Document:

ex10_1.htm

Exhibit 10.1

 

 

NEULION, INC.

 

 

 

 

 

 

SECOND AMENDED AND RESTATED STOCK OPTION PLAN

 

 

 

May 2007,

as amended on May 13, 2009, July 14, 2009 and April 29, 2010

 

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

 

	NEULION, INC. (FORMERLY JUMPTV INC.) 	-2-
	 	 
	ARTICLE 1.	-2-
	 	 
	PURPOSE AND INTERPRETATION 	-2-
	 	 
	1.1.	 	Plan	-2-
	1.2.	 	Purpose	-2-
	1.3.	 	Administration	-2-
	1.4.	 	Interpretation	-2-
	1.5.	 	Numbers 	-5-
	1.6.	 	Lapsed Options 	-6-
	 	 
	ARTICLE 2. STOCK OPTION PLAN	-6-
	 	 	 	 
	2.1.	 	Grants 	-6-
	2.2.	 	Exercise of Options 	-6-
	2.3	 	Share Option Price 	-7-
	2.4	 	Grant to Participant’s RRSP or RRIF	-7-
	2.5	 	Termination, Retirement, Death or Departure	-7-
	2.6	 	Option Agreements	-8-
	2.7	 	Payment of Option Price 	-8-
	2.8	 	Cashless Exercise	-8-
	2.9	 	Withholding	-8-
	 	 	 	 
	ARTICLE 3 GENERAL 	-9-
	 	 	 
	3.1	 	Right to Exercise Options in connection with a Proposed Transaction	-9-
	3.2	 	Prohibition on Transfer of Options	-10-
	3.3	 	Prohibition on Transfer of Shares	-10-
	3.4	 	Capital Adjustments	-10-
	3.5	 	Non-Exclusivity 	-10-
	3.6	 	Amendment and Termination 	-10-
	3.8	 	Compliance with Legislation	-11-
	3.9	 	Effective Date 	-12-
	3.10	 	Prior Plan	-12-
	3.11	 	Record Keeping 	-12-
	 	 	 	 
	SECOND AMENDED AND RESTATED SHARE OPTION PLAN 	-13-
	 	 	 	 
	REGULATIONS	-13-
	 	 
	SCHEDULE “A” TO OPTION PLAN	-14-

 

  

  

  

 

NEULION, INC. (formerly JumpTV Inc.)

 

 

ARTICLE 1.

PURPOSE AND INTERPRETATION

 

 

	
1.1.

	
Plan

	
 

 

This Plan consists of a Stock Option Plan and supersedes any and all prior plans relating to the granting of stock options by the Corporation.

 

1.2.          Purpose 

 

The purpose of this Plan is to advance the interests of the Corporation by (i) providing Eligible Persons with additional incentive; (ii) encouraging stock ownership by Eligible Persons; (iii) increasing the proprietary interest of Eligible Persons in the success of the Corporation; (iv) encouraging Eligible Persons to remain with the Corporation or a related entity; and (v) attracting new employees, officers, directors and consultants to the Corporation or a related entity.

 

	
1.3.

	
Administration

	 

 

	
  

	
(a)

	

This Plan will be administered by the Board or a committee of the Board duly appointed for this purpose by the Board and consisting of not less than 2 directors.  If a committee is appointed for this purpose, all references the term “Board” will be deemed to be references to the committee.

 

	
  

	
(b)

	
Subject to the limitations of this Plan, the Board  has the authority;  (i) to grant Options to  purchase Shares to Eligible Persons; (ii) to determine the terms, including the limitations, restrictions and conditions, if any, upon such grants; (iii) to interpret this Plan and to adopt, amend and rescind such administrative guidelines and other rules and Regulations relating to this Plan as it may from time to time deem advisable, subject to required prior approval by any applicable regulatory authority; and (iv) to make all other determinations and to take all other actions in connection with the implementation and administration of this Plan as it may deem necessary or advisable.  The Board’s guidelines, rules, Regulations, interpretations and determinations will be conclusive and binding upon all parties.

 

1.4.         Interpretation

 

For the purposes of this Plan, the following terms will have the following meanings unless otherwise defined elsewhere in this Plan:

 

	
  

	
(a)

	
“Blackout Expiry Date” has the meaning set forth in subclause 2.2(a);

 

  

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(b)

	
“Blackout Period” means the period of time when, pursuant to any self-imposed policies of the Corporation applicable to an Optionee, the Optionee is prohibited from trading in the Corporation’s securities;

 

	
  

	
(c)

	
“Board” means the board of directors of the Corporation or a committee thereof appointed in accordance with the Plan;

 

	
  

	
(d)

	
“consultant” has the meaning prescribed by National Instrument 45-106 Prospectus and Registration Exemptions (or a successor instrument) and, for greater certainty means, for an issuer, a person other than an employee, executive officer, or director of the issuer or of a related entity of the issuer, that:

 

	
  

	
(i)

	
is engaged to provide services to the issuer or a related entity of the issuer, other than services provided in relation to a distribution,

 

	
  

	
(ii)

	
provides the services under a written contract with the issuer or a related entity of the issuer, and

 

	
  

	
(iii)

	

spends or will spend a significant amount of time and attention on the affairs and business of the issuer or a related entity of the issuer,

 

and includes, for an individual consultant, a corporation of which the individual consultant is an employee or shareholder, and a partnership of which the individual consultant is an employee or partner;

 

	
  

	
(e)

	 	
“Corporation” means NeuLion, Inc., formerly JumpTV Inc.;

 

	
  

	
(f)

	 	
“Eligible Person” means, subject to the Regulations and to all applicable law,

 

(i)            any employee, officer, director or consultant of (i) the Corporation or (ii) any related entity (and includes any such person who is on a leave of absence authorized by the Board or the board of directors of any related entity) designated as an Eligible Person by the Board; and

 

(ii)           at any time from and after the completion of an initial public offering of the Shares, a Family Trust, Personal Holding Corporation or Retirement Trust;

 

	
  

	
(g)

	
“Family Trust” means a trust, of which at least one of the trustees is an Eligible Person and the  beneficiaries of which are one or more of the Eligible Person and the spouse, minor children and minor grandchildren of the Eligible Person;

 

	
  

	
(h)

	 	
“holding entity” means a person that is controlled by an individual;

 

	
  

	
(i)

	
“Insider” means:

 

(i)            an insider as defined in the Securities Act (Ontario), other than a person who falls within that definition solely by virtue of being a director or senior officer of a Subsidiary; and

 

  

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(ii)           an associate, as defined in the Securities Act (Ontario), of any person who is an insider by virtue of (i) above;

 

	
  

	
(j)

	
“Option” means an option granted to an Eligible Person to purchase Shares of the Corporation pursuant to the terms of the Plan;

	
  

	
(k)

	
“Participant” means an eligible Person to whom or to whose RRSP an Option has been granted;

 

	
  

	
(l)

	
“Permitted Assign” means, for a Participant;

 

	
  

	
(i)

	
a trustee, custodian or administrator acting on behalf of, or for the benefit of the person,

 

	
  

	
(ii)

	
a holding entity of the person,

 

	
  

	
(iii)

	
an RRSP or a RRIF of the person,

 

	
  

	
(iv)

	
a spouse of the person,

 

	
  

	
(v)

	
a trustee, custodian or administrator acting on behalf of, or for the benefit of the spouse of the person,

 

	
  

	
(vi)

	
a holding entity of the spouse of the person, or

 

	
  

	
(vii)

	
an RRSP or a RRIF of the spouse of the person;

 

	
  

	
(m)

