0001193125-13-374841.txt : 20130923 0001193125-13-374841.hdr.sgml : 20130923 20130923171322 ACCESSION NUMBER: 0001193125-13-374841 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20130923 DATE AS OF CHANGE: 20130923 GROUP MEMBERS: 1109519 ONTARIO LTD GROUP MEMBERS: 810679 ONTARIO LTD GROUP MEMBERS: ADVENT UNDERWRITING LTD GROUP MEMBERS: CLEARWATER INSURANCE CO GROUP MEMBERS: FAIRFAX FINANCIAL HOLDINGS LTD GROUP MEMBERS: FEDERATED INSURANCE CO OF CANADA GROUP MEMBERS: GENERAL FIDELITY INSURANCE CO GROUP MEMBERS: NORTHBRIDGE COMMERCIAL INSURANCE CORP GROUP MEMBERS: NORTHBRIDGE GENERAL INSURANCE CORP GROUP MEMBERS: NORTHBRIDGE INDEMNITY INSURANCE CORP GROUP MEMBERS: NORTHBRIDGE PERSONAL INSURANCE CORP GROUP MEMBERS: ODYSSEY REINSURANCE CO GROUP MEMBERS: SIXTY TWO INVESTMENT CO LTD GROUP MEMBERS: TIG INSURANCE CO GROUP MEMBERS: UNITED STATES FIRE INSURANCE CO GROUP MEMBERS: V. PREM WATSA GROUP MEMBERS: ZENITH INSURANCE CO SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BLACKBERRY Ltd CENTRAL INDEX KEY: 0001070235 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 000000000 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56515 FILM NUMBER: 131110648 BUSINESS ADDRESS: STREET 1: 295 PHILLIP ST STREET 2: WATERLOO CITY: ONTARIO CANADA STATE: A6 ZIP: 00000 BUSINESS PHONE: 5198887465 MAIL ADDRESS: STREET 1: 295 PHILLIP STREET STREET 2: WATERLOO, ONTARIO N2L 3W8 CITY: ONTARIO STATE: A6 ZIP: N2L 3W8 FORMER COMPANY: FORMER CONFORMED NAME: RESEARCH IN MOTION LTD DATE OF NAME CHANGE: 19980911 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN CENTRAL INDEX KEY: 0000915191 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 101728897 STATE OF INCORPORATION: Z4 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: FAIRFAX FINANCIAL HOLDINGS LTD STREET 2: 95 WELLINGTON ST WEST STE 800 CITY: TORONTO STATE: A6 ZIP: M5K 1B1 BUSINESS PHONE: 4163674941 MAIL ADDRESS: STREET 1: FAIRFAX FINANCIAL HOLDINGS LTD STREET 2: 95 WELLINGTON ST WEST STE 800 CITY: TORONTO STATE: A6 ZIP: M5K 1B1 FORMER COMPANY: FORMER CONFORMED NAME: FAIRFAX FINANCIAL HOLDINGS LTD DATE OF NAME CHANGE: 19931122 SC 13D/A 1 d602174dsc13da.htm SC 13D/A SC 13D/A

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 13D/A

 

 

Under the Securities Exchange Act of 1934

(Amendment No. 1)*

 

 

BlackBerry Limited

(Name of Issuer)

 

 

Common Shares

(Title of Class of Securities)

09228F103

(CUSIP Number)

Paul Rivett

President

Fairfax Financial Holdings Limited

95 Wellington Street West, Suite 800

Toronto, Ontario, Canada, M5J 2N7

Telephone: (416) 367-4941

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

– With a copy to –

Jason R. Lehner

Shearman & Sterling LLP

Commerce Court West

199 Bay Street, Suite 4405

Toronto, Ontario M5L 1E8

Telephone (416) 360-8484

September 23, 2013

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box  ¨.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

Explanatory note

Pursuant to Rule 13d-2 promulgated under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 to Schedule 13D (this “Amendment No. 1”) amends the Schedule 13D originally filed with the United States Securities and Exchange Commission (the “SEC”) on July 23, 2012 (the “Original Schedule 13D” and together with this Amendment No. 1, the “Schedule 13D”) by V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 Ontario Limited, Fairfax Financial Holdings Limited, United States Fire Insurance Company, TIG Insurance Company, General Fidelity Insurance Company, Northbridge Commercial Insurance Corporation, Odyssey Reinsurance Company, Zenith Insurance Company, Northbridge General Insurance Corporation, Federated Insurance Company of Canada, Northbridge Indemnity Insurance Corporation, Northbridge Personal Insurance Corporation, Clearwater Insurance Company, Zenith Insurance Company and Advent Underwriting Limited (collectively, the “Reporting Persons”). Except as specifically amended by this Amendment No. 1, items in the Schedule 13D are unchanged. Capitalized terms used herein that are not defined herein have the meanings ascribed to them in the Schedule 13D.

