGREEMENT
 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of June 29, 2011
among NeuLion, Inc., a Delaware corporation (the “Company”), JK&B Capital V,
L.P., and JK&B Capital V Special Opportunity Fund, L.P. (each, a “Purchaser” and
collectively, the “Purchasers”).
 
WHEREAS, the Company and each Purchaser has entered into a Subscription
Agreement (as defined below) pursuant to and subject to the terms and conditions
of which, each Purchaser has agreed to purchase from the Company, and the
Company has agreed to issue and sell to the Purchasers Class 4 Preference Shares
(“Preferred Shares”).
 
WHEREAS, in connection with the purchase and sale of the Preferred Shares the
Company has agreed to provide the rights set forth in this Agreement.
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
 
ARTICLE 1
DEFINITIONS
 
1.1           Defined Terms.  Except as otherwise expressly provided herein or,
unless the context otherwise requires, the terms defined in this Section 1.1
will have the meanings herein specified for all purposes of this Agreement.
 
“Company Public Sale” has the meaning set forth in Section 3.1(a).
 
“Closing Date” means the date upon which the transactions contemplated by the
Subscription Agreement are consummated.
 
“Common Stock” means the common stock, par value $0.01, of the Company.
 
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and
any successor thereto, and any rules and regulations promulgated thereunder, all
as the same shall be in effect from time to time.
 
“FINRA” means the Financial Industry Regulatory Association, Inc.
 
“Lock-Up Period” has the meaning set forth in Section 2.3.
 
“Piggyback Registration” has the meaning set forth in Section 3.1(a).
 
“Person” means all natural persons, corporations, business trusts, associations,
companies, partnerships, limited liability companies, joint ventures and other
entities, governments, agencies and political subdivisions.
 
 
 

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“Prospectus” means the prospectus included in any Registration Statement, all
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference in such prospectus.
 
 “Register” means preparing and filing a registration statement in compliance
with the Securities Act and the automatic effectiveness thereof or the use of
commercially reasonable efforts to cause such Registration Statement to become
effective under the Securities Act;
 
The term “Registration” shall have a correlative meaning.
 
“Registrable Securities” means the shares of Common Stock issuable upon
conversion of the Preferred Shares issued to the Purchasers pursuant to the
Subscription Agreements or upon the conversion of or as a dividend with respect
to such shares and any securities that may be issued or distributed or be
issuable in respect of such Preferred Shares by way of conversion, dividend,
stock split or other distribution, merger, consolidation, exchange,
recapitalization or reclassification or similar transaction; provided that any
such Registrable Securities shall cease to be Registrable Securities upon the
earliest to occur of:
 
 
(a)
the first day that the Purchasers no longer own 25% or more of the Registrable
Securities;

 
 
(b)
in respect of a Registration pursuant to the Securities Act, the first day on
which the Purchasers may sell all of the Registrable Securities owned by the
Purchasers without registration or volume limitations under the Securities Act;

 
 
(c)
June 29, 2016.

 
 
“Registration Expenses” has the meaning set forth in Section 5.1.
 
“Registration Period” means the period commencing on the Closing Date and ending
on the earliest to occur of:
 
 
(i)
the first day that the Purchasers no longer own 25% or more of the Registrable
Securities;

 
 
(ii)
the first day on which the Purchasers may sell all of the Registrable Securities
owned by the Purchasers without registration or volume limitations under the
Securities Act; and

 
 
(iii)
June 29, 2016.

 
“Registration Statement” means any registration statement of the Company filed
with, or to be filed with, the SEC pursuant to the Securities Act, including the
related Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement.
 
 
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“SEC” means the U.S. Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act or the Exchange Act.
 
“Securities Act” means the U.S. Securities Act of 1933, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.
 
“Subscription Agreement” means the Subscription Agreement dated June ___, 2011,
between the Company and each Purchaser.
 
“Shelf Supplement” means, in respect of a Registration in the United States, a
supplement to the Prospectus contained in the Shelf Registration Statement for
purposes of including pricing and other necessary information in connection with
any resale of Registrable Securities.
 
“Shelf Registration Statement” means a Registration Statement of the Company
filed with the SEC for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 under the Securities Act (or any similar rule that may be
adopted by the SEC) covering the resale of Registrable Securities.
 
“Trading Day” means any day the Toronto Stock Exchange is open for the trading
of securities or any exchange on which the Company’s Common Stock are listed and
posted for trading.
 
“Underwritten Offering” means a Registration in which securities of the Company
are sold to an underwriter or underwriters on a firm commitment basis for
distribution to the public.
 