	
“Personal Holding Corporation” means a corporation that is controlled by an Eligible Person and the shares of which are beneficially owned by the Eligible Person and the spouse, minor children and minor grandchildren of the Eligible Person;

 

	
  

	
(n)

	
“Plan” means the Corporation’s Stock Option Plan, as amended from time to time;

 

	
  

	
(o)

	
“Regulations” means the regulations made pursuant to this Plan, as same may be amended from time to time;

 

	
  

	
(p)

	
“related entity” means any person or company that controls or is controlled by the Corporation or that is controlled by the same person or company that controls the Corporation;

 

	
  

	
(q)

	
“Retirement Trust” means a trust governed by a registered retirement savings plan or a registered retirement income fund established by and for the benefit of an Eligible Person;

 

	
  

	
(r)

	
“RRSP” means a registered retirement savings plan as defined in the Income Tax Act (Canada);

 

	
  

	
(s)

	
“RRIF” means a registered retirement income fund as defined in the Income Tax Act (Canada);

 

	
  

	
(t)

	
“Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, restricted share plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Shares to one or more Eligible Persons, including a share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise;

 

  

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(u)

	
“Share Option Price” means the price at which Shares subject to this Plan can be purchased as determined by the Board in accordance with the Plan;

 

	
  

	
(v)

	
“Shares” means the common shares of the Corporation or such other class of voting shares of the Corporation for which the common shares may hereafter be converted or exchanged;

 

	
  

	
(w)

	
“Subsidiary” means any corporation that is a subsidiary of the Corporation as defined in the Securities Act (Ontario);

 

	
  

	
(x)

	
“Termination Date” means the date on which a Participant ceases to be an Eligible Person;

 

	
  

	
(y)

	
“Transfer” includes any sale, exchange, assignment, gift, bequest, disposition, mortgage, charge, pledge, encumbrance, grant of security interest or other arrangement by which possession, legal title or beneficial ownership passes from one person to another, or to the same person in a different capacity, whether or not voluntary and whether or not for value, and any agreement to effect any of the foregoing;

 

	
  

	
(z)

	
“Trustee” means a person appointed by the Board to act in the capacity of trustee for the benefit of the Plan;

 

	
  

	
(aa)

	
“United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia;

 

	
  

	
(bb)

	
“U.S. Securities Act” means the United States Securities Act of 1933, as amended; and

 

	
  

	
(cc)

	
“Year” means a fiscal year of the Corporation, as determined from time to time by the Board.

 

Time shall be of the essence with respect to this Plan.

 

Words importing the singular number include the plural and vice versa words importing the masculine gender include the feminine.

 

This Plan is to be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

1.5.         Numbers 

 

The Maximum number of Shares available for purchase or issuance under this Plan is equal to the greater of (i) 4,000,000 Shares; and (ii) 12.5% of the number of issued and outstanding Shares from time to time.  For greater certainty, the maximums set out herein shall be exclusive of all grants of options made prior to the coming into effect of this Plan as well as any rights granted under any other security-based incentive compensation plans of the Corporation and such options and rights, as the case may be, shall not be subject to the terms of this Plan.

 

  

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1.6.         Lapsed Options 

 

In the event that Options granted under this Plan are surrendered in accordance with the provisions of this Plan, terminate or expire without being exercised in whole or in part, the Shares reserved for issuance but not purchased under such lapsed Options shall be available for subsequent Options to be granted under Plan.

 

 

ARTICLE 2.

STOCK OPTION PLAN

 

2.1.         Grants

 

	
  

	
(a)

	
Subject to the terms of this Plan, the Board will have the authority to determine the limitations, restrictions and conditions, if any, in addition to those set out in this Plan, applicable to the exercise of an Option, including, without limitation, the nature and duration of the restrictions, if any, to be imposed upon the sale or other disposition of Shares acquired upon exercise of the Option, and the nature of the events, if any, and the duration of the period in which any Participant’s rights in respect of Shares acquired upon exercise of an Option may be forfeited.  An Eligible Person and the Eligible Person’s RRSP or RRIF may receive Options on more than one occasion under this Plan.

 

	
  

	
(b)

	
The effective date of any grant of Options pursuant to this Plan shall be the date on which the Board approves such grant, whether at a meeting of the Board or by written resolution.

 

	
  

	
(c)

	
With respect to any Options granted to a “covered individual”, as defined in Section 162(m)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”), the award shall be made by a committee of the Board that constitutes a “compensation committee” within the meaning of Section 162(m).

 

Subject to the Regulations, the aggregate number of securities available for issuance under the Plan to any one Eligible Person and an RRSP or an RRIF of which that person is an annuitant, will be 5% of the Shares outstanding at the time of the grant (on a non-diluted basis), or such other number as the shareholders of the Corporation shall approve in accordance with the requirements of any stock exchange or quotation system upon which any shares of the Corporation are then listed and posted or quoted for trading.

 

2.2.         Exercise of Options

 

	
  

	
(a)

	
Options must be exercised no later than 5 years after the date of grant or such lesser period as the applicable grant, the Regulations or the provisions of this Plan may require (the “Expiry Date”); provided, however, in the event that an Option is scheduled to expire or terminate during or within 10 business days following a Blackout Period, the Expiry Date shall be the date that is the tenth business day following the date of expiry of the Blackout Period (the “Blackout Expiry Date”).  If a new Blackout Period is imposed prior to the Blackout Expiry Date, the Blackout Expiry Date shall be the date that is the tenth business day following the date of expiry of the new Blackout Period.

 

	
  

	
(b)

	
The Board may determine when any Option will become exercisable and may determine that the Option will be exercisable in installments.

 

  

-6-

  

 

	
  

	
(c)

	
No fractional Shares may be issued and the Board may determine the manner in which fractional Share value will be treated.

 

	
  

	
(d)

	
Not less than 100 Shares may be purchased at any one time except where the remainder totals less than 100.

 

2.3          Share Option Price

 

	
  

	
Subject to the applicable rules of any stock exchange or quotation system on which the Shares may be listed from time to time, the Board will establish the Share Option Price at the time each Option is granted on the basis of the closing market price of the Shares on the market with the largest trading volume of the Shares on the last trading date preceding the date of the grant.  If there is no trading market for the Shares, the Board will in good faith determine the Share Option Price of an Option based on the fair market value of the Shares on the date of the grant.  If the Option is to be granted on a pre-determined date in the future, the Share Option Price will be the weighted average trading price, rounding up to the nearest cent, of the Shares on the stock exchange or quotation system upon which any shares of the Corporation are then listed and posted or quoted for trading for the five trading dates preceding the date of the grant.  In all instances, the Share Option Price shall not be less than fair market value, as determined under Section 409A of the Code.

 

2.4          Grant to Participant’s RRSP or RRIF

 

	
  

	
Upon written notice from the Participant,  any Option that might otherwise be granted to that Participant will be granted, in whole or in part, to an RRSP or an RRIF established by and for the sole benefit of the Participant.  The determination of whether and the extent to which a Participant is entitled by applicable tax law to contribute Option to the Participant’s RRSP or RRIF shall be the responsibility of the Participant.

 

2.5          Termination, Retirement, Death or Departure

 

	
  

	
(a)

	
Subject to subsection (c), if a Participant ceases to be an Eligible Person for any reason whatsoever other than death, each Option held by the Participant, the Participant’s Permitted Assigns, or the Participant’s RRSP or RRIF will cease to be exercisable 90 days after the Termination Date.  If any portion of an Option has not vested by the Termination Date, that portion of the Option may not under any circumstances be exercised by the Participant, the Participant’s Permitted Assigns or the Participant’s RRSP or RRIF.  This subsection (a) will apply regardless whether the Participant received compensation in respect of dismissal or was entitled to a period of notice of termination which would otherwise have permitted a greater portion of the Option to vest in the Participant, the Participant’s Permitted Assigns or the Participant’s RRSP or RRIF.