 

Item 1. Security and Issuer.

The class of securities to which this statement relates is the Common Shares of Blackberry Limited (“BlackBerry”), without par value (the “Shares”). The address of the principal executive office of BlackBerry is 295 Philip Street, Waterloo, Ontario N2L 3W8.

Each reference in the Schedule 13D to “RIM” is hereby amended to refer to “BlackBerry”.

 

Item 4. Purpose of Transaction.

Item 4 of the Schedule 13D is hereby amended and restated in its entirety as follows:

The Reporting Persons acquired the Shares for investment purposes.

On September 23, 2013, Fairfax and BlackBerry entered into a letter of intent agreement (“LOI”) under which a consortium to be led by Fairfax offered to acquire all of the outstanding Shares for U.S. $9.00 per Share in cash (the “Proposed Acquisition”). The Proposed Acquisition is subject to the completion by Fairfax of due diligence, the negotiation of a definitive agreement (“Definitive Agreement”) with respect to the Proposed Acquisition and receipt of customary regulatory approvals for the Proposed Acquisition. There can be no assurance that the due diligence to be conducted will be satisfactory to Fairfax, that financing for the Proposed Transaction will be obtained, that a Definitive Agreement will be entered into or that the Proposed Transaction will be consummated.

Diligence in respect of BlackBerry is expected to be complete by November 4, 2013 (“Diligence Period”). The parties’ intention is to negotiate and execute a Definitive Agreement by such date. During such period, the LOI provides that BlackBerry is permitted to actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals (“Alternative Transactions”).

If (A) during the Diligence Period (i) BlackBerry enters into any letter of intent or definitive agreement providing for an Alternative Transaction, (ii) BlackBerry ceases to negotiate with the Fairfax consortium in good faith with a view to entering into the Definitive Agreement by the end of the Diligence Period, or (iii) an Alternative Transaction is publicly proposed or publicly announced and is consummated within six months following the end of the Diligence Period, or (B) during the three-month period following the end of the Diligence Period, BlackBerry enters into any agreement providing for an Alternative Transaction with a person with whom discussions were held before or during the Diligence Period, then BlackBerry will pay Fairfax a fee of U.S. $0.30 per Share, provided, however, that no such fee shall be payable if the consortium shall have reduced the price offered below U.S. $9.00 per Share without the approval of the board of directors of BlackBerry. In the event that a Definitive Agreement is signed with Fairfax, the termination fee will increase to U.S.$ 0.50 per Share.

The LOI also provides that, until the date that is six months following the end of the Diligence Period, Fairfax will vote all Shares that it owns, including Shares acquired after the date of the LOI (a) if BlackBerry’s board of directors has recommended or approved the Proposed Transaction (i) in favor of the Proposed Transaction and (ii) against any Alternative Transaction or any action that is reasonably likely to impede, interfere with, delay, postpone, or adversely affect in any material respect the Proposed Transaction, and (b) if BlackBerry’s board of directors has recommend or approved an all cash Alternative Transaction in respect of which BlackBerry has provided Fairfax 48 hours’ advance written notice and which the board of directors has concluded is a Superior Proposal (as defined in the LOI), (i) in favor of the Superior Proposal, and (ii) against any other Alternative Transaction or any action that is reasonably likely to impede, interfere with, delay, postpone, or adversely affect in any material respect such Superior Proposal. In the event that the Proposed Transaction is structured as a take-over bid or BlackBerry’s board of directors recommends a take-over that is a Superior Proposal, in respect of which BlackBerry has provided Fairfax 48 hours’ advance written notice, Fairfax agrees to tender its common shares of BlackBerry into such Superior Proposal (and not withdraw its shares prior to the expiry of the take-over bid) until the date that is six months following the end of the Diligence Period.

The foregoing description of the LOI does not comport to be complete and is qualified in its entirety by the full text of the LOI, which is filed herewith as Exhibit 2 and incorporated herein by reference.