1.2           General Interpretive Principles.  Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
be construed to affect the meaning, construction or effect hereof.  Unless
otherwise specified, the terms “hereof,” “herein” and similar terms refer to
this Agreement as a whole (including any exhibit, annex, agreement or disclosure
statements hereto), and references herein to Sections refer to Sections of this
Agreement. Words of inclusion shall not be construed as terms of limitation
herein, so that references to “include”, “includes” and “including” shall not be
limiting and shall be regarded as references to non-exclusive and
non-characterizing illustrations.
 
ARTICLE 2
REGISTRATION RIGHTS
 
2.1           Registration Rights.  If the Company receives a written request
from a majority of holders of the Preferred Shares that the Company file a
Registration Statement to Register the resale of all or part of the Registrable
Securities held by the Purchasers, the Company shall, subject to the limitations
of Sections 2.2 and 2.3:
 
 
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(a)
as soon as practicable and in any event within 90 days after the Company’s
receipt of such written request, prepare and file a Registration Statement in
order to Register that number of Registrable Securities specified by the
Purchasers in the notice;

 
 
(b)
use its reasonable commercial efforts to resolve any regulatory comments and
satisfy any regulatory deficiencies in respect of the Registration Statement,
and, as soon as reasonably practicable after such comments or deficiencies have
been resolved or satisfied, prepare and file, and use its reasonable commercial
efforts to cause the Registration Statement to become effective under the
Securities Act, and will, subject to the provisions of Article 3, take all other
steps and proceedings necessary in order to Register the resale of the
Registrable Securities as soon as practicable;

 
 
(c)
ensure that the Registration Statement contains the disclosure required by, and
conforms in all material respects, to the requirements of, the applicable
provisions of the Securities Act;

 
 
(d)
prepare and file as soon as practicable with the SEC any amendments and
supplements to the Registration Statement that may be necessary to comply with
the Securities Act; and

 
 
(e)
in the case of an Underwritten Offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the
underwriters of such offering.

 
Subject to the provisions of Section 5.1, a request pursuant to Section 2.1 may
be withdrawn by written notice to the Company by the holders of a majority of
the Preferred Shares.
 
 
2.2           Number of Demand Qualifications.  The Company is only obligated to
file an aggregate of three Registration Statements under Section 2.1, but no
filing pursuant to Section 2.1 is deemed to be a filing for purposes of this
Article 2 until the Company has had the Registration Statement become effective,
unless the Registration Statement has not become effective due solely to the
fault of, or (except as a result of any postponement of any filing pursuant to
Section 2.3) because the filing is withdrawn at the written request of, the
holders of a majority of the Preferred Shares.
 
2.3           Exceptions.  If the Company is requested to file a Registration
Statement pursuant to Section 2.1:
 
 
(a)
the Company is not obligated to effect the filing of such Registration Statement
if the number of Registrable Securities to be Registered comprises less than 5%
of the issued and outstanding Common Stock at the time of delivery of the
notice;

 
 
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(b)
the Company is not obligated to effect the filing of such Registration
Statement:

 
 
(i)
for a period of up to 90 days after the date of a request for Registration
pursuant to Section 2.1 if:

 
(A)           at the time of such request, the Company is engaged, or has fixed
plans to engage within 60 days after the date of such request, in an
Underwritten Offering in which the Purchasers are entitled to include
Registrable Securities pursuant to Section 3.1; or
 
(B)           at the time of such request, the Company is currently engaged in
an offer or exchange offer and the filing of a Registration Statement would
cause a violation of the Securities Act;
 
 
(ii)
during the 90-day period following the closing by the Company of an Underwritten
Offering in which the Purchasers were entitled (subject to underwriter cutbacks)
to include Registrable Securities pursuant to Section 3.1 (or for such shorter
period as the lead underwriter(s) of such public offering may have requested)
(the “Lock-Up Period”), if the lead underwriter(s) of such public offering has
advised the Company that the stand-off pursuant to this clause (ii), including
the length thereof, is reasonable and customary under the circumstances and has
requested such stand-off;

 
 
(iii)
if the Company has already effected the filing of a Registration Statement
pursuant to Section 2.1 within the previous 90 days and such Registration
Statement has not been withdrawn or such prior offering otherwise terminated; or

 
 
(iv)
if the Company has a Shelf Registration Statement that has been declared
effective under the Securities Act at the time it receives a written notice from
the holder(s) of a majority of the Preferred Shares exercising demand rights
pursuant to Section 2.1;

 
 
(c)
the Company may defer such filing for up to 180 days after the delivery by the
Company to the Purchasers of a certificate signed by the Chief Executive Officer
of the Company stating that in the good faith judgment of the board of directors
of the Company it would be detrimental to the Company and its stockholders for a
Registration Statement to be filed and it is essential to defer the filing of
such Registration Statement; provided that the Company may not use this right
more than once in any 12-month period;

 
 
