6-K 1 form6k.htm FORM 6-K form6k.htm


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934


For the month of,
November
 
 
 2013
Commission File Number   
000-29898
 
   
 
BlackBerry Limited
(Translation of registrant’s name into English)
 
2200 University Avenue East, Waterloo, Ontario, Canada N2K 0A7
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:

Form 20-F   
 
Form 40-F   
X
 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):          

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):           




 
 
 

 

DOCUMENTS INCLUDED AS PART OF THIS REPORT


Document
 
   
1
MATERIAL CHANGE REPORT, DATED NOVEMBER 7, 2013.
 
2
SUBSCRIPTION AGREEMENT, DATED NOVEMBER 4, 2013.
 


This Report on Form 6-K is incorporated by reference into the Registration Statements on Form S-8 of the Registrant, which were originally filed with the Securities and Exchange Commission on March 28, 2002 (File No. 333-85294), October 21, 2002 (File No. 333-100684), April 28, 2008 (File No. 333-150470), October 3, 2011 (File No. 333-177149) and on July 10, 2013 (File No. 333-189880).

 
 

 

DOCUMENT 1
 

 
 

 

FORM 51-102F3
 
Material Change Report
 
Item 1
Name and Address of Company
 
BlackBerry Limited (“BlackBerry”)
2200 University Avenue East
Waterloo, Ontario
N2K 0A7
 
Item 2
Date of Material Change
 
November 4, 2013
 
Item 3
News Release
 
A news release was issued through the newswire facilities of Marketwire on November 4, 2013.
 
Item 4
Summary of Material Change
 
On November 4, 2013, BlackBerry announced that it has entered into an agreement (the “Subscription Agreement”) pursuant to which Fairfax Financial Holdings Limited (“Fairfax”) and other institutional investors (collectively, the “Purchasers”) will invest in BlackBerry through a U.S. $1 billion private placement of convertible debentures (the “Initial Debentures”). Fairfax has agreed to acquire U.S. $250 million principal amount of the convertible debentures. The transaction is expected to be completed within the next two weeks.
 
Under the terms of the transaction, the Purchasers will subscribe for U.S. $1 billion aggregate principal amount of 6% unsecured subordinated convertible debentures (the “Debentures”) convertible into common shares of BlackBerry at a price of U.S. $10.00 per common share (the “Transaction”). The Debentures have a term of seven years. Based on the number of common shares currently outstanding, if all of the U.S. $1 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 16% of the common shares outstanding after giving effect to the conversion.
 
Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry’s Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry. Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead Director and Chair of the Compensation, Nomination and Governance Committee. Current directors Thorsten Heins and David Kerr intend to resign from the Board at closing.
 
 
 

 

In addition, Mr. Heins will step down as Chief Executive Officer at closing and Mr. Chen will serve as Interim Chief Executive Officer pending completion of a search for a new Chief Executive Officer.
 
The announcement marks the conclusion of the review of strategic alternatives previously announced on August 12, 2013.
 
The closing of the transaction is subject to customary conditions, including approval from the Toronto Stock Exchange.
 
Pursuant to the Subscription Agreement, Fairfax has the right to arrange the purchase of up to an additional U.S. $250 million principal amount of the Debentures (the “Additional Debentures”) within 30 days following closing. If an additional U.S. $250 million of Debentures is issued and all U.S. $1.25 billion of Debentures were converted, the common shares issued on conversion would represent approximately 19.2% of the common shares after giving effect to the conversion, based on the number of common shares currently outstanding.
 
Item 5
Full Description of Material Change
 
5.1 – Full Description of Material Change
 
The following description of the Subscription Agreement and the Transaction does not purport to be complete and is qualified in its entirety by reference to the Subscription Agreement, a copy of which is being filed with the Canadian securities regulatory authorities concurrently with this material change report. Capitalized terms not defined herein shall have the meanings ascribed to those terms in the Subscription Agreement.
 
