Document:

ex10_3.htm

Exhibit 10.3

 

AMENDED AND RESTATED RETENTION WARRANTS PLAN

NEULION, INC. (formerly JumpTV Inc.),

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

ARTICLE 1

PURPOSE AND INTERPRETATION

	
1.1

	
Purpose

The purpose of the Retention Warrants Plan (the “Plan”) is to advance the interests of the Corporation by (i) providing Eligible Persons with additional incentive; (ii) encouraging share 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.

	
1.2

	
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 to 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 issue Retention Warrants to purchase Common Shares to Eligible Persons; (ii) to determine the terms, including the limitations, restrictions and conditions, if any, upon such issuances; (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.

 

	
1.3

	
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);

	
  

	
(b)

	
“Blackout Period” means the period of time when, pursuant to any self-imposed policies of the Corporation applicable to a Retention Warrant holder, the Retention Warrant holder 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 this Plan;

 

	
  

	
(d)

	
“Consultant” has the meaning prescribed by National Instrument 45-106 Prospectus and Registration Exemptions (or 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, but for greater certainty, shall not be an Eligible Person;

 

	
  

	
(g)

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

	
  

	
(h)

	
“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;

 

	
  

	
(i)

	
“Holding Entity” means a person that is controlled by an individual;

 

	
  

	
(j)

	
“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

 

	
  

	
(ii)

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

 

	
  

	
(k)

	
“Participant” means an Eligible Person to whom or to whose RRSP a Retention Warrant 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,

 

  

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(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)

	
“Retention Warrant” means a warrant issued by the Corporation pursuant to this Plan to purchase Shares;

 

	
  

	
(o)

	
“Plan” means this incentive compensation plan providing for the issuance of Retention Warrants to purchase shares, as amended from time to time;

 

	
  

	
(p)

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

 

	
  

	
(q)

	
“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;

 

	
  

	
(r)

	
“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;

 

	
  

	
(s)

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

 

	
  

	
(t)

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

 

	
  

	
(u)

	
“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;

 

	
  

	
(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;

 

  

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(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 and 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.

	
1.4

	
Numbers

The maximum number of Shares available for issuance pursuant to the exercise of Retention Warrants issued pursuant to the Plan shall be limited to 2,500,000.  For greater certainty, the maximums set out herein shall be exclusive of all issuances of warrants made prior to the coming into effect of this Plan (other than those common share purchase warrants issued by the Corporation pursuant to its acquisition of the Broadband Network Business of XOS Technologies, Inc. or issued pursuant to its acquisition of Cycling Television Limited) as well as any warrants, options, or rights granted under any other security-based incentive compensation plans of the Corporation and such warrants, options or rights, as the case may be, shall not be subject to the terms of this Plan.  No Insiders may be granted Retention Warrants or are otherwise entitled to a benefit under this Plan.

	
1.5

	
Lapsed Retention Warrants

In the event that Retention Warrants issued 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 Retention Warrants shall be available for subsequent Retention Warrants to be issued under Plan.

ARTICLE 2

RETENTION WARRANTS PLAN

2.1           Issuance

	
  

	
(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 a Retention Warrant, 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 Retention Warrant, 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 a Retention Warrant may be forfeited.  An Eligible Person and Eligible Person’s RRSP or RRIF may be issued Retention Warrants on more than one occasion under this Plan.

	
  

	
(b)

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

 

	
  

	
(c)

	
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).

 

  

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(d)

	
With respect to any Retention Warrants 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).

2.2          Exercise of Retention Warrants

	
  

	
(a)

	
Retention Warrants issued must be exercised no later than 5 years after the date of the issuance or such lesser period as the applicable issuance, the Regulations or the provisions of this Plan may require (the “Expiry Date”): provided, however, in the event that a Retention Warrant 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 Retention Warrant will become exercisable and may determine that the Retention Warrant will be exercisable in installments.

 

	
  

	
(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 one time except where the remainder totals less than 100.