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provided that (1) the Company shall give prompt written notice to the Purchasers
at such time as the reason for any postponement of the filing of a Registration
Statement pursuant to clause (i) of this Section 2.3(b), or Section 2.3(c), no
longer exists, or any Lock-Up Period has been terminated, at which point the
relevant postponement shall terminate, (2) any stand-off period pursuant to
Section 2.3(b)(ii) may be terminated by the relevant lead underwriter(s), such
consent to termination not to be unreasonably withheld, and upon any such
termination the postponement of the filing of a Registration Statement pursuant
to Section 2.3(b)(ii) shall terminate, and (3) if the Company postpones the
filing of any Registration Statement pursuant to Section 2.3(b) or (c) and the
Purchasers withdraws its related request pursuant to Section 2.1, the Purchasers
will not have any obligation pursuant to Section 5.1 in connection with such
aborted filing.
 
ARTICLE 3
PIGGY-BACK RIGHTS
 
3.1           Piggyback Registrations.
 
 
(a)
Participation. If the Company at any time proposes to Register any offering of
its securities under the Securities Act for its own account or for the account
of any other Persons, on a form or in a manner that would permit the inclusion
of the Registrable Securities for offer and sale in an Underwritten Offering to
the public under the Securities Act (other than (i) a Registration with the SEC
on Form S-4 or S-8 or any successor form to such Forms or (ii) a Registration of
securities solely relating to an offering and sale to employees or directors of
the Company pursuant to any employee stock plan or other employee benefit plan
arrangement) (a “Company Public Sale”), then, as soon as practicable (but in no
event less than 15 days prior to the proposed date of filing the Registration
Statement), the Company shall give written notice of such proposed filing to the
Purchasers, and such notice shall offer the Purchasers the opportunity to
include in such Company Public Sale under a Registration Statement such number
of Registrable Securities as the Purchasers may request in writing (a “Piggyback
Registration”).  The Company is under no obligation to complete any offering of
its securities it proposes to make pursuant to this Section 3.1 and will incur
no liability to the Purchasers for its failure to do so.

 
 
(b)
Inclusion of Registrable Securities in Company Public Sale. Subject to Section
3.1(c), the Company shall include in such Company Public Sale all such
Registrable Securities which are requested to be included therein within 15 days
after the receipt by the Purchasers of any such notice; provided that if at any
time after giving written notice of its intention to Register any securities and
prior to:

 
 
(i)
the effective date of the applicable Registration Statement:

 
 
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(ii)
in the case of a determination not to Register, shall be relieved of its
obligation to include any Registrable Securities in such Underwritten Offering
(but not from its obligation to pay the Registration Expenses in connection
therewith); and

 
 
(iii)
in the case of a determination to delay Registering, shall be permitted to delay
including any Registrable Securities in such Underwritten Offering, for the same
period as the delay in Registering such other securities.

 
If the Purchasers request a Piggyback Registration pursuant to Section 3.1(a),
then the Purchasers must, and the Company shall make such arrangements with the
managing underwriter or underwriters so that the Purchasers may, participate in
such Underwritten Offering. The Purchasers shall not be permitted to withdraw
all or part of their Registrable Securities from a Piggyback Registration at any
time prior to the effective date thereof.
 
 
(c)
Priority of Piggyback Registration. If the managing underwriter or underwriters
of any proposed Underwritten Offering of Registrable Securities included in a
Piggyback Registration inform(s) the Company and the Purchasers in writing that,
in its or their opinion, the number of securities which the Purchasers and any
other Persons intend to include in such offering exceeds the number which can be
sold in such offering without being likely to have a significant adverse effect
on the price, timing or distribution of the securities offered or the market for
the securities offered, then the Registrable Securities shall not be included in
such Registration.

 
 
(d)
Obligation to Register Registrable Securities. To the extent that any
Registrable Securities are included and sold in a Company Public Sale, the
Company’s continuing obligations to Register that number of securities included
in the Company Public Sale shall forthwith cease upon the closing of the Company
Public Sale; provided that all of the Company’s obligations under Article 2 and
Section 3.1 in respect of the Registrable Shares that were not included and sold
in such Company Public Sale shall remain in full force and effect and shall not
be deemed to have been satisfied or to have ceased as a result of such Company
Public Sale.

 
 
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(e)
Underwriting Agreement. The Purchasers shall be party to the underwriting
agreement between the Company and such underwriters, which underwriting
agreement shall (i) contain such representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of the
Purchasers as are customarily made by issuers to selling stockholders in
secondary underwritten public offerings and (ii) provide that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement also shall be conditions precedent to the obligations of
the Purchasers. The Purchasers shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters, except that
such Purchasers shall be required, upon request, to provide representations,
warranties or agreements regarding the Purchasers, the Purchasers’ Registrable
Securities and the Purchasers’ intended method of distribution of the
Registrable Securities or any other representations or information required by
law or required to be included in a Registration Statement.