The Subscription
 
Conditions of Closing
 
The closing of the Transaction is subject to certain mutual conditions, including: (a) the approval of the Toronto Stock Exchange of the issuance of the Debentures and the listing of the underlying Common Shares and the approval of NASDAQ Global Select Market of the listing of the underlying Common Shares, in each case without the requirement to seek approval from BlackBerry shareholders; (b) the entering into the indenture governing the Debentures by the indenture trustee, BlackBerry and the guarantors party thereto; (c) that there be no applicable law in effect that makes the consummation of the Transaction illegal or otherwise prohibits or enjoins any party from consummating the Transaction, or that is made in connection with the Transaction and imposes any material restrictions, limitations or conditions on any of the parties; and (d) that no governmental authority shall have commenced any action or proceeding to enjoin the issuance and sale of the Debentures to the Purchasers pursuant to the Subscription Agreement or to suspend or cease or stop trading of securities of BlackBerry, and that no governmental authority shall have given written notice to any party of its intention to commence any such action or proceeding. Closing is also subject to certain conditions in favour of BlackBerry and the Purchasers, respectively,
 
 
 

 

including, in the case of the Purchasers, that (a) John Chen shall have been appointed to the Board and Prem Watsa shall have been appointed to the Board as lead director and as chair of the Compensation, Nomination and Governance Committee of the Board, with the total number of directors following such appointments remaining at 8, and (b) from and including the date of the Agreement up to and including the Closing Date, there shall not have occurred a Material Adverse Effect with respect to BlackBerry.
 
Break Fee
 
If prior to the closing, BlackBerry enters into a binding written agreement providing for a transaction that if completed would constitute a Change of Control (generally defined as (i) acquisition of voting control or direction over more than 35% of the outstanding Common Shares, (ii) acquisition of all or substantially all of the assets of BlackBerry and its subsidiaries, or (iii) the completion of a merger, amalgamation, arrangement or similar transaction which results in the holders of Common Shares immediately prior to the completion of such transaction holding less than 50% of the then outstanding Common Shares of the resulting entity immediately after the completion of such transaction):
 
(a) each Purchaser will have the right to terminate its obligations under the Subscription Agreement, and if the Purchasers are not prepared as a group to purchase all but not less than all of the Initial Debentures, the Purchasers shall notify BlackBerry and the Subscription Agreement shall terminate, in which case BlackBerry covenants and agrees to pay to the Purchasers a fee equal to an aggregate of U.S.$250 million within one business day of the termination of the Subscription Agreement; or
 
(b) the Purchasers as a group (along with any other purchaser or purchasers that are willing to enter into the Subscription Agreement and become a Purchaser and who are approved by the remaining Purchasers) may elect to purchase all but not less than all of the Initial Debentures, and in the event of such election BlackBerry covenants and agrees that it will pay to the Purchasers who purchase the Debentures at closing a fee equal to an aggregate of U.S.$135 million within one business day following closing.
 
If at any time following the closing but no later than the 30th day following the closing, BlackBerry enters into a binding written agreement providing for a transaction that if completed would constitute a Change of Control, BlackBerry covenants and agrees that it will pay to the Purchasers who purchased the Debentures a fee equal to an aggregate of U.S.$135 million within one business day of the entering into such agreement.
 
Covenants
 
At or prior to closing, BlackBerry shall cause John Chen to be appointed as the Executive Chair of BlackBerry and to be appointed as a director of BlackBerry, shall cause Prem Watsa to be appointed as the lead director of BlackBerry and the Chair of the Compensation, Nomination and Governance Committee of the Board, and shall pay, or cause to be paid all of the reasonable and documented third party, out-of-pocket fees and expenses incurred by Fairfax in connection with (i) the evaluation of the transaction contemplated in a letter of intent between BlackBerry and Fairfax dated September 23, 2013, (ii) the negotiation of that
 
 
 

 

letter of intent, and (iii) the evaluation and initiation of the issue of Debentures, in all cases including without limitation the fees and expenses of all consultants, valuators, and financial and legal advisors to Fairfax, provided that payments will not exceed in the aggregate, U.S.$40 million. BlackBerry shall pay a placement fee to BMO Nesbitt Burns Inc. as settlement agent in connection with the transactions contemplated by the Subscription Agreement in an amount which shall not exceed U.S.$3 million. In addition, BlackBerry shall use its reasonable commercial efforts to obtain a waiver of certain provisions of its existing asset-backed lending arrangement, which is not currently being utilized except for approximately U.S.$6 million relating to outstanding letters of credit as of November 5, 2013, it being agreed that obtaining the waiver will not be a condition to closing.
 