2.3          Exercise Price of Retention Warrants

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 Exercise Price of a Retention Warrant at the time each Retention Warrant 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 issuance.  If there is no trading market for the Shares, the Board will in good faith determine the Exercise Price of a Retention Warrant based on the fair market value of the Shares on the date of the issuance.  If the Retention Warrant is to be issued on a pre-determined date in the future, the Exercise Price of a Retention Warrant 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 issuance.  In all instances, the Exercise Price shall be no lower than fair market value, as determined under Section 409A of the Code.

2.4          Issuance to Participant’s RRSP or RRIF

Upon written notice from the Participant, any Retention Warrant that might otherwise be issued to that Participant will be issued, 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 Retention Warrants 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 Retention Warrant 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 a Retention Warrant has not vested by the Termination Date, that portion of a Retention Warrant 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 Retention Warrant to vest in the Participant, the Participant’s Permitted Assigns or the Participant’s RRSP or RRIF.

 

  

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(b)

	
If a Participant dies, the legal representatives of the Participant may exercise the Participant’s Retention Warrants, the Participant’s Permitted Assign’s Retention Warrants and the participant’s RRSP Retention Warrants or RRIF Retention Warrants within 120 days after the date of the participant’s death but only to the extent the Retention Warrants 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 Retention Warrants and its Permitted Assign’s Retention Warrants, 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 Retention Warrants (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 Retention Warrants and in the event of such exercise of discretion, the Retention Warrants shall be deemed not to have been terminated as of the termination date of the Participant’s employment, consultancy or directorship, as applicable.

2.6          Retention Warrant Agreements

Each Retention Warrant must be confirmed, and will be governed, by an agreement (a “Retention Warrant Agreement”) substantially in the form of Schedule “A” attached hereto (as the same may be amended from time to time by the Regulations) and signed by the Corporation.

2.7          Payment of Retention Warrant Price

Subject to section 2.9, the exercise price of each Share purchased pursuant to the exercise of a Retention Warrant 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 Retention Warrant 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 or exercise of a Retention Warrant, 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 Retention Warrant, 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.

 

  

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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 Retention Warrant 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 Retention Warrant.  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 Retention Warrant 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.

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 Retention Warrants 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 Retention Warrants 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 may, in its sole discretion, by resolution permit any or all unvested Retention Warrants outstanding under the Plan to become immediately exercisable (subject to any limitation the Board of Directors may impose) in order to permit Shares issuable under such Retention Warrants to be tendered to such bid.

	
  

	
(b)

	
There shall be no automatic vesting of unvested Retention Warrants in the event of a Change of Control (as defined below) unless otherwise agreed in a Participant’s employment or consulting agreement; however, the Board may, in its sole discretion, by resolution permit any or all unvested Retention Warrants 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 agrees to amalgamate, consolidate or merge with another body corporate;

 

  

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(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

 

	
  

	
(iv)

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

All unvested Retention Warrants 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 Retention Warrants 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 Retention Warrants shall not vest).

3.2          Acceleration or Waiving of Vesting Periods

The Board shall not accelerate or waive vesting periods of any Retention Warrants issuable under the Plan except pursuant to the provisions of this Plan in the case of death, disability, retirement or Change of Control (the “Permitted Grounds”).  If the Board or any committee of the Board accelerates or waives the vesting period for any reason other than the Permitted Grounds, the number of Retention Warrants 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 securities authorized for issuance under the Plan.

3.3          Prohibition on Transfer of Retention Warrants

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

3.4          Prohibition on Transfer of Shares

No Participant will, upon exercise of a Retention Warrant, deal with any Share or any 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.

3.5          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 Retention Warrants 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 Retention Warrants theretofore granted under the Plan, and in the exercise price of those unexercised Retention Warrants; 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.

3.6           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.

 

  

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3.7          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 a Retention Warrant holder where, in the case of a Retention Warrant holder such amendment, suspension or termination materially prejudices the rights of the Retention Warrant holder.