 
 
(f)
Participation in Underwritten Registrations.  The Purchasers may not participate
in any Underwritten Offering hereunder unless the Purchasers (i) agree to sell
their Registrable Securities on the basis provided in any underwriting
arrangements approved by the Company and (ii) complete and execute all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.

 
ARTICLE 4
OBLIGATIONS OF THE COMPANY
 
4.1           Registration Procedures.  In connection with the Company’s
Registration obligations under Article 2 and Article 3, the Company will use
commercially reasonable efforts to effect such Registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of distribution thereof as expeditiously as reasonably practicable, and in
connection therewith the Company will:
 
 
(a)
prepare the required Registration Statement including all exhibits and financial
statements required under the Securities Act to be filed therewith, and before
filing a Registration Statement, Prospectus, or any amendments or supplements
thereto, and (x) furnish to the Purchasers copies of all documents prepared to
be filed, which documents will be subject to the review of the Purchasers and
their counsel, acting reasonably and (y) except in the case of a Registration
under Section 3.1, not file any Registration Statement, Prospectus, or
amendments or supplements thereto to which the Purchasers or the underwriters,
if any, shall reasonably object; provided that notwithstanding any other term of
this Agreement, if the Purchasers or the underwriters, if any, do so reasonably
object, the Company shall not be deemed to be in breach of any of its
obligations hereunder;

 
 
(b)
as soon as reasonably practicable file with the SEC a Registration Statement,
relating to the Registrable Securities including all exhibits and financial
statements required by the SEC to be filed therewith, and use commercially
reasonable efforts to cause such Registration Statement to become effective
under the Securities Act;

 
 
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(c)
prepare and file with the SEC such amendments and post-effective amendments to
any Registration Statement and supplements (including Shelf Supplements) to the
Prospectus as may be reasonably requested by the Purchasers or necessary to keep
such Registration effective for the period of time required by this Agreement
and, if applicable, to include the Registrable Securities in an Underwritten
Offering pursuant to Section 3.1, and comply with provisions of applicable
securities laws with respect to the sale or other disposition of all securities
covered by such Registration Statement during such period in accordance with the
intended method or methods of disposition by the Purchasers set forth in such
Registration Statement;

 
 
(d)
notify the Purchasers and (if requested) confirm such advice in writing and
provide copies of the relevant documents to the Purchasers, as soon as
reasonably practicable after notice thereof is received by or on behalf of the
Company (A) when the applicable Registration Statement or any amendment thereto
has been filed, becomes effective, and when the Prospectus or any amendment or
supplement to such Prospectus has been filed, (B) of any written comments by the
SEC or any request by the SEC or any other federal, state or provincial
governmental authority for amendments or supplements to any Registration
Statement (or the related Prospectus) or for additional information, (C) of the
issuance by the SEC of any stop order or cease trade order suspending the
effectiveness of any Registration Statement or any order by the SEC or any other
regulatory authority preventing or suspending the use of any preliminary or
final Prospectus, or the initiation or threatening of any proceedings for such
purposes, and (D) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for
offering or sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;

 
 
(e)
promptly notify the Purchasers when the Company becomes aware of the happening
of any event as a result of which the applicable Registration Statement or the
Prospectus included in such Registration Statement (as then in effect), contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein (in light of the circumstances under
which they were made) not misleading, or fails to constitute full, true and
plain disclosure of all material facts regarding the Registrable Securities or,
if for any other reason it shall be necessary during such time period to amend
or supplement such Registration Statement or Prospectus, in order to comply with
the Securities Act, and, in each case as promptly as reasonably practicable
thereafter, prepare and file with the SEC, and furnish without charge to the
selling Purchasers an amendment or supplement to such Registration Statement or
Prospectus, which will correct such misstatement or omission or effect such
compliance;

 
 
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(f)
use commercially reasonable efforts to prevent or obtain the withdrawal of any
stop order, cease trade order or other order suspending the use of any
preliminary or final Prospectus, or suspending the qualification of Registrable
Securities covered by a Registration Statement;

 
 
(g)
promptly incorporate in a Prospectus supplement or post-effective amendment to a
Registration Statement, such information as the managing underwriter or
underwriters, if any, and the Purchasers agree should be included therein
relating to the plan of distribution with respect to such Registrable
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment, as soon as reasonably practicable after being notified
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;

 
 
(h)
furnish to the Purchasers without charge, as many copies as the Purchasers may
reasonably request of the applicable Registration Statement and any supplement,
amendment or post-effective amendment thereto, including financial statements,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);