One or more entities within the Fairfax Group of Companies, including one or more of the Reporting Persons, may determine to purchase additional securities of BlackBerry in the open market or otherwise, depending upon price, market conditions, availability of funds, evaluation of alternative investments and other factors. While none of the Reporting Persons has any present plans to sell any Shares or other securities of BlackBerry, one or more of them could determine, based upon the same set of factors listed above with respect to purchases and subject to the LOI, to sell some or all of such securities.

 

Item 7. Material to be Filed as Exhibits.

The following are filed as exhibits to the Schedule 13D:

 

Ex. 1: Joint filing agreement dated as of July 17, 2012 among V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 Ontario Limited, Fairfax Financial Holdings Limited, United States Fire Insurance Company, TIG Insurance Company, General Fidelity Insurance Company, Northbridge Commercial Insurance Corporation, Odyssey Reinsurance Company, Zenith Insurance Company, a California corporation, Northbridge General Insurance Corporation, Federated Insurance Company of Canada, Northbridge Indemnity Insurance Corporation, Northbridge Personal Insurance Corporation, Clearwater Insurance Company, Zenith Insurance Company, a Canadian corporation, and Advent Underwriting Limited (filed with the Original Schedule 13D)

 

Ex. 2: Letter of intent agreement, dated September 23, 2013, between Fairfax Financial Holdings Limited and BlackBerry Limited (filed herewith).

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013     V. Prem Watsa
    /s/ V. Prem Watsa

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   1109519 Ontario Limited
  By:   /s/ V. Prem Watsa
   

Name:  V. Prem Watsa

   

Title:    President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   The Sixty Two Investment Company Limited
  By:   /s/ V. Prem Watsa
   

Name:  V. Prem Watsa

   

Title:    President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   810679 Ontario Limited
  By:   /s/ V. Prem Watsa
   

Name:  V. Prem Watsa

   

Title:    President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Fairfax Financial Holdings Limited
  By:   /s/ Paul Rivett
   

Name:  Paul Rivett

   

Title:    President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

    United States Fire Insurance Company
Dated: September 23, 2013     By:   /s/ James V. Kraus
     

Name:  James V. Kraus

     

Title:    Sr. Vice President, General Counsel and Secretary

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

    TIG Insurance Company
Dated: September 23, 2013     By:   /s/ John J. Bator
     

Name:  John J. Bator

     

Title:    CFO, Treasurer and Sr. Vice President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   General Fidelity Insurance Company
  By:   /s/ John J. Bator
   

Name:  John J. Bator

   

Title:    CFO, Treasurer and Sr. Vice President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013     Northbridge Commercial Insurance Corporation
    By:   /s/ Craig Pinnock
      Name: Craig Pinnock
      Title: CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Odyssey Reinsurance Company
  By:   /s/ Kirk M. Reische
   

Name:  Kirk M. Reische

   

Title:    Vice President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013     Zenith Insurance Company, a Canadian corporation
    By:   /s/ Craig Pinnock
      Name: Craig Pinnock
      Title: CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013       Northbridge General Insurance Corporation
    By:   /s/ Craig Pinnock
     

Name:  Craig Pinnock

     

Title:    CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013     Federated Insurance Company of Canada
    By:   /s/ Craig Pinnock
     

Name:  Craig Pinnock

     

Title:    CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Northbridge Indemnity Insurance Corporation
  By:   /s/ Craig Pinnock
   

Name:  Craig Pinnock

   

Title:    CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Northbridge Personal Insurance Corporation
  By:   /s/ Craig Pinnock
   

Name:  Craig Pinnock

   

Title:    CFO

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Clearwater Insurance Company
  By:   /s/ John J. Bator
   

Name:  John J. Bator

   

Title:    CFO, Treasurer and Sr. Vice President

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Zenith Insurance Company, a California
corporation
  By:   /s/ Michael Jansen
   

Name:  Michael Jansen

   

Title:    EVP and General Counsel

SIGNATURE

After reasonable inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: September 23, 2013   Advent Underwriting Limited
  By:   /s/ Neil Ewing
   

Name:  Neil Ewing

   

Title:    Company Secretary

Exhibit Index

 

Exhibit

No.