 

	
  

	
(b)

	
Notwithstanding the provisions of Section 3.7(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;

 

	
  

	
(ii)

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

 

	
  

	
(iii)

	
to extend the period for which the Retention Warrants are exercisable in respect of Rights for the benefit of an Insider; and

 

	
  

	
(iv)

	
to amend the provisions of this Section 3.7(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 Retention Warrant, 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 Retention Warrants are exercisable in respect of Retention Warrants granted to Insiders, approval of the shareholders of the Corporation must be obtained;

 

	
  

	
(iii)

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

 

	
  

	
(iv)

	
the consent or deemed consent of the Retention Warrants holder is obtained if the amendment would materially prejudice the rights of the Retention Warrants holder.

 

	
  

	
(d)

	
If this Plan is terminated pursuant to section 3.7(a) hereof or otherwise, the provision of this Plan and any administrative guidelines, and other rules and Regulations adopted by the Board and in force at the time of this Plan, will continue in effect as long as any Retention Warrants under the Plan or any rights pursuant thereto remain outstanding.  However, notwithstanding the termination of the Plan, the Board may make any amendments to the Plan or the Retention Warrants it would be entitled to make if the Plan were still in effect.

 

	
  

	
(e)

	
Where shareholder approval of an amendment is required pursuant to this section 3.7, such shareholder approval may be given by way of confirmation at the next meeting of shareholders after the amendment is made, provided that no Retention Warrants may be exercised pursuant to the amended terms prior thereto.

 

  

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3.8          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 3.8, 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.

 

3.9          Compliance with Legislation

 

	
(a)

	
The Board may postpone or adjust any exercise of any Retention Warrants 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.

 

	
(b)

	
Without limiting the generality of Section 3.9(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 3.9(b) shall bear one or more legends making appropriate reference to the restrictions imposed under applicable securities laws with regard to such Shares.

 

	
3.10

	
Effective Date

 

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

 

3.11        Record Keeping

 

  

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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 Retention Warrants issued to a Participant and the number of Retention Warrants outstanding.

 

 

 

 

 

 

  

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RETENTION WARRANTS 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 Retention Warrant 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.

 

 

 

  

12

  

 

Schedule “A” to Retention Warrants Plan

 

PERSONAL AND CONFIDENTIAL

 

200

 

<<Name and Address of Retention Warrant holder>>

 

Dear <<First Name>>

 

The Retention Warrants Plan (the “Plan”) governing the issuance of retention warrants (“Retention Warrants”) to purchase common shares (“Shares”) of NeuLion, Inc. (the “Corporation”) permits the board of directors (the “Board”) of the Corporation to issue Retention Warrants 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 issue you, as of <<Date of Issue>> Retention Warrants to purchase Shares of the Corporation.  This agreement (the “Agreement”) is granted on the basis set out in this letter, and is subject to the Plan.  This Agreement and the Plan are referred to collectively as the “Documents”.  All capitalized terms not otherwise defined are to bear the meaning attributed to them in the Plan, a copy of which is attached hereto as Schedule “A”.

 

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

 

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

 

Your Retention Warrants will vest and are exercisable in the following manner:

 

	
Vesting Date

	
Percentage of Retention Warrants Exercisable

	
Expiry Date

	  	
On or After Vesting Date

	  
	 	 	 
	.  	.  	.  

 

Subject to earlier expiration in accordance with the Documents, your rights to purchase Shares pursuant to this Retention Warrant 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 Retention Warrants may be exercised in whole or in part in respect of vested Retention Warrants at any time prior to expiry of the relevant Retention Warrants.  The Retention Warrants may not be exercised in amounts less than 100 Shares in the case of any one exercise unless that exercise would entirely exhaust the Retention Warrants.

 

You may exercise your vested Retention Warrants at any time before the Expiry Date, or in 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 Exercise Price Per Retention Warrant of the number of Shares being purchased.  No fractional Shares will be issued upon exercise of Retention Warrants, 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.

 

  

13

  

 

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

 

This 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 Plan.  As well, restrictions apply in connection with cessation of engagement.  Complete details of these restrictions are set out in the Plan.