 

	
  

	
(b)

	
If a Participant dies, the legal representatives of the Participant may exercise the Participant’s Options, the Participant’s Permitted Assign’s Options and the participant’s RRSP Options or RRIF Options within 120 days after the date of the participant’s death but only to the extent the Options were by their terms exercisable on the date of death.

 

	
  

	
(c)

	
In the event that a Participant’s employment, consultancy or directorship, as applicable, is terminated by the Corporation for cause (as defined in such Participant’s employment or consulting agreement, as applicable), such Participant’s Options and its Permitted Assign’s Options, whether vested or otherwise, shall immediately terminate.  Notwithstanding the foregoing or anything to the contrary herein, the Board shall have discretion to permit such Participant and its Permitted Assigns to exercise the vested portion of such Participant’s Options (as of the termination date).  The Board shall have a period of 30 days to exercise its discretion to permit the exercise of such Participant’s Options and in the event of such exercise of discretion, the Options shall be deemed not to have been terminated as of the termination date of the Participant’s employment, consultancy or directorship, as applicable.

 

  

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2.6          Option Agreements

 

Each Option must be confirmed, and will be governed, by an agreement (an “Option Agreement”) in the form of Schedule “A” attached hereto (as the same may be amended from time to time by the Regulations) signed by the Corporation and the Participant or an RRSP or an RRIF of which that person is an annuitant.

 

2.7          Payment of Option Price

 

Subject to section 2.9, the exercise price of each Share purchased under an Option must be paid in full by bank draft or certified cheque at the time of exercise, and upon receipt of payment in full, but subject to the terms of this Plan, the number of Shares in respect of which the Option is exercised will be duly issued as fully paid and non-assessable.

 

2.8          Cashless Exercise

 

If the Shares are listed and posted for trading on a stock exchange or market, a Participant may elect “cashless” exercise in a notice of exercise if the Shares issuable on exercise are to be immediately sold.  In such case, the Participant will not be required to deliver to the Corporation the certified cheque or bank draft referred to in section 2.7.  Instead the following procedure will be followed, as detailed in a Cashless Exercise Instruction Form to be provided by the Corporation and completed by the Participant:

 

	
  

	
(a)

	
the Participant will instruct a broker selected by the Participant to sell through the exchange or market on which the Shares are listed or quoted the Shares issuable on exercise of an Option, as soon as possible and the then applicable bid price of the Shares;

 

	
  

	
(b)

	
on the settlement date for the trade, the Corporation will direct its registrar and transfer agent to issue a certificate in the name of the broker (or as the broker may otherwise direct) for the number of Shares issued on exercise of the Option, against payment by the broker to the Corporation of the exercise price for such Shares; and

 

	
  

	
(c)

	
the broker will deliver to the Participant the remaining proceeds of sale, net of the brokerage commission.

 

2.9          Withholding

 

The Corporation shall have the right to deduct and withhold from (or recover in respect of) any payment to be made pursuant to or in connection with this Plan, any Option or any Shares the amount of any taxes required by law to be withheld from, or paid in connection with, such payment.  The Corporation may, in its discretion, permit a Participant to elect to satisfy such withholding obligation through a cash payment to be made by such Participant, through the surrender of Shares held by a Participant in a manner acceptable to the Corporation, or through the surrender of shares which the Participant is otherwise entitled to receive under the Plan or any Option.  The Corporation shall have the right to sell any of the Participant’s Shares to satisfy or recover any taxes which are payable by the Corporation in respect of this Plan, any Option or any Shares for the account of such Participant.  Where the withholding undertaken in connection with the foregoing is considered by the Corporation to be inadequate, the payment or delivery of property hereunder by the Corporation shall be conditional upon such Participant (or other person) reimbursing or compensating the Corporation or making arrangements satisfactory to the Corporation for the payment or provision of all required taxes.  For purposes hereof , “taxes” shall refer to any local, foreign, federal, provincial, state, social security, withholding or any other taxes or governmental charges of any kind whatsoever.

  

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2.10        Participant Responsibility

Neither the Corporation nor any of its Subsidiaries shall assume any responsibility in respect of any tax consequences that arise from participation in the Plan by any employee, consultant or other person.  Such persons are urged to consult their own independent tax advisors in such regard.  In particular, the Corporation and its Subsidiaries shall have no liability in respect of any Options which a Participant may cause to be issued to any personal holding corporation and/or their spouse and/or minor children or grandchildren, and/or to RRSP, RRIF  or similar deferred compensation plans.

 

 

ARTICLE 3

GENERAL

 

3.1          Right to Exercise Options in connection with a Proposed Transaction

 

	
  

	
(a)

	
If there is a Take-over Bid or Issuer Bid (other than a “Normal Course” Issuer Bid) made for all or any of the issued and outstanding Shares, then the Board of Directors may, in its sole discretion, by resolution permit any or all unvested Options of any or all Participants outstanding under the Plan to become immediately exercisable (subject to any limitations the Board of Directors may impose) in order to permit Shares issuable under such Options to be tendered to such bid.

 

	
  

	
(b)

	
There shall be no automatic vesting of unvested Options in the event of a Change of Control (as defined below) unless otherwise agreed in an employment or consulting agreement; however, the Board may, in its sole discretion, by resolution permit any or all unvested Options of any or all Participants outstanding under the Plan to become immediately exercisable (subject to any limitations the Board may impose) in the event of a Change of Control.  For the purposes of this provision, a “Change of Control” will be deemed to have occurred when:

 

	
  

	
(i)

	
a person (which includes a partnership or corporation) acting alone or jointly or in concert with others, acquires beneficial ownership of voting securities of the Corporation which, together with voting securities of the Corporation already owned by such person or persons, constitutes in the aggregate 50% or more of the outstanding voting securities of the Corporation (for greater certainty, an initial public offering of the Corporation’s Shares will not constitute a Change of Control).  A person who is principally engaged in the business of managing investment funds for unaffiliated securities investors and, as a part of such person’s duties for fully managed accounts, holds or exercises voting power over voting securities of the Corporation, will not, solely by reason thereof, be considered to be a beneficial owner of such voting securities;

 

	
  

	
(ii)

	
the Corporation agree to amalgamate, consolidate or merge with another body corporate;

 

	
  

	
(iii)

	
any resolution is passed or any action or proceeding is taken with respect to the liquidation, dissolution or winding up of the Corporation; or

 

  

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(iv)

	
the Corporation decides to sell, lease, or otherwise dispose of all, or substantially all, of its assets.

 

All unvested Options held by an Eligible Person shall vest immediately in the event that such Eligible Participant’s employment or consultancy is terminated at any time prior to the expiry date of such Options by virtue of, or in connection with, a Change of Control, except in the case of termination for cause of such Eligible Participant’s employment or consultancy (in which case such Options shall not vest).

 

3.2          Prohibition on Transfer of Options

 

Options are personal to each Eligible Person and its Permitted Assigns.  No Eligible Person may deal with any Options or any interest in them or Transfer any Options now or hereafter held by the Eligible Person except in accordance with the Plan.  A purported Transfer of any Options in violation of the Plan will not be valid and the Corporation shall not issue any Share upon the attempted exercise of improperly Transferred Option.

 

3.3          Prohibition on Transfer of Shares

 

No Participant will, upon exercise of an Option, deal with any Share or interest in it or Transfer any Share now or hereafter held by the Participant, the Participant’s Permitted Assigns or the Participant’s RRSP or RRIF except in accordance with the Articles of the Corporation.