   

Description

Ex. 1:    Joint filing agreement dated as of July 17, 2012 among V. Prem Watsa, 1109519 Ontario Limited, The Sixty Two Investment Company Limited, 810679 Ontario Limited, Fairfax Financial Holdings Limited, United States Fire Insurance Company, TIG Insurance Company, General Fidelity Insurance Company, Northbridge Commercial Insurance Corporation, Odyssey Reinsurance Company, Zenith Insurance Company, a California corporation, Northbridge General Insurance Corporation, Federated Insurance Company of Canada, Northbridge Indemnity Insurance Corporation, Northbridge Personal Insurance Corporation, Clearwater Insurance Company, Zenith Insurance Company, a Canadian corporation, and Advent Underwriting Limited (filed previously).
Ex. 2:    Letter of intent agreement, dated September 23, 2013, between Fairfax Financial Holdings Limited and BlackBerry Limited (filed herewith).
 EX-2 2 d602174dex2.htm EX-2 EX-2

Exhibit 2

 

LOGO

September 23, 2013

BlackBerry Limited

295 Phillip Street

Waterloo, Ontario

Canada N2L 3W8

 

Attention: Mr. Tim Dattels

Chair, Special Committee of the Board

Dear Mr. Dattels:

Further to our recent telephone conversation regarding BlackBerry Limited (the “Company”), we are pleased to provide the Board of Directors of the Company (the “Directors”) with our proposal of an all cash offer pursuant to which a new company (“Newco”) would be formed by Fairfax Financial Holdings Limited (“FF”) and one or more other parties (the “Consortium” and each such person, a “Consortium Member”) to acquire 100% of the common shares of the Company (excluding shares already held by us) for U.S. $9.00 per share, representing a total transaction value of U.S. $4.7 billion (the “Transaction Value”). We have devoted substantial time, resources and energy to studying the Company. We believe our offer provides an extremely compelling combination of attractive and certain value for shareholders.

We are highly confident that the Consortium can fund the full amount of the consideration and all related transaction fees and expenses. We are seeking financing from BofA Merrill Lynch and BMO Capital Markets (the “Lenders”).

We have endeavoured to provide the strongest possible proposal to the Company and its shareholders, including:

 

  •   All Cash Offer.    Our proposal is for Newco to acquire all of the outstanding shares of the Company for 100% cash consideration

 

  •   Attractive Long-Term Solution for all Stakeholders.    Under our proposal, the Company can avail itself of the benefits of a private operating environment without the distraction of the public markets and the emphasis on short-term financial results.

 

  •   Highest Certainty and Speed of Completion.    Our proposal offers a high level of certainty of regulatory approval. Newco will be a Canadian buyer not subject to Investment Canada review and we do not believe that there are any Competition Act issues or issues under the antitrust laws of the United States that would impede the transaction. This will lead to a rapid regulatory approval, delivering cash proceeds to the shareholders as promptly as possible. Our proposal provides higher certainty than alternatives that have been suggested in the press.

 

  •   No Financing Condition after Due Diligence.    Following completion of the requisite due diligence discussed below, financing requirements will be fully committed at the time of the execution of a definitive transaction agreement, which agreement will not contain a financing condition. The equity commitments will provide that (i) Newco will agree to enforce the equity commitments or the Company will have a customary right to cause Newco to seek specific performance of the equity commitments or (ii) the equity commitments will have been guaranteed on customary terms by the Consortium members.

 

- 2 -

 

  •   Maintain Process Flexibility to Maximize Value.    The Consortium and the Lenders will require a 6 week due diligence period which commences on the date hereof and ends at 5:00 p.m. (EST) on November 4, 2013 (the “Diligence Period”). We are available to commence our due diligence immediately and believe such diligence would be conducted during the negotiation of definitive agreements. During the Diligence Period, the Company shall be permitted to shop the Company and the proposal to other third parties. FF shall deliver an initial draft of the Definitive Agreement no later than 10 days from the date hereof. If the initial draft has not been delivered by such time, the Diligence Period shall terminate on the 11th day following the date hereof.

In order to advance our proposal, and for good and valuable consideration, you and we have agreed as follows:

 

1. During the Diligence Period the parties will negotiate in good faith with a view to entering into a definitive agreement (the “Definitive Agreement”) pursuant to which the Consortium will acquire the Company for the Transaction Value (the “Transaction”).

 

2. The parties will, as promptly as practicable, negotiate in good faith a confidentiality agreement regarding access to confidential information to be provided to us and our representatives (including the Lenders and equity participants in the Transaction), and the Company shall provide access to such confidential information as soon as possible following execution of the confidentiality agreement.