 

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

 

Please acknowledge your acceptance of this 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 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)

	

_______________________________

	
 

	  	  	  

 

 

  

14

  

 

Schedule B to Retention Warrants Plan

 

RETENTION WARRANT EXERCISE NOTICE

 

To: NeuLion, Inc. (the “Corporation”)

 

The undersigned hereby irrevocably elects to exercise Retention Warrants 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)

	
Retention Warrant 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 Retention Warrant Holder)

	  
	  	  	
)

	  	  
	  	  	
)

	
_______________________________

	  
	  	  	
)

	
(Name of Retention Warrant Holder – please print)

	  

 

 

15ex10_4.htm

Exhibit 10.4

 

NEULION, INC. (formerly JUMPTV INC.)

RESTRICTED SHARE PLAN

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

	
  

	
1.

	
Purpose of the Plan

	
  

	
1.1

	

The purpose of the restricted share plan (the “Plan”) for employees and consultants of NeuLion, Inc. (formerly JumpTV Inc.) (the “Corporation”) or of any of the Subsidiaries of the Corporation is to secure for the Corporation and its shareholders the benefit of an incentive to partake in share ownership by employees and consultants of the Corporation and its Subsidiaries, as the case may be.  For the purposes of the Plan, “Subsidiaries” shall mean (i) any legal entity of which the Corporation is the holder or the beneficial holder, at the time of the granting of the Restricted Shares, directly or indirectly, otherwise than by way of security only, of securities to which  are attached over 50% of the votes enabling it to elect the majority of the directors of such entity as well as any subsidiary of such legal entity, and (ii) any legal entity in which the Corporation or a subsidiary of the Corporation holds or beneficially holds at least 50% of the voting rights or in which it has a majority interest and of which the Corporation or a subsidiary of the Corporation manages the operations.

 

	
  

	
2.

	
Definitions

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

“Award” means the Restricted Shares granted to an Eligible Participant under the Plan on an Award Date, evidenced by an Award Agreement and subject to the terms and conditions of the Plan and the Award Agreement;

“Award Agreement” means an agreement, substantially in the form of the agreement set out in Schedule 1 to this Plan, entered into by an Eligible Participant and the Corporation pursuant to which an Award is granted to the Eligible Participant in accordance with the Plan, and containing such additional terms and conditions not inconsistent with the Plan as the Board or the Committee shall deem desirable;

“Award Date” means the date on which an Award is granted, which date may be on or, if determined by the Board or the Committee at the time of grant, after the date that the Board or the Committee resolves to grant the Award;

“Board” means the board of directors of the Corporation;

“Change of Control” shall have the meaning set forth in Section 6.1;

“Committee” shall have the meaning set forth in Section 3;

“consultant” means, as defined in National Instrument 45-106 Prospectus and Registration Exemptions (or a successor instrument), 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;

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

“Exchange” means the stock exchange or quotation system on which the Corporation’s Shares are listed, if any;

“Eligible Participant” means any employee or consultant of the Corporation designated by the Board or the Committee as eligible to participate in the Plan;

“Insider” has the meaning ascribed thereto in the Securities Act (Ontario);

“NeuLion Market Value” means on any given date:

	
  

	
(i)

	
the closing price per share of the Shares on the Exchange on the business day next preceding such date;

	
  

	
(ii)

	
if there is no sale of the Shares on the Exchange at its close on such business day, then the last bid price per share of the Shares on the Exchange on such business day; or

 

	
  

	
(iii)

	
if the Shares are not listed on a recognized stock exchange or quoted on the over-the-counter market, then the price per share per Class A Share determined by the Board in good faith;

 

“Plan” means the Restricted Share Plan of the Corporation;

“Restricted Share” means a restricted share granted under the Plan pursuant to a particular award agreement and “Restricted Shares” shall have a corresponding meaning;

“Restricted Share Holder” shall have the meaning set forth in Section 5.2;

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

“Subsidiaries” shall have the meaning set forth in Section 1;

“Vesting Date” shall have the meaning set forth in Section 5.3.

	
  

	
3.