Standstill
 
For a period of one year following the Closing Date, neither Fairfax nor its affiliates (including The Sixty Two Investment Company) shall, directly or indirectly and whether alone or by acting jointly or in concert with any other person, in any manner acquire or offer to acquire (whether publicly or otherwise) by any means whatsoever beneficial ownership of any Common Shares or securities convertible into, or exchangeable or exercisable for, Common Shares if, following any such acquisition, Fairfax and its affiliates would, in the aggregate, directly or indirectly, together with their joint actors, beneficially own more than 19.9% of the outstanding Common Shares (assuming, for this purpose, the conversion into, or exchange or exercise for, all securities beneficially owned by Fairfax and its affiliates and their joint actors that are convertible into, or exchangeable or exercisable for, Common Shares).
 
Hold Period
 
For a period of one year following the Closing Date, Fairfax and its affiliates shall not, directly or indirectly, transfer, sell, assign, gift, pledge, encumber, hypothecate, mortgage, exchange or otherwise dispose (each, a “Transfer”) of any Common Shares or securities convertible into, or exchangeable or exercisable for, Common Shares, if after such Transfer, Fairfax and its affiliates would, in the aggregate, directly or indirectly own less than 9.9% of the outstanding Common Shares (assuming, for this purpose, the conversion into, or exchange or exercise for, all securities beneficially owned by Fairfax and its affiliates and their joint actors that are convertible into, or exchangeable or exercisable for, Common Shares).
 
Outside Date
 
If closing has not occurred on or prior to November 27, 2013, any of the Purchasers or BlackBerry may terminate this Agreement (except that the right to terminate the Agreement will not be available to a party whose breach of the Agreement has been the cause of, or resulted in, the failure of the closing to occur by such date). If any closing in respect of Additional Debentures has not occurred by the 30th day following the closing, the option of Fairfax to arrange for the purchase of the Additional Debentures shall expire.
 
 
 

 

Letter of Intent dated September 23, 2013
 
BlackBerry and Fairfax agree that the letter of intent dated September 23, 2013 between them is terminated and that each party thereto fully and finally releases the other party from any and all obligations thereunder.
 
Employment Agreement with John Chen
 
On the Closing Date, BlackBerry will enter into an employment agreement with Mr. Chen. As Executive Chair, Mr. Chen will have control over strategic direction, strategic relationships, and organization goals of BlackBerry and authority over hiring, retention, duties, and responsibilities of all officers, executives and other employees. Mr. Chen’s remuneration will include base salary of U.S. $1,000,000 and performance bonus of U.S. $2,000,000. Mr. Chen will also be granted 13,000,000 restricted share units vesting as to 25% on the 3rd and 4th anniversary dates of his employment, with the balance vesting on the 5th anniversary.
 
If Mr. Chen’s employment is terminated without cause, he will be entitled to be paid his salary for the remainder of the year in which he is terminated as well as two times his base salary and two times his base bonus (total of U.S.$6,000,000), and be entitled to benefits (excluding those relating to transportation) for 18 months following such termination. A definitive employment agreement with Mr. Chen will be entered into on the Closing Date.
 
The Debentures
 
A summary of the material terms of the Debentures is annexed hereto as Schedule “B”.
 
5.2 – Disclosure for Restructuring Transactions
 
N/A
 
Item 6
Reliance on subsection 7.1(2) of National Instrument 51-102
 
Not applicable.
 
Item 7
Omitted Information
 
No significant facts remain confidential in, and no information has been omitted from, this report.
 
Item 8
Executive Officer
 
For further information please contact Paul Carpino, Vice-President, Investor Relations of BlackBerry at (519) 888-7465.
 