 

3.4          Capital Adjustments

 

If there is any change in the outstanding Shares by reason of a stock dividend or split, recapitalization, consolidation, combination or exchange of shares, or other fundamental corporate change, the Board will make an appropriate substitution or adjustment in (i) the exercise price of any unexercised Options under the Plan; (ii) the number or kind of shares or other securities reserved for issuance pursuant to this Plan; and (iii) the purchase price of those shares subject to unexercised Options theretofore granted under the Plan, and in the exercise price of those unexercised Options; provided, however, that no substitution or adjustment will obligate the Corporation to issue or sell fractional Shares.  In the event of the reorganization of the Corporation or the amalgamation or consolidation of the Corporation with another corporation, the Board may make such provision for the protection of the rights of Eligible Persons, Participants and their RRSPs or their RRIFs as the Board in its discretion deems appropriate.  The determination of the Board, as to any adjustment or as to there being no need for adjustment, will be final and binding on all parties.

 

3.5          Non-Exclusivity

 

Nothing contained herein will prevent the Board from adopting other or additional compensation arrangements for the benefit of any Eligible Person or Participant, subject to any required regulatory or shareholder approval.

 

3.6          Amendment and Termination

 

	
  

	
(a)

	
The Board may, at any time and from time to time, amend, suspend or terminate the Plan without shareholder approval, provided that no such amendment, suspension or termination may be made without obtaining any required approval of any regulatory authority or stock exchange or the consent or deemed consent of an Optionee where such amendment, suspension or termination materially prejudices the rights of the Optionee.

 

  

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(b)

	
Notwithstanding the provisions of Section 3.6(a), the Board may not, without the approval of the shareholders of the Corporation, make amendments to the Plan for any of the following purposes:

 

	
  

	
(i)

	
to increase the maximum number of Shares that may be issued pursuant to Options granted under the Plan;

	
  

	
(ii)

	
to reduce the Exercise Price of Options for the benefit of an Insider;

	
  

	
(iii)

	
to extend the Expiry Date of Options for the benefit of an Insider; and

	
  

	
(iv)

	
to amend the provisions of this Section 3.6(b).

 

	
  

	
(c)

	
Subject to Section 3.6(b), the Board may, at any time and from time to time, without the approval of the shareholders of the Corporation, amend any term of any outstanding Option, provided that:

 

	
  

	
(i)

	
any required approval of any regulatory authority or stock exchange is obtained;

 

	
  

	
(ii)

	
the Board would have had the authority to initially grant the option under the terms so amended; and

 

	
  

	
(iii)

	
the consent or deemed consent of the Optionee is obtained if the amendment would materially prejudice the rights of the Optionee under the Option.

 

3.7          Restrictions on Awards

 

The maximum number of Common Shares that:

 

	
  

	
(a)

	
may be reserved for issuance to Insiders pursuant to the Plan and any other previously established or proposed Share Compensation Arrangement is 10% of the number of Common Shares outstanding;

 

	
  

	
(b)

	
may be issued to Insiders under the Plan and any other previously established or proposed Share Compensation Arrangement within a one-year period is 10% of the number of Common Shares outstanding; and

 

	
  

	
(c)

	
may be issued to any one Insider under the Plan and any other previously established or proposed Share Compensation Arrangement within a one-year period is 5% of the number of Common Shares outstanding.

 

If a proposed Share Compensation Arrangement, together with all of the Corporation’s other previously established or proposed Share Compensation Arrangements, could result, at any time, in the number of shares reserved for issuance pursuant to stock options granted to Insiders exceeding 10% of the outstanding issue, the Share Compensation Arrangement must be approved by a majority of the votes cast at the shareholders’ meeting other than votes attaching to securities beneficially owned by Insiders.

 

For the purposes of this Section 3.7, holders of non-voting and subordinate voting shares must be entitled to vote with the holders of any class of shares of the Corporation which otherwise carry greater voting rights, on a basis proportionate to their respective residual equity interests in the Corporation.

 

3.8          Compliance with Legislation

 

	
(a)

	
The Board may postpone or adjust any exercise of any Option or the issue of any Shares pursuant to this Plan as the Board in its discretion may deem necessary in order to permit the Corporation to effect or maintain registration of this Plan or the Shares issuable pursuant thereto under the securities laws of any applicable jurisdiction, or to determine that the Shares and this Plan are exempt from such registration.  The Corporation is not obligated by any provision of this Plan or any grant hereunder to sell or issue Shares in violation of any applicable law.  In addition, if the Shares are listed on a stock exchange, the Corporation will have no obligation to issue any Shares pursuant to this Plan unless the Shares have been duly listed, upon official notice of issuance, on a stock exchange on which the Shares are listed for trading.

 

  

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(b)

	
Without limiting the generality of Section 3.8(a), with regard to Participants who are residents of the United States, the Board may administer this Plan in accordance with Rule 701 or Rule 506 of Regulation D under the U.S. Securities Act or otherwise in accordance with the advice of counsel, and in accordance with applicable state securities laws.  Each certificate representing Shares acquired in accordance with this Section 3.8(b) shall bear one or more legends making appropriate reference to the restrictions imposed under applicable securities laws with regard to such Shares.

 

3.9          Effective Date

 

This Plan will become effective immediately upon approval of the Board, subject to any required regulatory and shareholder approval.

 

3.10        Prior Plan

 

The Plan shall entirely replace and supersede prior share option plans, if any, enacted by the Board of Directors of the Corporation.

 

3.11        Record Keeping

 

The Corporation shall maintain a register in which shall be recorded:

 

(a)          the name and address of each Participant in the Plan; and

 

(b)          the number of Option issued to a Participant and the number of Options outstanding.

 

 

 

  

-12-

  

 

SECOND AMENDED AND RESTATED SHARE OPTION PLAN

 

REGULATIONS

 

	
  

	
1.

	
In these Regulations, words defined in this Plan and not otherwise defined herein will have the same meaning as set forth in this Plan.

 

	
  

	
2.

	

A Participant will cease to be an Eligible Person on the earliest to occur of:

 

 

	
  

	
(a)

	
the date of the Participant’s termination, retirement or cessation of employment with or engagement by the Corporation or any of its related entities;

 

	
  

	
(b)

	

the date of the Participant’s death; and

 

	
  

	
(c)

	

the date on which the Participant otherwise fails to meet the criteria set forth under the definition of an Eligible Person.

 

	
  

	
3.

	
If the legal representative of a Participant who has died exercises the Option of the Participant or the Participant’s RRSP or RRIF in accordance with the terms of the Plan, the Corporation will have no obligation to issue the Shares until evidence satisfactory to the Corporation has been provided by the legal representative that the legal representative is entitled to purchase the Shares under this Plan.

 

	
  

	
4.

	
Share certificates representing the number of Shares in respect of which the Option has been exercised will be issued only upon payment in full of the relevant exercise price.  These share certificates will be held for safekeeping by the Secretary of the Corporation, unless the Participant directs the Secretary otherwise.

 

 

 

  

-13-

  

 

Schedule “A” to Option Plan

 

PERSONAL AND CONFIDENTIAL

 

200

 

<<Name and Address of Optionee>>

 

Dear <<First Name>>

 

The stock option plan (the “Option Plan”) of NeuLion, Inc. (the “Corporation”) permits the board of directors (the “Board”) of the Corporation to grant options to officers, employees and certain others whose contribution to the Corporation are significant.  In recognition of your future and continuing contribution to the Corporation and in order to permit you to share in enhanced value that you will help to create, the Board is pleased to grant you, as of <<Date of Issue>> options (the “Options”) to purchase commons shares  (the “Shares”) of the Corporation.  This option agreement (the “Option Agreement”) is granted on the basis set out in this letter, and is subject to the Option Plan.  This Option Agreement and the Option Plan are referred to collectively as the “Option Documents”.  All capitalized terms not otherwise defined are to bear the meaning attributed to them in the Option Plan, a copy of which is attached hereto as Schedule “A”.