	
Administration

The Plan shall be administered by the Corporation’s Board (the “Board”) or, if determined by the Board, by a compensation committee of the Board (the “Committee”). The Board or the Committee shall have full and complete latitude to select those who are Eligible Participants, grant Awards under the Plan, interpret the Plan and to establish the rules and regulations applying to it and to make all other determinations it deems necessary or useful for the administration of the Plan, including without limiting the scope of the foregoing provided that such interpretations, rules, regulations and determinations shall be consistent with the relevant policy statements of the competent securities authorities and the rules of the Exchanges.

 

  

  

  

 

	
  

	
4.

	
Shares Subject to the Plan

The Shares subject to the Plan are the class A shares of the Corporation.  A maximum of 1,000,000 Restricted Shares may be awarded pursuant to the Plan.  The total number of Shares that may be issued pursuant to the vesting of an Award of Restricted Shares in accordance with the terms of the Plan shall not exceed 1,000,000 Shares, subject to the adjustment under Section 7.  All of the Shares which could have been issued pursuant to an Award which Award has been cancelled, expired, forfeited or terminated without having been exercised in full or settled in cash or Shares (treasury or purchased in the secondary market) of the Corporation shall not become reserved Shares for the purposes of Restricted Shares that may be subsequently awarded under the terms of the Plan.  No fractional Shares shall be issued under the Plan and all fractional interests shall be rounded up to the nearest whole number of Shares.

	
  

	
5.

	
Grant of Restricted Share Awards

	
  

	
5.1

	
      Grant of Awards

The Board or the Committee shall from time to time designate the Eligible Participants to whom a grant of Restricted Shares shall be made and shall determine the number of Restricted Shares granted under each Award.  The Board or the Committee shall further have discretion to establish at the time of grant, within the restrictions set forth in the Plan, the Award Date, the Vesting Date and other particulars applicable to an Award granted hereunder.

	
  

	
5.2

	
Award Agreement

Upon the grant of an Award, the Corporation will deliver to the Eligible Participant selected to receive such Award an Award Agreement dated as of the Award Date, containing the terms of the Award and executed by the Corporation, and upon delivery to the Corporation of the Award Agreement executed by the Eligible Participant in question, the Eligible Participant in question will be a Restricted Share Holder under the Plan and, subject to vesting, have the right to receive the Shares (or, at the Corporation’s option, cash equal to the NeuLion Market Value of such Shares on the Vesting Date) on the terms set out in the Award Agreement and in the Plan.

	
  

	
5.3

	
Vesting Date

The Vesting Date of an Award will be determined in accordance with the Board or the Committee instructions issued at the time of grant (the “Vesting Date”), and will be subject to the provisions of section 5.4 relating to expiry and to the Restricted Share Holder having been in active employment or consultancy, as applicable, throughout the intervening period from the Award Date.  Where a Restricted Share Holder fails to remain in active employment or consultancy for any period between the Award Date and the Vesting Date, that Vesting Date shall be extended by a period equal to the aggregate of those periods of inactive employment.

	
  

	
5.4

	
Expiry of Awards

	
  

	
(a)

	
Unless otherwise determined by the Board or the Committee at or after the time of grant where vesting of an Award is subject to the attainment of performance objectives, such Award, or part thereof, shall expire on  the Vesting Date if such performance objectives have not been attained.

 

  

  

  

 

	
  

	
(b)

	
Any Award, whether or not subject to the attainment of performance objectives, shall expire immediately and be forfeited and be of no further force and effect on the date upon which the Restricted Share Holder ceases to be an employee or consultant, as the case may be, of the Corporation for any reason, unless otherwise determined by the Board or the Committee at or after the time of the grant.

	
  

	
5.5

	
Non-Assignable

An Award will not be assignable; however, the Board or the Committee may determine at the time of grant or thereafter that any Restricted Share is assignable, to the extent permitted by applicable law, in whole or in part and in such circumstances and under such conditions as specified by the Board or the Committee.  Notwithstanding the foregoing, in the case where a Restricted Share Holder dies his or her legal representative shall have the rights of such Restricted Share Holder under the Plan and the Award Agreement for a period of 90 days following the death of the Restricted Share Holder, following which, all Restricted Shares that have not vested shall terminate.