 

3. Nothing herein shall be construed as constraining the Company’s ability to have discussions with any other person about any transaction, including an Alternative Transaction prior to the execution of the Definitive Agreement. In this letter, the term “Alternative Transaction” shall mean any bona fide proposal or offer made by any person or group for (i) an arrangement, amalgamation, merger, reorganization, share exchange, business combination, recapitalization, dissolution, liquidation or similar transaction involving the Company which would result in any person or group beneficially owning more than 25% of the outstanding equity interests of the Company or any successor or parent company thereto, (ii) the acquisition by any person or group (including by any asset acquisition, joint venture or similar transaction) of assets (including equity securities of any subsidiary of the Company) representing more than 10% of the assets, revenues or net income of the Company and its subsidiaries, on a consolidated basis, other than transactions disclosed to FF in writing on or before the date hereof, (iii) any acquisition (including by way of take-over bid or exchange offer) by any person or group that if consummated would result in any person or group beneficially owning more than 25% of the voting power of the outstanding shares or (iv) any combination of the foregoing, in each case of (i) through (iii) whether in a single transaction or a series of transactions.

 

4. Nothing herein shall constrain the ability of FF during the Diligence Period to have discussions with any other person regarding such person’s participation in the Transaction, whether by way of equity, debt or otherwise. The Company agrees to provide access to confidential information to any such person as FF may direct, on the same basis as such information is provided to FF, subject to such person entering into a confidentiality agreement substantially on the same terms as that contemplated in paragraph 2 above. Prior entering into any Definitive Agreement, FF agrees not to limit, contractually or otherwise, the ability of any person to have discussions with the Company or to enter into any arrangements with the Company with respect to an Alternative Transaction.

 

- 3 -

 

5. During the Diligence Period, the Company shall cause the business of the Company to be conducted in the ordinary course and shall use commercially reasonable efforts to preserve in all material respects its business organization and maintain in all material respects existing relations with governmental entities, customers, suppliers and creditors, provided that if required in order to satisfy their fiduciary duties, the board of directors of the Company may take any action which they reasonably believe is necessary to preserve the value of the Company, and provided that the Company may take any action that it has disclosed to FF in writing on or before the date hereof or that it has, on or before the date hereof, publicly disclosed it is, or will be, undertaking.

 

6. If,

 

  (a) During the Diligence Period the Company shall enter into any letter of intent or definitive agreement providing for an Alternative Transaction;

 

  (b) During the Diligence Period the Company ceases to negotiate with the Consortium in good faith with a view to entering into the Definitive Agreement by the end of the Diligence Period;

 

  (c) During the 3 month period following the end of the Diligence Period, the Company shall enter into any agreement providing for an Alternative Transaction with a person with whom discussions regarding an Alternative Transaction were held before or during the Diligence Period; or

 

  (d) During the Diligence Period, an Alternative Transaction other than as contemplated in clause 6(a), (b) or (c) is publicly proposed or publicly announced by a third person and such Alternative Transaction with such person is consummated within 6 months following the end of the Diligence Period;

then the Company shall pay FF a fee of U.S. $0.30 for each issued and outstanding Blackberry share, in the case of (a) immediately upon entering into such agreement, in the case of (b) immediately upon such cessation, and in the case of (c) or (d), upon consummation of the Alternative Transaction; provided, however, that no such fee shall be payable if the Consortium shall have reduced the price offered below U.S. $9.00 per share without the approval of the board of directors of the Company.

 

7. If during the Diligence Period, the Company proposes to enter into an agreement relating to an Alternative Transaction, it shall not do so unless it has first provided 48 hours’ written notice to FF of such fact.

 

8. Upon the entering into of the Definitive Agreement, the terms and conditions of the Definitive Agreement will supersede this letter agreement. The terms and conditions of the Definitive Agreement, including a non-solicitation commitment with a fiduciary exception, a right to match a superior proposal and a break fee of U.S. $ 0.50 for each issued and outstanding Blackberry share, will be negotiated on terms that are customary for a transaction of this nature.

 

- 4 -

 

9. In the event that the Diligence Period terminates and no Definitive Agreement is entered into between us because the Company ceases negotiations with the Consortium (which the Company can do at any time), other than in circumstances where the Consortium shall have reduced the price offered below U.S. $9.00 per share without the approval of the board of directors of the Company, you agree to reimburse us our reasonable and documented out-of-pocket expenses incurred in connection with our consideration of the Transaction, such reimbursement to include the reasonable and documented expenses of our legal, accounting and financial advisors; provided that the maximum amount of expenses subject to reimbursement hereunder shall not exceed U.S. $5 million. Any amounts paid in respect of expense reimbursement hereunder are creditable against any fee payable under paragraph 6.