 

The total number of Shares that you may purchase pursuant to this Option Agreement is: <<Amount>>

 

The price you must pay for each Share to be acquired on the exercise of the Option is: <<Price>>

 

Your Options will vest and are exercisable in the following manner:

 

 

	Vesting Date 	Percentage of Options Exercisable  	Expiry Date
	 	On or After Vesting Date	 
	 	 	 

 

 

.                                                      .                                                      .

 

 

Subject to earlier expiration in accordance with the Option Documents, your rights to purchase Shares pursuant to this option will expire at 5:00 p.m. on <<ExpiryDate>> (unless such expiration falls within a Blackout Period, in which case the your rights to purchase Shares will expire on the Blackout Expiry Date).

 

The Options may be exercised in whole or in part in respect of vested Options at any time prior to expiry of the relevant Options.  The Options may not be exercised in amount less than 100 Shares in the case of any one exercise unless that exercise would entirely exhaust the Options.

 

You may exercise your vested Options at any time before the Expiry Date, or the Blackout Expiry Date, as the case may be, by delivering to the Corporation a completed exercise notice (similar to the attached Schedule “B”) together with cash or a certified cheque payable to “NeuLion, Inc.” in the amount of the total Share Option Price of the number of Shares being purchased.  No fractional Shares will be issued upon exercise of Options, and the Corporation will satisfy such fractional interest by paying a cash adjustment in an amount equal to the same fraction of the exercise price.

 

  

-14-

  

 

All decisions made by the board of directors with regard to any questions arising in connection with the Option Documents, whether of interpretation or otherwise, will be binding and conclusive on all parties.

 

This Option Agreement is personal and may not be sold, pledged, transferred or encumbered in any way.  There are restrictions on the transfer of Shares issued to you pursuant to the Option Plan.  As well, restrictions apply in connection with cessation of engagement.  Complete details of these restrictions are set out in the Option Plan.

 

This Option Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario.

 

Please acknowledge your acceptance of this Option Agreement by signing where indicated below on the enclosed copy of this letter and returning the signed copy to the Corporation, attention Human Resources.  By signing and delivering this copy, you are agreeing to be bound by all terms of the Option Documents.

 

Yours truly,

 

NeuLion, Inc.

 

 

 

Per:

_______________________________

Authorized Signing Officer

 

 

I have read and agree to be bound by this letter.

 

 

Signature:             _______________________________

 

 

Date:                      _______________________________

 

 

Witness:              _______________________________

 

 

Witness Name:

 

(Printed)               ______________________________

 

 

 

  

-15-

  

 

Schedule B

 

OPTION EXERCISE NOTICE

 

To:           NeuLion, Inc. (the “Corporation”)

 

The undersigned hereby irrevocably elects to exercise Options for the number of common shares in the capital of the Corporation as set forth below:

 

	
  

	
(a)

	
number of common shares to be acquired:

	
$___________

 

	
  

	
(b)

	
Option exercise price per common share:

	
$__________

 

	
  

	
(c)

	
total purchase price [(a) time (b)]:

	
$__________

 

and hereby tenders to the Corporation cash / a certified cheque (circle one) for the total purchase price for the common shares, and directs the Corporation to register the common shares and issue a certificate therefor, as set forth below:

 

 

__________________________________________

(Name of Registered Holder – please print)

 

 

__________________________________________

(Address of Registered Holder – please print)

 

 

__________________________________________

 

 

 

	 	DATED this _________ day of _____________________, _____________.
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	WITNESS:	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	)	 	 
	 	 	 	)	 	 
	 	  	 	)	 	 
	 	Signature of Witness 	 	)	(Signature of Option Holder)	 
	 	 	 	)	 	 
	 	 	 	)	 	 
	 	 	 	)	(Name of Option Holder – please print)	 

 

 

-16-ex10_2.htm

Exhibit 10.2

 

NEULION, INC. (FORMERLY JUMPTV INC.)

 

2006 STOCK APPRECIATION RIGHTS PLAN

 

April 26, 2006, as amended on November 13, 2007, March 26, 2008, May 13, 2009, July 14, 2009 and April 29, 2010

 

	
1.

	
Purpose

 

The purpose of this Stock Appreciation Rights Plan (the “Plan”) of NeuLion, Inc. (formerly JumpTV Inc.) and any successor thereof (the “Corporation”) is to provide a means whereby the Corporation may, through the grant of rights (each, a “Right”) to senior officers and directors of the Corporation (and of any affiliate or subsidiary of the Corporation) to receive cash compensation based on the appreciation of the common shares of the Corporation (“Common Shares”) or to purchase or receive Common Shares in order to motivate senior officers and directors to exert their best efforts on behalf of the Corporation (and any affiliate or subsidiary) and to closely align the personal interests of such senior officers and directors with those of the shareholders.  Rights to receive cash compensation or to purchase or receive Common Shares may be granted by the Corporation from time to time to senior officers and directors of the Corporation, or of any affiliate or subsidiary of the Corporation, or to personal holding corporations, the shares of which are held directly or indirectly by such Rightsholders, and/or their spouses, and/or minor children or grandchildren, or to registered retirement savings plans established by and for the sole benefit of such Rightsholders (such persons, corporations and plans shall be considered to be the class of eligible Rightsholders hereunder).

 

	
2.

	
Number of Shares Available Under Plan

 

Common Shares to be issued upon exercise of Rights granted under the Plan shall be reserved on the date of the grant of such Rights for issuance upon exercise of such Rights.

 

(a)      Maximum Number.  Subject to adjustment as provided in Subparagraph 4(i) below, the aggregate number of Common Shares which may be reserved for issuance under the Plan shall not exceed the greater of (x) 4,150,000 and (y) 5% of the issued and outstanding Common Shares.  The Common Shares reserved for issuance upon the exercise of Rights that (i) expire unexercised; (ii) are exercised by the Rightsholder for the “In The Money Value of the Right” (as hereinafter defined) in cash pursuant to a Cash Settlement Request (as hereinafter defined); (iii) are exercised for Common Shares issued from Treasury or purchased by the Corporation in the secondary market pursuant to a Securities Settlement Request (as defined below); or (iv) are exercised for Common Shares issued from Treasury pursuant to a Treasury Shares Alternative Settlement Request (as hereinafter defined) pursuant to subparagraphs 4(c), (d) or (e) below (or any combination thereof), shall be available for subsequent grants of Rights under the Plan.

 

(b)      Termination, Expiry, etc.  If any Rights granted under the Plan shall terminate, expire or, with the consent of the Rightsholder and any applicable regulatory authority, be cancelled such number of new Rights may thereafter be granted, subject to applicable regulatory requirements.

 

  

  

  

 

	
3.

	
Administration

 

(a)      Supervision by Board.  The Plan shall be administered under the supervision of the board of directors of the Corporation or the compensation committee of the board of directors (both of which are referred to hereinafter as the “Board”).

 

(b)      Powers of Board.  Subject to the provisions of the Plan, the Board shall have the power to:

 

	
  

	
(i)

	
determine and designate from time to time those persons to whom Rights under this Plan are to be granted and the number of Common Shares to be subject to such Rights; and

 

	
  

	
(ii)

	
determine the time or times when, and the manner in which, each Right shall be exercisable and the duration of the exercise period.