	
  

	
5.6

	

No Implied Rights

 

A Restricted Share Holder will only have rights as a shareholder of the Corporation with respect to those of the Restricted Shares, if any, that the Restricted Share Holder has received upon vesting of an Award in accordance with its terms.

Nothing in this Plan or in any Award Agreement will confer or be construed as conferring on a Restricted Share Holder any right to remain as an employee or consultant of the Corporation, or an Eligible Participant the right to be granted Awards hereunder.

	
  

	
5.7

	

Settlement of the Award

 

Unless an Award has expired in accordance with sections 5.4, the Corporation shall, as soon as practicable and within the time permitted by legislation after the Vesting Date:

	
  

	
(a)

	
issue from treasury the number of Shares represented by such vested Award and direct its transfer agent to issue a certificate in the name of the Restricted Share Holder of such vested Award (or, if deceased, his legal representative) which will be issued as fully paid and non-assessable Shares; or

	
  

	
(b)

	
purchase the number of Shares represented by such vested Award on the secondary market for delivery to the Restricted Share Holder of such vested Award (or, if deceased, his legal representative) provided that the vesting and settlement of such Award occurs on or before the date that is within three years from the end of the calendar year of the date of grant of such Award; or

 

	
  

	
(c)

	
unless the Award Agreement provides otherwise, pay to the Restricted Share Holder of such vested Award (or, if deceased, his legal representative), an amount in cash equal to the NeuLion Market Value on the Vesting Date of the Shares represented thereby provided that the vesting and settlement of such Award occurs on or before the date that is within three years from the end of the calendar year of the date of grant of such Award.

 

Whether an Award is settled in accordance with sections 5.7(a), (b) or (c) shall be at the entire discretion of the Corporation upon recommendation from the Compensation Committee, if any.

  

  

  

 

	
  

	
6.

	
Change of Control

 

	
  

	
6.1

	

For the purposes of this section 6, “Change of Control” shall mean:

 

	
  

	
6.1.1

	
the acquisition by any person or entity, or any persons or entities acting jointly or in concert, whether directly or indirectly, of voting securities of the Corporation which together with all other voting securities of the Corporation held by such persons or entities, constitute, in the aggregate, fifty percent (50%) or more of the votes attached to all outstanding voting securities of the Corporation.

	
  

	
6.1.2

	
an amalgamation, arrangement or other form of business combination of the Corporation with another entity which results in the holders of voting securities of that other entity holding, in the aggregate, fifty percent (50%) or more of the votes attached to all outstanding voting securities of the entity resulting from the business combination; or

	
  

	
6.1.3

	
the sale, lease or exchange of all or substantially all of the property of the Corporation to another person or entity, other than in the ordinary course of business of the Corporation or any of its Subsidiaries.

	
  

	
6.2

	
For greater certainty, the initial public offering of the Corporation’s shares shall not be construed as a “Change of Control” for the purposes of Section 6.1 above.

	
  

	
6.3

	
There shall be no automatic vesting of unvested Restricted Shares held by a Participant in connection with a Change of Control unless otherwise agree in an employment or consulting agreement; however, the Board or the Committee shall have, in their sole discretion, the power to accelerate the time at which any or all Restricted Shares held by any or all Participants may vest or the time during which any Restricted Shares granted hereunder will become fully vested including, without limitation, in connection with a Change of Control.

	
  

	
6.4

	
All unvested Restricted Shares held by a Participant shall vest immediately in the event that such Participant’s employment or consultancy is terminated at any time prior to the expiry date of such Restricted Shares 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 the Restricted Shares shall not vest).

	
  

	
7.

	
Effects of Alteration of Share Capital

In the event of any change in the number of outstanding Shares of the Corporation by reason of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of Shares or other similar change, subject to the prior approval of the competent regulatory authorities, an equitable adjustment shall be made by the Board or the Committee in the maximum number or kind of Shares issuable under the Plan or subject to outstanding Restricted Shares.  Such adjustment will be definitive and mandatory for the purposes of the Plan.