Item 9
Date of Report
 
November 7, 2013
 
 
 

 

Schedule “A”
 

 
 

 

Page 1 of 4
11.04.13
 

1
 
BLACKBERRY RECEIVES INVESTMENT OF U.S. $1 BILLION
2
 
FROM FAIRFAX FINANCIAL AND OTHER INSTITUTIONAL INVESTORS
3
   
4
 
John S. Chen to be Appointed Executive Chair of BlackBerry’s Board of Directors and Interim CEO;
5
 
Prem Watsa to be Appointed Lead Director
6
   
7
 
Company Concludes Review of Strategic Alternatives and
8
 
Announces Changes to Board and Leadership Team
9
   
10
 
Waterloo, ON, and Toronto, ON – (November 4, 2013) – BlackBerry (Nasdaq: BBRY; TSX: BB), a world
11
 
leader in the mobile communications market, today announced that it has entered into an agreement
12
 
pursuant to which Fairfax Financial Holdings Limited (“Fairfax”) and other institutional investors
13
 
(collectively, the “Purchasers”) will invest in BlackBerry through a U.S. $1 billion private placement of
14
 
convertible debentures. Fairfax has agreed to acquire U.S. $250 million principal amount of the
15
 
Debentures. The transaction is expected to be completed within the next two weeks.
16
   
17
 
Under the terms of the transaction, the Purchasers will subscribe for U.S. $1 billion aggregate principal
18
 
amount of 6% unsecured subordinated convertible debentures (the “Debentures”) convertible into
19
 
common shares of BlackBerry at a price of U.S. $10.00 per common share (the “Transaction”), a 28.7%
20
 
premium to the closing price of BlackBerry common shares on November 1, 2013. The Debentures have
21
 
a term of seven years. Based on the number of common shares currently outstanding, if all of the U.S.
22
 
$1 billion of Debentures were converted, the common shares issued upon conversion would represent
23
 
approximately 16% of the common shares outstanding after giving effect to the conversion.
24
   
25
 
Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry’s Board
26
 
of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and
27
 
organizational goals of BlackBerry. Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead
28
 
Director and Chair of the Compensation, Nomination and Governance Committee and Thorsten Heins
29
 
and David Kerr intend to resign from the Board at closing.
30
   
31
 
In addition, Mr. Heins will step down as Chief Executive Officer at closing and Mr. Chen will serve as
32
 
Interim Chief Executive Officer pending completion of a search for a new Chief Executive Officer.
33
   
34
 
Today’s announcement marks the conclusion of the review of strategic alternatives previously
35
 
announced on August 12, 2013.
36
   
37
 
“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this
38
 
group of preeminent, long-term investors,” said Barbara Stymiest, Chair of BlackBerry’s Board. “The
39
 
BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of
40
 
action that it concluded is in the best interests of BlackBerry and its constituents, including its
41
 
shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry,
42
 
enhancing our substantial cash position. Some of the most important customers in the world rely on
43
 
BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we
44
 
remain a strong and innovative partner for their needs.”
45
   
46
 
Ms. Stymiest added, “I am also pleased that John Chen, a distinguished and proven leader in the
47
 
technology industry, has agreed to serve as BlackBerry’s Executive Chairman. I look forward to
48
 
continuing to serve BlackBerry as a member of its Board of Directors and chair of the Board’s Audit and
49
 
Risk Management Committee. On behalf of the Board, I would also like to thank Thorsten for his service
50
 
to BlackBerry over the past six years. Under his leadership, BlackBerry established a more efficient cost
51
 
structure, developed new products, saw the adoption of BES 10 and delivered the BlackBerry 10
 
 
 

 

Page 2 of 4
11.04.13
 

52
 
platform. These are all significant accomplishments. We are grateful for his contributions and wish him
53
 
well in his future endeavors.”
54
   
55
 
“Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment,
56
 
reinforces its deep commitment to the future success of this company,” said Prem Watsa, Chairman and
57
 
CEO of Fairfax. “I look forward to rejoining the BlackBerry Board and to working with the other directors
58
 
and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy
59
 
and growth.”
60
   
61
 
“I am pleased to join a company with as much potential as BlackBerry,” said Mr. Chen. “BlackBerry is an
62
 
iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to
63
 
reclaim our success. I look forward to leading BlackBerry in its turnaround and business model
64
 
transformation for the benefit of all of its constituencies, including its customers, shareholders and
65
 
employees.”
66
   
67
 
The closing of the transaction is subject to customary conditions, including approval from the Toronto
68
 
Stock Exchange.
69
   
70
 
Pursuant to the Transaction agreement, the investors have an option to purchase up to an additional
71
 
U.S. $250 million principal amount of Debentures within 30 days following closing. If an additional U.S.
72
 
$250 million of Debentures is issued and all U.S. $1.25 billion of Debentures were converted, the
73
 
common shares issued upon conversion would represent approximately 19.2% of the common shares
74
 
after giving effect to the conversion, based on the number of common shares currently outstanding.
75
   