 
 
(i)
deliver to the Purchasers without charge, as many copies of the applicable
Prospectus (including each preliminary prospectus), and any amendment or
supplement thereto as the Purchasers may reasonably request (it being understood
that the Company consents to the use of such Prospectus or any amendment or
supplement thereto by the Purchasers in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any amendment or
supplement thereto) and such other documents as the Purchasers may reasonably
request in order to facilitate the disposition of the Registrable Securities by
the Purchasers;

 
 
(j)
on or prior to the date on which the applicable Registration Statement becomes
effective under the Securities Act, use commercially reasonable efforts to
register or qualify, and cooperate with the Purchasers and their counsel(s), in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or “Blue Sky” laws of each state and
other jurisdiction of the United States as the Purchasers or their counsel
reasonably request in writing and do any and all other acts or things reasonably
necessary or advisable to keep such Registration in effect, provided that the
Company will not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) become subject to the
securities laws of any jurisdiction other than the United States or the various
states of the United States or (C) take any action which would subject it to
taxation or general service of process in any such jurisdiction where it is not
then so subject;

 
 
(k)
use commercially reasonable efforts to cause the Registrable Securities covered
by any Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Purchasers to consummate the disposition of such Registrable Securities;

 
 
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(l)
enter into such customary agreements (including, without limitation,
indemnification agreements, and in the case of Underwritten Offerings,
underwriting agreements) and take all such other actions as the Purchasers or
the underwriters, if any, reasonably request in order to expedite or facilitate
the registration and disposition of such Registrable Securities;

 
 
(m)
obtain for delivery to the Purchasers and to the underwriters, if any, an
opinion or opinions from counsel for the Company dated the effective date of the
Registration Statement or, in the event of an Underwritten Offering, the date of
the closing under the underwriting agreement, addressed or confirmed to the
Purchasers and underwriters, in customary form, scope and substance, which
opinions shall be reasonably satisfactory to the Purchasers or underwriters, as
the case may be, and their respective counsel;

 
 
(n)
in the case of an Underwritten Offering, provide copies to the Purchasers
included in such Underwritten Offering, of the “comfort letter” from, and
delivered to the Company and the underwriters, if any, by the Company’s
independent certified public accountants, in customary form and covering such
matters of the type customarily covered by “comfort letters” as the Company and
the underwriters, if any, reasonably request, dated the date of execution of the
underwriting agreement and brought down to the closing under the underwriting
agreement;

 
 
(o)
cooperate with each seller of Registrable Securities and each underwriter, if
any, participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with FINRA
or other regulatory body;

 
 
(p)
use commercially reasonable efforts to comply with all applicable securities
laws and make available to its security holders, as soon as reasonably
practicable, an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;

 
 
(q)
provide and cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by the applicable Registration Statement, as the
case may be, from and after a date not later than the effective date of such
Registration Statement,

 
 
(r)
cause all Registrable Securities covered by the Registration Statement, to be
listed on each securities exchange on which any of the Company’s securities are
then listed or quoted and on each inter-dealer quotation system on which any of
the Company’s securities are then quoted; and

 
 
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(s)
make available upon reasonable notice at reasonable times and for reasonable
periods for inspection by (A) a representative appointed by the Purchasers
covered by the applicable Registration Statement, (B) any underwriter or agent
participating in any disposition to be effected pursuant to such Registration
Statement, and (C) any attorney, lawyer, accountant or other agent retained by
the Purchasers or any such underwriter or agent, all pertinent financial and
other records, pertinent corporate documents of the Company, and cause all of
the Company’s officers, directors and employees and the independent public
accountants who have certified its financial statements to make themselves
available to discuss the business of the Company and to supply all information
reasonably requested by any such Person in connection with such Registration
Statement, as shall be necessary to enable them to exercise their due diligence
responsibility; provided that any such Person gaining access to information
regarding the Company pursuant to this Section 4.1 shall agree to hold in strict
confidence and shall not make any disclosure or use any information regarding
the Company which the Company determines in good faith to be confidential, and
of which determination such Person is notified, unless (w) the release of such
information is requested or required (by deposition, interrogatory, requests for
information or documents by a governmental entity, subpoena or similar process),
(x) such information is or becomes publicly known without a breach of this or
any other agreement of which such Person has knowledge, (y) such information is
or becomes available to such Person on a non-confidential basis from a source
other than the Company or (z) such information is independently developed by
such Person.

 
4.2           Information Regarding the Purchasers.  The Company may require the
Purchasers to furnish to the Company such information regarding the distribution
of the Registrable Securities and such other information relating to the
Purchasers and their ownership of Registrable Securities as the Company may from
time to time reasonably request in writing to enable the Company to comply with
its obligations hereunder or under applicable law.  The Purchasers agree to
furnish such information to the Company and to cooperate with the Company as
reasonably necessary to enable the Company to comply with the provisions of this
Agreement and applicable law.  The Company shall not assume and shall not be
deemed to assume any liability for any information provided to it by the
Purchasers.
 