	
  

	
8.

	
Amendment and Termination

	
  

	
8.1

	
Subject to the requisite shareholder and regulatory approvals set forth under subparagraphs 8.1(a) and (b) below, the Board or the Committee may from time to time amend or revise the terms of the Plan or may discontinue the Plan at any time provided however that no amendment or revision may, without the consent of a Restricted Share Holder, in any manner adversely affect his or her rights under any Award, therefore granted under the Plan.

 

  

  

  

 

	
  

	
(a)

	
The Board or the Committee may, subject to receipt of requisite shareholder and regulatory approval, make the following amendments to the Plan:

	
  

	
(i)

	
any amendment to the number of securities issuable under the Plan, including an increase to a fixed maximum number of securities or a change from a fixed maximum number of securities to a fixed maximum percentage.  A change to a fixed maximum percentage which was previously approved by shareholders will not require additional shareholder approval; and

	
  

	
(ii)

	
any change to the definition of the Eligible Participants which would have the potential of broadening or increasing Insider participation.

 

	
  

	
(b)

	
The Board or the Committee may, subject to receipt of requisite regulatory approval, where required, in its sole discretion make all other amendments to the Plan that are not of the type contemplated in subparagraph 8.1(a) above including, without limitation:

	
  

	
(i)

	
amendments of a “housekeeping” nature;

	
  

	
(ii)

	
a change to the vesting provisions of a Restricted Share or the Plan;

 

	
  

	
(iii)

	
a change to the termination provisions of a Restricted Share or the Plan which does not entail an extension beyond the original expiry date; and

 

	
  

	
(iv)

	
amendments to comply with foreign laws.

 

	
  

	
(c)

	

Notwithstanding the provisions of subparagraph 8.1(b), the Corporation shall additionally obtain requisite shareholder approval in respect of amendments to the Plan that are contemplated pursuant to section subparagraph 8.1(b), to the extent such approval is required by any applicable laws or regulations.

 

	
  

	
8.2

	
The shareholders’ approval of an amendment may be given by way of confirmation at the next meeting of shareholders after the amendment is made, provided that no Shares are issued pursuant to the amended terms prior thereto.

	
  

	
9.

	
General Provisions

	
  

	
9.1

	
The Corporation’s obligation to grant Awards or issue Shares under the terms of the Plan is subject to all of the applicable laws, regulations or rules of any governmental regulatory agency or other competent authority in respect of the issuance or distribution of securities and to the rules of any stock exchange on which the Shares of the Corporation are listed or quoted for trading.  Each Restricted Share Holder shall agree to comply with such laws, regulations and rules and to provide to the Corporation any information or undertaking required to comply with such laws, regulations and rules.

	
  

	
9.2

	
The participation in the Plan of an employee or consultant of the Corporation or any of its Subsidiaries shall be entirely optional and shall not be interpreted as conferring upon an employee or consultant of the Corporation or any of its subsidiaries any right or privilege whatsoever, except for the rights and privileges set out expressly in the Plan.  Neither the Plan nor any act that is done under the terms of the Plan shall be interpreted as restricting the right of the Corporation or any of its Subsidiaries to terminate the employment or consultancy, as applicable, of an employee or consultant at any time.  For the purposes of the Plan a Restricted Share Holder shall cease to be an employee or consultant of the Corporation on the date on which the Corporation gives the Restricted Share Holder notice of termination (or receives notice of resignation) employment or consultancy, as applicable.

  

  

  

 

	
  

	
9.3

	
No employee or consultant of the Corporation or any of its Subsidiaries shall acquire the automatic right to be granted one or more Restricted Shares under the terms of the Plan by reason of any previous grant of Restricted Shares under the terms of the Plan.

 

	
  

	
9.4

	
The Plan does not provide for any guarantee in respect of any loss or profit that may result from fluctuations in the price of the Shares.