76
 
About John Chen
77
 
John Chen previously served as the chairman and CEO of Sybase Inc., beginning in 1998. Under Mr.
78
 
Chen’s leadership, Sybase was transformed from a mature technology company into a high-growth
79
 
enterprise data management, data warehousing, mobility management and analytics innovator that was
80
 
acquired by SAP AG in 2010. At Sybase, Mr. Chen introduced the concept of the “Unwired Enterprise”,
81
 
extending enterprise applications to mobile users. Prior to Sybase, Mr. Chen held a series of executive
82
 
positions at Siemens AG, Pyramid Technology Corp., and Burroughs Corp. He started his career as a
83
 
design engineer with Unisys Corp. Mr. Chen is currently a director of Wells Fargo & Company and The
84
 
Walt Disney Company.
85
   
86
 
About Prem Watsa
87
 
Prem Watsa is the Chairman of the Board of Directors and the Chief Executive Officer of Fairfax Financial
88
 
Holdings Limited, a financial services holding company whose corporate objective is to achieve a high
89
 
rate of return on invested capital and build long-term shareholder value, since 1985. He is also Vice
90
 
President of Hamblin Watsa Investment Counsel Ltd. since 1985.
91
   
92
 
J.P. Morgan Securities LLC, Perella Weinberg Partners and RBC Capital Markets are serving as financial
93
 
advisors to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP, Torys LLP and Blake, Cassels &
94
 
Graydon LLP are serving as legal advisors. BDT & Company, LLC, BofA Merrill Lynch and BMO Capital
95
 
Markets are acting as financial advisors to Fairfax, and Shearman & Sterling LLP and McCarthy Tétrault
96
 
LLP are acting as legal advisors. BMO Capital Markets is also acting as the sole bookrunner for the
97
 
private placement.
98
   
99
 
About BlackBerry
100
 
A global leader in wireless innovation, BlackBerry® revolutionized the mobile industry when it was
101
 
introduced in 1999. Today, BlackBerry aims to inspire the success of our millions of customers around
102
 
the world by continuously pushing the boundaries of mobile experiences. Founded in 1984 and based in
 
 
 

 

Page 3 of 4
11.04.13
 

103
 
Waterloo, Ontario, BlackBerry operates offices in North America, Europe, Asia Pacific and Latin America.
104
 
BlackBerry is listed on the NASDAQ Stock Market (NASDAQ: BBRY) and the Toronto Stock Exchange (TSX:
105
 
BB). For more information, visit www.blackberry.com.
106
   
107
 
Contacts:
108
   
109
 
BlackBerry
110
 
Media Contact:
111
 
BlackBerry Media Relations
112
 
519-888-7465 x77273
113
 
mediarelations@blackberry.com
114
   
115
 
Investor Contact:
116
 
BlackBerry Investor Relations
117
 
(519) 888-7465
118
 
investor_relations@blackberry.com
119
   
120
 
Fairfax
121
 
Fairfax Financial Holdings Limited
122
 
John Varnell
123
 
Vice President, Corporate Development
124
 
(416) 367-4941
125
 
(416) 367-4946 (FAX)
126
   
127
 
The Debentures have not been and will not be registered under the U.S. Securities Act of 1933 (the “U.S.
128
 
Securities Act”), and may not be offered or sold in the United States or to, or for the account or benefit
129
 
of U.S. persons (as defined in Regulation S under the U.S. Securities Act), absent registration or an
130
 
applicable exemption from registration requirements. This press release shall not constitute an offer to
131
 
sell or the solicitation of an offer to buy nor shall there be any sale of the Debentures in any state in
132
 
which such offer, solicitation or sale would be unlawful prior to registration or qualification under the
133
 
securities laws of any such state.
134
   
135
 
This news release contains forward-looking statements within the meaning of the U.S. Private Securities
136
 
Litigation Reform Act of 1995 and Canadian securities laws, including statements regarding: BlackBerry’s
137
 
expectations regarding new product initiatives and timing, including the BlackBerry 10 platform;
138
 