 

10. Until the date that is 6 months following the end of the Diligence Period, FF agrees to vote all common shares of the Company that it owns, including shares acquired after the date hereof (a) if the Company’s board of directors has recommended or approved the Transaction (i) in favour of the Transaction and (ii) against any Alternative Transaction or any action that is reasonably likely to impede, interfere with, delay, postpone, or adversely affect in any material respect the Transaction, and (b) if the Company’s board of directors has recommend or approved an all cash Alternative Transaction in respect of which the Company has complied with Section 7 and which the board of directors has concluded is a Superior Proposal, (i) in favour of the Superior Proposal, and (ii) against any other Alternative Transaction or any action that is reasonably likely to impede, interfere with, delay, postpone, or adversely affect in any material respect such Superior Proposal. In the event that the Transaction is structured as a take-over bid or the Company’s board of directors recommends a take-over that is a Superior Proposal, in respect of which the Company has complied with Section 7, FF agrees to tender its common shares of the Company into such Superior Proposal (and not withdraw its shares prior to the expiry of the take-over bid) until the date that is 6 months following the end of the Diligence Period. FF represents that it has, and during such 6 month period will have, the ability to vote and dispose of all such shares in accordance with its obligations pursuant to this paragraph 10. “Superior Proposal” means a bona fide written Acquisition Transaction made by an arm’s length third party (i) that is reasonably capable of being completed without undue delay, taking into account all financial, legal, regulatory and other aspects of such proposal and the person making such proposal; (ii) that is not subject to any due diligence or access condition; (iii) that is not subject to any financing condition and in respect of which, where applicable, financing commitment letters reasonably satisfactory to the Company have been furnished to the Company; (iv) that did not result from a breach of any non-solicitation agreement between the parties contained in the Definitive Agreement, and that the board of directors of the Company determines, in its good faith judgment, after receiving the advice of its outside legal and financial advisors and after taking into account all the terms and conditions of the Acquisition Transaction, including all legal, financial, regulatory and other aspects of such Acquisition Transaction and the person proposing such Acquisition Transaction would, if consummated in accordance with its terms (but not assuming away any risk of non-completion) result in a transaction more favourable, from a financial point of view, to the shareholders of the Company than those contemplated by this Agreement or a Definitive Agreement between the parties.

 

- 5 -

 

11. Until the end of the Diligence Period, FF agrees that it shall not, without the prior written consent of the Company, sell, transfer, assign, pledge, or otherwise dispose of, or enter into any agreement or understanding relating to the sale, transfer, assignment, voting (other than as provided herein) or other disposition of any common shares of the Company that it holds on the date hereof, or any shares acquired during the Diligence Period.

 

12. We agree to coordinate public disclosure of this letter agreement and our Proposal. Each party acknowledges that the other party has disclosure obligations under securities laws which will require the other party to publicly disclose this proposal in a filing with the provincial securities commission and/or the U.S. Securities and Exchange Commission and to comply with these requirements, each party will be filing this letter agreement with the applicable securities commission on or about September 23, 2013.

 

13. This letter agreement shall be governed by the laws of the Province of Ontario.

 

14. It is understood that this letter does not create a binding obligation on our part or yours to enter into a definitive agreement with respect to a Transaction and that a binding obligation on: (a) our part to acquire the Company will result only upon our determination that we are satisfied with all aspects of the due diligence we carry out during the Diligence Period and the execution of the Definitive Agreement on terms and conditions that are acceptable to us, and (b) the Company’s part will result only upon the execution of the Definitive Agreement on terms and conditions that are acceptable to the Company and upon the Company’s board of directors authorizing the entering into and delivery of the Definitive Agreement. However, it is agreed that the provisions of paragraphs 1 through 13 shall create binding obligations between us, which shall survive the termination of the Diligence Period.

We are enthusiastic about the future prospects of the Company and look forward to advancing our proposal. Please acknowledge your agreement with the foregoing by signing the counterpart of this letter.

Yours very truly,

Fairfax Financial Holdings Limited

 

Per:   /s/ Paul Rivett
 

Name: Paul Rivett

Title:   President

Agreed this 23rd day of September, 2013.

BlackBerry Limited

 

Per:   /s/ Steven E. Zipperstein
 

Name: Steven E. Zipperstein

Title:   Chief Legal Officer

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