4.3           Discontinuance of Distribution.  The Purchasers agree that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4.1(e), the Purchasers will forthwith discontinue
disposition of Registrable Securities pursuant to such Registration Statement,
until the Purchasers’ receipt of the copies of the supplemented or amended
Prospectus, contemplated by Section 4.1(e), or until the Purchasers are advised
in writing by the Company that the use of the Prospectus may be resumed, and if
so directed by the Company, the Purchasers will deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies then in the
Purchasers’ possession, of the Prospectus, covering such Registrable Securities
current at the time of receipt of such notice.
 
 
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ARTICLE 5
EXPENSES
 
5.1           Registration Expenses.
 
 
(a)
All expenses incident to the Company’s performance of or compliance with this
Agreement will be paid by the Company, including (i) all registration and filing
fees, and any other fees and expenses associated with filings required to be
made with the SEC or FINRA, (ii) all fees and expenses in connection with
compliance with state securities or “Blue Sky” laws, (iii) all printing,
duplicating, word processing, messenger, telephone, facsimile and delivery
expenses (including expenses of printing prospectuses or similar documents),
(iv) all fees and disbursements of counsel for the Company and of all
independent certified public accountants of the Company (including the expenses
of any opinions, audit and cold comfort letters required by or incident to such
performance), (v) Securities Act liability insurance or similar insurance if the
underwriters, if any, so require in accordance with then-customary underwriting
practice, (vi) all fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange or quotation of the
Registrable Securities on any inter-dealer quotation system, (vii) all
applicable rating agency fees with respect to the Registrable Securities, (viii)
any reasonable fees and disbursements of underwriters, if any, customarily paid
by issuers of securities, (ix) all fees and expenses of any special experts or
other Persons retained by the Company in connection with any Registration, and
(x) all of the Company’s internal expenses (including all salaries and expenses
of its officers and employees performing legal or accounting duties). All such
expenses are referred to herein as “Registration Expenses.” The Company shall
not be required to pay any fees and disbursements to underwriters not
customarily paid by the issuers of securities in a secondary offering, including
underwriting discounts and commissions and transfer taxes, if any, attributable
solely to the sale of Registrable Securities.

 
 
(b)
Notwithstanding the foregoing provisions of this Section 5.1, the Registration
Expenses, if any, incurred by the Company where such obligation arises in
respect of a demand registration pursuant to Article 2 which the Purchasers have
subsequently withdrawn, the Purchasers shall immediately reimburse the Company
for all of such Registration Expenses upon receipt of evidence thereof,
provided, however, that if at the time of such withdrawal, the Purchasers have
learned of a material adverse change in the condition, business or prospects of
the Company from that known to the Purchasers at the time of their request and
have withdrawn the request with reasonable promptness following disclosure by
the Company of such material adverse change, then the Purchasers shall not be
required to pay any of such expenses.

 
 
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ARTICLE 6
INDEMNIFICATION
 
6.1           Indemnification by the Company.  The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, the Purchasers, and, as
applicable, the Purchasers’ directors, officers and employees, heirs successors
and assigns and each Person who controls (within the meaning of the Securities
Act or the Exchange Act) such Persons from and against any and all losses,
penalties, judgments, suits, costs, claims, damages, liabilities (or actions or
proceedings in respect thereof, whether or not such indemnified party is a party
thereto) and expenses, joint or several (including reasonable costs of
investigation and legal expenses) (each, a “Loss” and collectively “Losses”)
arising out of or based upon (i) any untrue or alleged untrue statement of a
material fact contained or incorporated by reference in any Registration
Statement under which such Registrable Securities were Registered under the
Securities Act (including any Prospectus contained therein or any amendment
thereof or supplement thereto or any documents incorporated by reference
therein), or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading or to
provide full, true and plain disclosure of all material facts; provided that the
Company shall not be liable to any particular indemnified party (x) to the
extent that any such Loss arises solely as a result of an untrue statement or
alleged untrue statement or omission or alleged omission made in any such
Registration Statement, in reliance upon and in conformity with written
information furnished to the Company by such indemnified party expressly for use
in the preparation thereof or (y) to the extent that any such Loss arises solely
as a result of an untrue statement or omission in a preliminary Prospectus
relating to Registrable Securities, if a Prospectus (as then amended or
supplemented), that would have cured the defect was furnished to the indemnified
party from whom the Person asserting the claim giving rise to such Loss
purchased Registrable Securities prior to the sale (which may include a contract
of sale) of the Registrable Securities to such Person and a copy of such
Prospectus (as amended and supplemented), was not sent or given by or on behalf
of such indemnified party to such Person at or prior to the sale (which may
include a contract of sale) of the Registrable Securities to such Person.
 