 

(c)      Other Rights and Purchase Plans.  A senior officer or director who has been granted a Right may, if the person is otherwise eligible, be granted an additional Right or Rights under this Plan or any other option or purchase plans of the Corporation if the Board shall so determine.

 

(d)      Interpretation: Rules and Regulations.  The Board may interpret the Plan, prescribe, amend and rescind any rules and regulations necessary or appropriate for the administration of the Plan, and make such other determinations and take such other actions as it deems necessary or advisable.  Without limiting the generality of the foregoing, the Board may, in its discretion, treat all or any portion of any period during which a Rightsholder is on an approved leave of absence from the Corporation, or an affiliate or subsidiary of the Corporation, as a period of employment of such Rightsholder by the Corporation, or such affiliate or subsidiary, as the case may be, for the purpose of accrual of the Rightsholder’s Rights under the Plan.  Any interpretation, determination or other action made or taken by the Board shall be final, binding and conclusive.

 

(e)      Discretionary Awards to Non-Employee Directors.    The Compensation Committee of the Board, being an independent committee of the Board, shall administer any discretionary awards to non-employee directors.

 

	
4.

	
Terms and Conditions

 

Rights granted under the Plan shall be evidenced by a Rights agreement, in a form approved by the Board, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Board may deem appropriate:

 

(a)      Rights Period.  Each Rights agreement shall specify the period for which the Rights thereunder are exercisable (which in no event shall exceed 5 years from the date of grant) and shall provide that the Rights shall expire at the end of such period.

 

(b)      Exercise Price.  The exercise price (the “Exercise Price”) of each Right shall be determined by the Board at the time such Rights are granted but in no event shall such price be lower than the Market Price (as hereinafter defined) at the time of the grant.

 

  

2

  

 

“Market Price” means the volume weighted average trading price of the Common Shares of the Corporation on the Toronto Stock Exchange (the “TSX”), or another stock exchange where the majority of the trading volume and value of the Common Shares occurs, calculated by dividing the total value by the total volume of Common Shares traded for the five (5) trading days immediately preceding the date of the Rights grant.  In certain exceptional circumstances and where appropriate, the TSX or another exchange may exclude certain trades from this calculation and adjust the market price accordingly.  If the securities are suspended from trading or have not traded on the TSX or another exchange for an extended period of time, the market price will be the fair market value of the listed securities as determined by the Board.  In all instances, the Market Price shall be determined in accordance with Section 409A of the United States Internal Revenue Code of 1986, as amended (the “Code”).

(c)      Cash Settlement.

 

	
  

	
(i)

	
Rightsholders shall be entitled to elect a cash settlement (“Cash Settlement”) of the Rights.  A Cash Settlement shall provide the Rightsholder (or in the event of the death of the Rightsholder, the Rightsholder’s executors or personal representatives) with the right to receive, upon the exercise of the Rights (in accordance with the terms of the Rights), the “In the Money Value of the Right” in cash (a “Cash Payment Request”).

 

	
  

	
(ii)

	
The Board has discretionary authority to accept or reject a Cash Payment Request in whole or in part. Notwithstanding the foregoing, the General Counsel of the Corporation may approve a Cash Payment Request in respect of amounts equal to or less than $2,500 United States dollars.

 

	
  

	
(iii)

	
If a Cash Payment Request is accepted, the Corporation shall pay the amount representing the “In the Money Value of the Right” accepted by the Board within 20 days of receipt of notice of such Cash Payment Request.

 

	
  

	
(iv)

	
If a Cash Payment Request is rejected by the Board in whole or in part, the Rightsholder shall elect either a Securities Settlement or a Treasury Share Settlement Alternative in respect of that portion of the Cash Payment Request which was rejected by the Board.

 

“In the Money Value of the Right” shall mean the amount by which the weighted average trading price per Common Share on the TSX, or such other exchange upon which the Common Shares are then trading, for the “Pricing Date” exceeds the Exercise Price multiplied by the number of Common Shares for which the Rights are exercised. The “Pricing Date” shall be the date of exercise (or if the Common Shares do not trade on the TSX on the exercise date, the next date on which the Common Shares trade) provided that notice of the exercise of the Rights is received by the Secretary of the Corporation on or before 9:30 a.m. local time on the exercise date.  If notice of exercise is received by the Secretary of the Corporation after 9:30 a.m. on the exercise date, the Pricing Date shall be the next date upon which the Common Shares trade on the TSX.

 

  

3

  

 

(d)      Securities Settlement. In lieu of receiving a Cash Settlement, Rightsholders shall be entitled to elect to receive the In the Money Value of the Right in Common Shares (the “Securities Settlement”) by requesting that the Corporation issue from treasury the number of Common Shares represented by dividing the In the Money Value of the Right by the Market Price) (a “Securities Settlement Request”), which Common Shares will be issued from treasury to the Rightsholder (or, if deceased, his legal representative) as fully paid and non-assessable shares in the capital of the Corporation. Notwithstanding the foregoing, if a Rightsholder requests a Securities Settlement the Corporation, at its discretion, is entitled to fulfill all or any part of such Securities Settlement Request by purchasing some or all of the Common Shares the Rightsholder (or, if deceased, his legal representative) is entitled to receive in the secondary market for the account of the Rightsholder. Any such Common Shares purchased in the secondary market to fulfill all or any part of a Securities Settlement Request shall be transferred to, and registered in the name of, the Rightsholder (or, if deceased, his legal representative) or as the Rightsholder directs.  Upon receipt of a Securities Settlement Request, the Corporation shall issue or purchase, as the case may be, the Common Shares which the Rightsholders is entitled to receive within 10 days of receipt of notice of such Securities Settlement Request.

 

(e)      Treasury Share Settlement Alternative. At the sole option of the Rightsholder, in lieu of receiving a Cash Settlement or a Securities Settlement or any combination of the foregoing, the Rightsholder may elect to pay to the Corporation the Exercise Price and receive that number of Common Shares from the treasury of the Corporation (the “Treasury Share Settlement Alternative”). Upon receipt of a request by a Rightsholder for a Treasury Share Settlement Alternative (a “Treasury Share Settlement Alternative Request”) in accordance with the provisions of this plan and the Rights agreement, all such Common Shares shall be issued as non-assessable and fully paid shares in the capital of the Corporation. Upon receipt of a Treasury Share Settlement Alternative Request, the Corporation shall issue the Common Shares which the Rightsholders is entitled to receive within 10 days of receipt of notice of such Treasury Share Settlement Alternative Request.

 

For greater certainty, a Rightsholder may elect to receive, upon exercise of Rights, the value of such exercise partially in cash (pursuant to a Cash Settlement Request) and partially in Common Shares (pursuant to a Securities Settlement Request and/or a Treasury Share Settlement Alternative Request).

 

With regard to any Rights granted to a “covered individual”, as defined in Section 162(m)(3) of the Code, the award shall be made by a committee of the Board that constitutes a “compensation committee” within the meaning of Section 162(m).

 

(f)      Exercise of Right.  The Board may specify in any Rights agreement or resolution authorizing Rights: (i) that no part or parts of any Right may be exercised until the Rightsholder shall have been a senior officer or director of the Corporation or an affiliate or subsidiary of the Corporation for such period after the date on which the Rights are granted as the Board may specify in the Rights agreement or resolution; or (ii) that any Rights shall not be exercisable until such vesting period or periods as may be specified by the Board shall have elapsed.