BlackBerry’s plans and expectations regarding new service offerings, and assumptions regarding its
139
 
service revenue model; BlackBerry’s plans, strategies and objectives, and the anticipated opportunities
140
 
and challenges in fiscal 2014; anticipated demand for, and BlackBerry’s plans and expectations relating
141
 
to, programs to drive sell-through of the company’s BlackBerry 10 smartphones; BlackBerry’s
142
 
expectations regarding financial results for the second quarter of fiscal 2014; BlackBerry’s expectations
143
 
with respect to the sufficiency of its financial resources; BlackBerry’s ongoing efforts to streamline its
144
 
operations and its expectations relating to the benefits of its Cost Optimization and Resource Efficiency
145
 
(“CORE”) program and similar strategies; BlackBerry’s plans and expectations regarding marketing and
146
 
promotional programs; and BlackBerry’s estimates of purchase obligations and other contractual
147
 
commitments. The terms and phrases “expects”, “believe”, “focused”, “getting”, “opportunities”, “we
148
 
are seeing”, “continuing”, “drive”, “improve”, “should”, “will”, “increasing”, “anticipated”, and similar
149
 
terms and phrases are intended to identify these forward-looking statements. Forward-looking
150
 
statements are based on estimates and assumptions made by BlackBerry in light of its experience and its
151
 
perception of historical trends, current conditions and expected future developments, as well as other
152
 
factors that BlackBerry believes are appropriate in the circumstances, including but not limited to the
153
 
launch timing and success of products based on the BlackBerry 10 platform, general economic
 
 
 

 

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154
 
conditions, product pricing levels and competitive intensity, supply constraints, BlackBerry’s
155
 
expectations regarding its business, strategy, opportunities and prospects, including its ability to
156
 
implement meaningful changes to address its business challenges, and BlackBerry’s expectations
157
 
regarding the cash flow generation of its business. Many factors could cause BlackBerry’s actual results,
158
 
performance or achievements to differ materially from those expressed or implied by the forward-
159
 
looking statements, including, without limitation: BlackBerry’s ability to enhance its current products
160
 
and services, or develop new products and services in a timely manner or at competitive prices,
161
 
including risks related to new product introductions; risks related to BlackBerry’s ability to mitigate the
162
 
impact of the anticipated decline in BlackBerry’s infrastructure access fees on its consolidated revenue
163
 
by developing an integrated services and software offering; intense competition, rapid change and
164
 
significant strategic alliances within BlackBerry’s industry; BlackBerry’s reliance on carrier partners and
165
 
distributors; risks associated with BlackBerry’s foreign operations, including risks related to recent
166
 
political and economic developments in Venezuela and the impact of foreign currency restrictions; risks
167
 
relating to network disruptions and other business interruptions, including costs, potential liabilities, lost
168
 
revenues and reputational damage associated with service interruptions; risks related to BlackBerry’s
169
 
ability to implement and to realize the anticipated benefits of its CORE program; BlackBerry’s ability to
170
 
maintain or increase its cash balance; security risks; BlackBerry’s ability to attract and retain key
171
 
personnel; risks related to intellectual property rights; BlackBerry’s ability to expand and manage
172
 
BlackBerry® WorldTM; risks related to the collection, storage, transmission, use and disclosure of
173
 
confidential and personal information; BlackBerry’s ability to manage inventory and asset risk;
174
 
BlackBerry’s reliance on suppliers of functional components for its products and risks relating to its
175
 
supply chain; BlackBerry’s ability to obtain rights to use software or components supplied by third
176
 
parties; BlackBerry’s ability to successfully maintain and enhance its brand; risks related to government
177
 
regulations, including regulations relating to encryption technology; BlackBerry’s ability to continue to
178
 
adapt to recent board and management changes and headcount reductions; reliance on strategic
179
 
alliances with third-party network infrastructure developers, software platform vendors and service
180
 
platform vendors; BlackBerry’s reliance on third-party manufacturers; potential defects and
181
 
vulnerabilities in BlackBerry’s products; risks related to litigation, including litigation claims arising from
182
 
BlackBerry’s practice of providing forward-looking guidance; potential charges relating to the
183
 
impairment of intangible assets recorded on BlackBerry’s balance sheet; risks as a result of actions of
184
 
activist shareholders; government regulation of wireless spectrum and radio frequencies; risks related to
185
 
economic and geopolitical conditions; risks associated with acquisitions; foreign exchange risks; and
186
 
difficulties in forecasting BlackBerry’s financial results given the rapid technological changes, evolving
187
 
industry standards, intense competition and short product life cycles that characterize the wireless
188
 
communications industry, and the company's previously disclosed review of strategic alternatives.
189
 