6.2           Indemnification by the Purchasers.  The Purchasers agree to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers and employees and each Person who controls the
Company (within the meaning of the Securities Act or the Exchange Act) from and
against any Losses resulting from (i) any untrue statement of a material fact in
any Registration Statement under which such Registrable Securities were
Registered under the Securities Act (including any Prospectus contained therein
or any amendment thereof or supplement thereto or any material incorporated by
reference therein), or or (ii) any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not misleading or to
provide full, true and plain disclosure of all material facts, to the extent,
but only to the extent, that such untrue statement or omission is contained in
any information furnished in writing by the Purchasers to the Company
specifically for inclusion in such Registration Statement or Prospectus and
relates solely to the Purchasers and has not been corrected in a subsequent
writing prior to or concurrently with the making of the purchase order for the
Registrable Securities delivered to the Person asserting the claim.  The Company
shall be entitled to receive indemnities from underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, to the same extent as provided above (with appropriate
modification) with respect to information furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement.  The
Purchasers shall also indemnify any underwriters of the Registrable Securities,
their officers and directors and each person who controls such underwriters
(within the meaning of the Securities Act or the Exchange Act) to the same
extent as provided with respect to indemnification of the Company, provided that
in no event shall any indemnity under this subsection 6.2, when taken together
with any contribution by such Purchaser under subsection 6.4, exceed the net
proceeds from the offering received by such Purchaser.
 
 
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6.3           Conduct of Indemnification Proceedings.  Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defence of
such claim with counsel reasonably satisfactory to the indemnified party;
provided that any Person entitled to indemnification hereunder shall have the
right to select and employ separate counsel and to participate in the defence of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (i) the indemnifying party has agreed in writing to pay such
fees or expenses, (ii) the indemnifying party shall have failed to assume the
defence of such claim within a reasonable time after receipt of notice of such
claim from the Person entitled to indemnification hereunder and employ counsel
reasonably satisfactory to such Person, (iii) the indemnified party has
reasonably concluded (based upon advice of its counsel) that there may be legal
defences available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, or (iv) in the
reasonable judgment of any such Person (based upon advice of its counsel) a
conflict of interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defence of such claim on behalf of such Person). If the
indemnifying party assumes the defence, the indemnifying party shall not have
the right to settle such action without the consent of the indemnified party. No
indemnifying party shall consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of an unconditional release
from all liability in respect to such claim or litigation. If such defence is
not assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its prior written
consent, but such consent may not be unreasonably withheld. It is understood
that the indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements or other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time from such indemnified
party or parties unless (x) the employment of more than one counsel has been
authorized in writing by the indemnifying party or parties, (y) an indemnified
party has reasonably concluded (based on the advice of counsel) that there may
be legal defences available to it that are different from or in addition to
those available to the other indemnified parties or (z) a conflict or potential
conflict exists or may exist (based upon advice of counsel to an indemnified
party) between such indemnified party and the other indemnified parties, in each
of which cases the indemnifying party shall be obligated to pay the reasonable
fees and expenses of such additional counsel or counsels.
 
 
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6.4           Contribution.  If for any reason the indemnification provided for
in paragraphs (a) and (b) of this Section 6.4 is unavailable to an indemnified
party or insufficient in respect of any Losses referred to therein, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Loss (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party or parties on the other hand; or (ii)
if the allocation provided by clause (i) of this Section 6.4 is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) of this Section 6.4 but also the
relative fault of the indemnifying party on the one hand and the indemnified
party or parties on the other hand in connection with the acts, statements or
omissions that resulted in such losses, as well as any other relevant equitable
considerations. In connection with any Registration Statement filed with the SEC
by the Company, (x) the relative benefits received by the indemnifying on the
one hand and the indemnified party on the other hand shall be deemed to be in
the same respective proportions as the net proceeds from the offering of any
securities registered thereunder (before deducting expenses) received by the
indemnifying party and the net proceeds from the offering of any Registrable
Securities (before deducting expenses) received by the indemnified party, bear
to the aggregate public offering price of the securities registered thereunder;
and (y) the relative fault of the indemnifying party on the one hand and the
indemnified party on the other hand shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The parties hereto agree that
it would not be just or equitable if contribution pursuant to this Section 6.4
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph, provided, however, that no contribution by any
Purchaser, when combined with any amounts paid by such Purchaser pursuant to
Section 6.2, shall exceed the net proceeds from the offering received by such
Purchaser. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The amount
paid or payable by an indemnified party as a result of the Losses referred to in
Sections 6.1 and 6.2 shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. If
indemnification is available under this Section 6.4, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Sections
6.1 and 6.2 hereof without regard to the relative fault of said indemnifying
parties or indemnified party. The remedies provided for in this Section 6.4 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
 