 

  

4

  

 

(g)      Payment of Purchase Price Upon Exercise.  The Exercise Price for Common Shares issued upon a Treasury Share Settlement Alternative Request shall be fully paid in cash or by cheque to the Corporation at the time of such exercise.

 

(h)      Exercise in the Event of Death or Termination of Employment, etc.

 

	
  

	
(i)

	
If a Rightsholder shall die (or if  the Rightsholder is a personal holding company controlled by, or a registered retirement savings plan established by, a senior officer or director, then if such person shall die) (A) while a senior officer or director of the Corporation, or of an affiliate or subsidiary of the Corporation, or (B) within 30 days after termination of the Rightsholder’s office or directorship with the Corporation, or an affiliate or subsidiary of the Corporation, in accordance with clause (ii) or (iii) below, the Rightsholder’s Rights shall expire upon the earlier of 12 months from the date of death and the expiration date specified in accordance with Subparagraph 4(a) above.  In the case of Rightsholders who are natural persons, such right of exercise may be exercised, to the extent that the Rightsholder shall have been entitled to do so at the date of death, by the person or persons to whom the Rightsholder’s Rights under the Rights pass by will or applicable law, or if no such person has such right, by the Rightsholder’s executors or administrators.

 

	
  

	
(ii)

	
If a Rightsholder’s (or, if the Rightsholder is a personal holding company controlled by, or a registered retirement savings plan established by, a senior officer or director, then if such person’s) office or directorship with the Corporation, or an affiliate or subsidiary of the Corporation, shall terminate because of the Rightsholder’s permanent disability, the Rightsholder may exercise the Rightsholder’s Rights, to the extent the Rightsholder may be entitled to at the date of the termination of the Rightsholder’s office with the Corporation, at any time, or from time to time, within six months of the date of the termination of the Rightsholder’s office, but in no event later than the expiration date specified in accordance with Subparagraph 4(a) above;

 

	
  

	
(iii)

	
If any Rightsholder’s (or, if the Rightsholder is a personal holding company controlled by, or a registered retirement savings plan established by, a senior officer or director, then if such person’s) office or directorship with the Corporation, or an affiliate or subsidiary of the Corporation, shall terminate for any reason other than the Rightsholder’s death or permanent disability, the Rightsholder may exercise the Rightsholder’s Rights, to the extent that the Rightsholder may be entitled to do so at the date of the termination of the Rightsholder’s office or directorship, at any time or from time to time, within 90 days of the date of termination of the Rightsholder’s office or directorship, but in no event later than the expiration date specified in accordance with Subparagraph 4(a) above; provided that in the case of termination of office for cause, the Rightsholder’s Rights to exercise the Rightsholder’s Rights shall cease forthwith upon notice of such termination being given;

 

  

5

  

 

	
  

	
(iv)

	
In the event of termination in (i), (ii) or (iii) above, the Board shall have the discretion, in appropriate circumstances, to extend the period for exercise of the Rightsholder’s Rights, but in no event later than the expiration date specified in accordance with subparagraph 4(a) above.

 

(i)      Right to Exercise Rights in connection with a Proposed Transaction.

 

	
  

	
(i)

	
If there is a Take-over Bid or Issuer Bid (as those terms are defined pursuant to applicable securities laws), other than a “Normal Course” Issuer Bid, made for all or any of the issued and outstanding Common Shares, then the Board may, in its sole discretion, by resolution, permit any or all unvested Rights of any or all Rightsholders outstanding under the Plan to become immediately exercisable (subject to any limitations the Board may impose) in order to permit Common Shares issuable pursuant to a Securities Settlement or Treasury Shares Settlement Alternative election to be tendered to such bid.

	
  

	 

	
  

	
(ii)

	
There shall be no automatic vesting of unvested Rights held by a Rightsholder in connection with a Change of Control (as defined below) unless otherwise agreed in an employment or consulting agreement. For the purposes of this provision, a “Change of Control” will be deemed to have occurred when:

	
  

	
(A)

	
a person (which includes a partnership or corporation) acting alone or jointly or in concert with others, acquires beneficial ownership of voting securities of the Corporation which, together with voting securities of the Corporation already owned by such person or persons, constitutes in the aggregate 50% or more of the outstanding voting securities of the Corporation (for greater certainty, an initial public offering of the Corporation’s Common Shares will not constitute a Change of Control). A person who is principally engaged in the business of managing investment funds for unaffiliated securities investors and, as a part of such person’s duties for fully managed accounts, holds or exercises voting power over voting securities of the Corporation, will not, solely by reason thereof, be considered to be a beneficial owner of such voting securities;

	
  

	
(B)

	
the Corporation agrees to amalgamate, consolidate or merge with another body corporate;

	
  

	
(C)

	
any resolution is passed or any action or proceeding is taken with respect to the liquidation, dissolution or winding up of the Corporation; or

	
  

	
(D)

	
the Corporation decides to sell, lease, or otherwise dispose of all, or substantially all, of its assets.

 

  

6

  

 

All unvested Rights held by a Rightsholder shall vest immediately in the event that such Rightsholder’s office or directorship is terminated at any time prior to the expiry date of such Rights by virtue of, or in connection with, a Change of Control, except in the case of termination for cause of such Rightsholder’s office (in which case such Rights shall not vest).

(j)      Acceleration of Awards  The Board or any committee of the Board shall not be permitted to accelerate the vesting of any Rights granted under the Plan except in the case of death, disability, retirement, change of control or pursuant to the terms and conditions of any pre-existing employment agreements (the “Permitted Grounds”).  If the Board or any committee of the Board accelerates the vesting of any Rights for any reason other than the Permitted Grounds, the number of Rights in respect of which vesting is to be accelerated or waived for purposes other than the Permitted Grounds shall be limited to 10% of the Rights authorized for grant under the Plan.

 

(k)      Investment Representation, Listing and Regulation.

 

	
  

	
(i)

	
No Rights shall be granted under the Plan unless and until the Plan shall have been approved by the TSX, if required, or any other stock exchange from which approval is required. However, any Rights granted in accordance with this Plan by the Board prior to the time when such stock exchange approval is required shall be valid and binding in accordance with this Plan and the terms of such grant.

 

	
  

	
(ii)

	
Each Right shall be subject to the requirement that, if at any time the Board shall determine, in its discretion, that the registration, qualification or other approval of or in connection with the Plan is necessary or desirable under any provincial or federal law, then such Rights may not be exercised (whether in respect of a Cash Settlement Request, Securities Settlement Request or Treasury Share Settlement Alternative Request, as appropriate), in whole or in part, unless and until such registration, qualification or approval shall have been obtained free of any condition not acceptable to the Board.  The Rightsholder shall, to the extent applicable, cooperate with the Corporation in relation thereto and shall have no claim or cause of action against the Corporation or any of its officers, directors or shareholders as the result of any failure by the Corporation to take any steps to obtain any such registration, qualification or approval.

 

	
  

	
(iii)

	
The granting of Rights and any issuance of Common Shares under the Plan in accordance with a Securities Settlement Request or a Treasury Shares Settlement Alternative Request shall be carried out in compliance with applicable securities laws, statutes, regulations of governmental authorities and applicable stock exchanges. The Corporation is not obligated by any provision of this Plan or any grant hereunder to permit the exercise of any Right granted hereunder in violation of any applicable law.

 

  

7

  

 

(l)      Adjustments in Event of Change of Common Shares.  Subject to any required approvals of applicable regulatory authorities and stock exchanges, in the event of any change in the Common Shares by reason of any stock dividend, recapitalization, merger, consolidation, split-up, combination or exchange of shares, or rights offering to purchase Common Shares at a price substantially below fair market value, or of any similar change affecting the Common Shares, the number and kind of shares which thereafter may be subject to, and sold under, the Plan and the number and kind of shares subject to the Plan in outstanding Rights agreements and the Exercise Price thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the Rights granted to, or available for, participants in the Plan.