 

	
  

	
9.5

	
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 Award or Restricted 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 an Eligible Participant to elect to satisfy such withholding obligation through a cash payment to be made by such Eligible Participant, through the surrender of Shares held by a Eligible Participant in a manner acceptable to the Corporation, or through the surrender of shares which the Eligible Participant is otherwise entitled to receive under the Plan.  The Corporation shall have the right to sell any of the Eligible Participant’s Shares to satisfy or recover any taxes which are payable by the Corporation in respect of this Plan, any Award or Restricted Shares for the account of such Eligible 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 Eligible 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.

	
  

	
9.6

	
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.

	
  

	
9.7

	
The Plan and any Restricted Shares granted under the terms of the Plan shall be governed and interpreted according to the laws of the province of Ontario and the laws of Canada applicable thereto.

	
  

	
9.8

	
The Plan shall be effective as of September 2, 2005.

 

 

 

  

  

  

 

NEULION, INC.

SCHEDULE 1

FORM OF AWARD AGREEMENT

RESTRICTED SHARE PLAN

This Award Agreement is entered into between NeuLion, Inc. (the “Corporation”) and the Restricted Share Holder named below pursuant to the Restricted Share Plan of the Corporation (the “Plan”), a copy of which is attached hereto, and confirms that:

	
  

	
1.

	
on _________________________ (the “Award Date”);

	
  

	
2.

	
____________________________ (the “Restricted Share Holder”);

 

	
  

	
3.

	
was granted ____________________________ non-assignable Restricted Shares (the “Award”);

 

	
  

	
4.

	
[vesting of the Award shall be subject to the attainment of the following performance objectives];

 

________________________________________________________

________________________________________________________

[or]

[vesting of the Award will not be subject to the attainment of performance objectives]

	
  

	
5.

	
the Award shall vest at 5:00 p.m., eastern time _______________ (the “Vesting Date”) provided, however, that if you are not actively employed continuously from the Award Date to the Vesting Date, a later Vesting Date shall apply as set out in the Plan;

all on the terms and subject to the conditions set out in the Plan.

By signing this agreement, the Participant:

	
  

	
(i)

	
acknowledges that he or she has read and understands the Plan and that he or she will abide by its terms and conditions;

	
  

	
(ii)

	
agrees that a Restricted Share does not carry any voting rights;

 

	
  

	
(iii)

	
recognizes that during the period between granting of an Award and the Vesting Date of the Award (or settlement thereof) the value of the Restricted Share may be subject to stock market fluctuations and the Corporation accepts no responsibility for any fluctuations in the value of an Award;

 

	
  

	
(iv)

	
recognizes that, at the sole discretion of the Corporation, the Plan can be administered by a designee of the Corporation by virtue of paragraph 3 and any communication from or to the designee shall be deemed to be from or to the Corporation;

  

  

  

 

	
  

	
(v)

	
acknowledges that the Corporation and its subsidiaries assume no responsibility as regards to the tax consequences that participation in the Plan will have for the Participant and the Participant is urged to consult its own tax advisor in such regard; and

 

	
  

	
(vi)

	
acknowledges that they are solely liable for any taxes or penalties which may be payable to Canada Revenue Agency under the Income Tax Act (Canada) or any other taxing authority in respect of the grant of an Award and the delivery of shares or cash pursuant to an Award is contingent upon satisfaction of applicable withholding requirements and applicable taxes may be withheld from any such payment in settlement of an Award.

 

I hereby DESIGNATE ____________________________ (PRINTED LETTERS) as my beneficiary, to receive any payments under the Plan in the event of my death provided, however, that if the above-named beneficiary predeceases me, such payments shall be made to my estate.

(This designation hereby revokes any designation previously made for the purpose of the Plan and can be revoked at any time by written notice to the Compensation & Benefits Department of the Corporation).

IN WITNESS WHEREOF the Corporation and the Restricted Share Holder have executed this Award Agreement as of _________________________.

NEULION, INC.

By:­­­_____________________________

________________________________

Name of Restricted Share Holder

 

	
________________________________

	  	  	
____________________________

	
Signature of Restricted Share Holder

	  	  	
Witness

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