 
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ARTICLE 7
MISCELLANEOUS
 
7.1           Rules 144 and 144A.  The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder. If the Company is
not required to file such reports, it will, upon the request of the Purchasers,
make publicly available information for so long as necessary to permit sales
pursuant to Rules 144, 144A or Regulation S under the Securities Act, and it
will take such further action as the Purchasers may reasonably request, all to
the extent required from time to time to enable the Purchasers to sell
Registrable Securities without Registration under the Securities Act within the
limitation of the exemptions provided by (i) Rules 144, 144A or Regulation S
under the Securities Act, as such Rules may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of the Purchasers, the Company will deliver to the Purchasers a written
statement as to whether it has complied with such requirements and, if not, the
specifics thereof.
 
7.2           Free Writing Prospectuses.  The Purchasers agree that they will
not use any “free writing prospectuses” (as such term is defined in Rule 405 of
the Securities Act) in connection with the offer or sale by them of Registrable
Securities pursuant to a Registration Statement.
 
7.3           No Inconsistent Agreements; Additional Rights.  The Company will
not hereafter enter into, and is not currently a party to, any agreement with
respect to its securities which is inconsistent with the rights granted to the
Purchasers by this Agreement.
 
7.4           Term and Termination. This Agreement shall take effect from and
after the Closing Date and shall terminate upon the earlier of (i) the
expiration of the Registration Period or (ii) the Company ceases trading on the
Toronto Stock Exchange or any other exchange on which the Company’s Common Stock
islisted and posted for trading, except for the provisions of Article 6, which
shall survive any such termination.
 
7.5           Fees and Expenses.  The Company shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and of the
Purchasers’ counsel incident to the negotiation, preparation, execution and
delivery of this Agreement. The fees and expenses that the Company is obligated
to pay pursuant to this Section 7.5 shall be in addition to all such fees and
expenses the Company is obligated to pay pursuant to the terms of Article 5 and
Article 6.
 
 
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7.6           Entire Agreement.  This Agreement, together with the schedules
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.
 
7.7           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of:
 
 
(a)
the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address respectively set out
on the signature pages attached hereto prior to 5:30 p.m. (Toronto time) on a
Trading Day;

 
 
(b)
the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile or email at the facsimile number or
email address respectively set out on the signature pages attached hereto on a
day that is not a Trading Day or later than 5:30 p.m. (Toronto time) on any
Trading Day;

 
 
(c)
the 2nd Trading Day following the date of mailing, if sent by an internationally
recognized overnight courier service; or

 
 
(d)
upon actual receipt by the party to whom such notice is required to be given.

 
The address for such notices and communications shall be as set out on the
signature pages attached hereto.
 
7.8           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the holder(s) of a majority of the Preferred Shares or, in
the case of a waiver, by the party against whom enforcement of any such waiver
is sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.
 
7.9           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Company, the Purchasers and their successors and
permitted assigns. Neither the Company nor the Purchasers may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other party.
 
 
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7.10           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.
 
7.11           Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
 
7.12           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
 
7.13           Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the invalidity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties shall attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
7.14           Construction.  The Company and the Purchasers confirm that each
of them together with their respective counsel has reviewed and had an
opportunity to revise the Agreement and, therefore, the provisions of this
Agreement express their mutual intent and the rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments hereto and no
rule of strict construction shall be applied against either party.
 
 
(Signature Pages Follow)
 
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective authorized signatories as of the date first indicated on the
first page hereof.
 

 
NEULION, INC.
     
By:
/s/ Roy E. Reichbach  
Name: 
Roy E. Reichbach  
Title:
Secretary              
Address:
  1600 Old Country Road   Plainview, NY 11803              
JK&B CAPITAL V, L.P.
     
By:
JK&B Management V, L.P., its General Partner
 
By:
JK&B Capital V, L.L.C., its General Partner
       
By:
/s/ Thomas Neustaetter                    
Address: 
  Two Prudential Plaza   180 N. Stetson Ave., Suite 4500   Chicago, IL 60601    
 
JK&B CAPITAL V SPECIAL OPPORTUNITY FUND, L.P.
     
By:
JK&B Management V, L.P., its General Partner
 
By:
JK&B Capital V, L.L.C., its General Partner
       
By:
/s/ Thomas Neustaetter        
Address:
      Two Prudential Plaza   180 N. Stetson Ave., Suite 4500   Chicago, IL 60601

 
 
 

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