 

(m)     Liquidation.  In the event the Board shall adopt a plan of complete liquidation, all Rights shall become immediately exercisable in full, notwithstanding that they may have been initially granted on an instalment basis.

 

(n)     No Rights as Shareholder.  No Rightsholder shall have any Rights as a shareholder with respect to any Common Shares subject to the Rightsholder’s Rights prior to the date of issuance to such Rightsholder of a certificate or certificates for such shares in connection with a Securities Settlement Request or a Treasury Shares Settlement Alternative Request.

 

(o)     No Rights to Continued Employment.  The Plan and any Rights granted under the Plan shall not confer upon any Rightsholder any right with respect to continuance in such Rightsholder’s office or directorship with the Corporation, or any affiliate or subsidiary of the Corporation, nor shall they interfere in any way with the right of the Corporation, or any affiliate or subsidiary of the Corporation, for which a Rightsholder holds an office to terminate the Rightsholder’s position in such office at any time in accordance with applicable law, or with the rights of the shareholders of the Corporation to end the Rightsholder’s directorship with the Corporation.

 

(p)     Financial Assistance.  At the discretion of the Board and subject to applicable law, the Corporation may provide financial assistance to any Rightsholder to assist in the exercise of Rights granted hereunder, such assistance to be in such form and on such terms as the Board may approve including, without limiting the generality of the foregoing, by way of loan which may be interest-bearing or non-interest-bearing, recourse or non-recourse, and secured or unsecured.

 

	
5.

	
Amendment and Discontinuance

 

(a)           The Board may, at any time and from time to time, amend, suspend or terminate the Plan without shareholder approval, provided that no such amendment, suspension or termination may be made without obtaining any required approval of any regulatory authority or stock exchange or the consent or deemed consent of a Rightsholder where, in the case of a Rightsholder such amendment, suspension or termination materially prejudices the rights of the Rightsholder.

(b)           Notwithstanding the provisions of Section 5(a), the Board may not, without the approval of the shareholders of the Corporation, make amendments to the Plan for any of the following purposes:

	
  

	
(i)

	
to increase the maximum number of Common Shares issuable under the Plan;

 

  

8

  

 

	
  

	
(ii)

	
to reduce the Exercise Price of Rights for the benefit of an Insider;

	
  

	
(iii)

	
to extend the period for which the Rights are exercisable in respect of Rights for the benefit of an Insider (as defined in Section 6); and

 

	
  

	
(iv)

	
to amend the provisions of this Section 5(b).

 

(c)           The Board may, at any time and from time to time, without the approval of the shareholders of the Corporation, amend any term of any outstanding Right, provided that:

	
  

	
(i)

	
any required approval of any regulatory authority or stock exchange is obtained;

	
  

	
(ii)

	
if the amendments would reduce the Exercise Price or extend the period for which the Rights are exercisable in respect of Rights granted to Insiders (as defined in Section 6), approval of the shareholders of the Corporation must be obtained;

	
  

	
(iii)

	
the Board would have had the authority to initially grant the Rights under the terms so amended; and

	
  

	
(iv)

	
the consent or deemed consent of the Rightsholder is obtained if the amendment would materially prejudice the rights of the Rightsholder.

6.           Restrictions on Awards

The maximum number of Common Shares that:

(a)           may be reserved for issuance to Insiders pursuant to the Plan and any other previously established or proposed Share Compensation Arrangement is 10% of the number of Common Shares outstanding;

(b)           may be issued to Insiders under the Plan and any other previously established or proposed Share Compensation Arrangement within a one-year period is 10% of the number of Common Shares outstanding; and

(c)           may be issued to any one Insider under the Plan and any other previously established or proposed Share Compensation Arrangement within a one-year period is 5% of the number of Common Shares outstanding.

 

If a proposed Share Compensation Arrangement, together with all of the Corporation’s other previously established or proposed Share Compensation Arrangements, could result, at any time, in the number of shares reserved for issuance pursuant to stock options granted to Insiders exceeding 10% of the outstanding issue, the Share Compensation Arrangement must be approved by a majority of the votes cast at the shareholders’ meeting other than votes attaching to securities beneficially owned by Insiders.

For the purposes of this Section 6, holders of non-voting and subordinate voting shares must be entitled to vote with the holders of any class of shares of the Corporation which otherwise carry greater voting rights, on a basis proportionate to their respective residual equity interests in the Corporation.

 

  

9

  

 

For the purposes of this Section 6, the following terms shall have the following meanings:

(a)           “Insider” has the meaning given to that term in the Securities Act (Ontario) and also includes associates and affiliates of the insider, but does not include directors or senior officers of a subsidiary or affiliate of the Corporation unless such director or senior officer:

	
  

	
(i)

	
in the ordinary course receives or has access to information as material facts or material changes concerning the Corporation before the material facts or material changes are generally disclosed;

	
  

	
(ii)

	
is a director or senior officer of a “major subsidiary” of the Corporation (where “major subsidiary” has the meaning given to that term in National Instrument 55-101 – Insider Reporting Exemptions); or

	
  

	
(iii)

	
is an insider of the Corporation in a capacity other than as a director or senior officer of the subsidiary or affiliate.

For the purpose of this definition, the terms “affiliate”, “associate” and “subsidiary” have the meanings given to them, respectively, in the Securities Act (Ontario).

“Share Compensation Agreement” means any stock option, stock plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares, including a share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise.

	
7.

	
Proceeds from Sales of Common Shares

 

The aggregate Exercise Price received from the sale of Common Shares issued upon receipt by the Corporation of such Exercise Price in connection with a Treasury Shares Settlement Alternative Request shall be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the Board may determine.

 

	
8.

	
Withholding

The Corporation shall have the right to deduct and withhold from (or recover in respect of) any payment to be made pursuant to or in connection with this Plan, any Right or any Shares the amount of any taxes required by law to be withheld from, or paid in connection with, such payment.  The Corporation may, in its discretion, permit a Rightsholder to elect to satisfy such withholding obligation through a cash payment to be made by such Rightsholder, through the surrender of Shares held by a Rightsholder in a manner acceptable to the Corporation, or through the surrender of shares which the Rightsholder is otherwise entitled to receive under the Plan or any Right.  The Corporation shall have the right to sell any of the Rightsholder’s Shares to satisfy or recover any taxes which are payable by the Corporation in respect of this Plan, any Right or any Shares for the account of such Rightsholder.  Where the withholding undertaken in connection with the foregoing is considered by the Corporation to be inadequate, the payment or delivery of property hereunder by the Corporation shall be conditional upon such Rightsholder (or other person) reimbursing or compensating the Corporation or making arrangements satisfactory to the Corporation for the payment or provision of all required taxes.  For purposes hereof, “taxes” shall refer to any local, foreign, federal, provincial, state, social security, withholding or any other taxes or governmental charges of any kind whatsoever.

 

  

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9.

	
Employee Responsibility

Neither the Corporation nor any of its subsidiaries shall assume any responsibility in respect of any tax consequences that arise from participation in the Plan by any employee, consultant or other person.  Such persons are urged to consult their own independent tax advisors in such regard.  In particular, the Corporation and its subsidiaries shall have no liability in respect of any Rights which a Rightsholder may cause to be issued to any personal holding corporation and/or their spouse and/or minor children or grandchildren, and/or to registered retirement savings plans or similar deferred compensation plans.

 

 

 

 

 

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