These risk factors and others relating to BlackBerry are discussed in greater detail in the “Risk Factors”
190
 
section of BlackBerry’s Annual Information Form, which is included in its Annual Report on Form 40-F
191
 
and the “Cautionary Note Regarding Forward-Looking Statements” section of BlackBerry’s MD&A
192
 
(copies of which filings may be obtained at www.sedar.com or www.sec.gov). These factors should be
193
 
considered carefully, and readers should not place undue reliance on BlackBerry’s forward-looking
194
 
statements. BlackBerry has no intention and undertakes no obligation to update or revise any forward-
195
 
looking statements, whether as a result of new information, future events or otherwise, except as
196
 
required by law.
197
   
198
   
 
 
 

 

Schedule “B”
 
 
 
 

 
 
DESCRIPTION OF THE DEBENTURES

Defined terms used in “Description of Debentures” and not otherwise defined herein have the meanings given to such terms in the BlackBerry Indenture (as defined below).
 
Debentures
 
The following description of the Debentures does not purport to be complete and is qualified in its entirety by reference to the BlackBerry Indenture, a form of which is being filed with the Canadian securities regulatory authorities concurrently with this material change report. Capitalized terms used in this Schedule “B” but not defined herein shall have the meanings ascribed to those terms in the BlackBerry Indenture.
 
General
 
The Debentures will be limited to an aggregate principal amount of up to U.S.$1.25 billion and will be created and issued under a trust indenture (the “BlackBerry Indenture”) to be dated as of the Closing Date made between BlackBerry, the Guarantors and Computershare Trust Company of Canada, as trustee (the “Trustee”).
 
The Debentures will be dated as of the Closing Date (as defined in the Subscription Agreement) and will mature on the 7th anniversary of the Closing Date or such earlier date on which the Debentures become payable pursuant to the terms of the BlackBerry Indenture (the “Maturity Date”). The Debentures will be issuable only in denominations of U.S.$1,000 and integral multiples thereof and will bear interest from and including the date of issue at 6% per annum, which will be payable quarterly in arrears on the last day of February, May, August and November in each year, provided that if an Event of Default under the BlackBerry Indenture has occurred and is continuing, interest will be calculated on the basis of 10% per annum instead of 6% per annum.
 
The principal amount of and interest on the Debentures will be payable in lawful money of the United States. The Debentures will be direct obligations of BlackBerry and will not be secured by any mortgage, pledge, hypothec or other charge and will be subordinated to certain other liabilities of BlackBerry including the asset-backed lending facility established by BlackBerry on August 27, 2013.
 
Conversion Right
 
The Debentures will be convertible (the “Conversion Right”) at the holder’s option into fully paid Common Shares of BlackBerry (“Shares”) at any time during the period starting on the 10th day following the issuance of the Debentures and ending on the third business day prior to the Maturity Date, at the Conversion Price, initially being U.S.$10.00 per Share and representing a Conversion Rate of approximately 100 Shares for each U.S.$1,000 principal amount of Debentures, subject to adjustment upon the occurrence of certain events in accordance with the provisions of the BlackBerry Indenture. In order to exercise its option to convert, a holder shall deliver a Conversion Notice to the Trustee (with a copy to BlackBerry).
 
Subject to the provisions thereof, the BlackBerry Indenture will provide for the adjustment of the Conversion Rate in certain events including: (a) the payment of a dividend or a distribution on all or substantially all of the Shares in Shares; (b) the subdivision of the outstanding Shares into a greater number of shares, or the combination of outstanding Shares into a smaller number of shares; (c) the fixing of a record date for the issuance of rights or warrants to all or substantially all holders of outstanding Shares entitling them to subscribe for or purchase Shares (or other securities convertible into Shares) at a
 
 
 

 
- 2 -

price per Share (or having a conversion price per Share) that is less than 95% of the Current Market Price per Share; (d) payment of a dividend or other distribution to all or substantially all holders of Shares consisting of certain evidences of indebtedness or certain other assets of BlackBerry; (e) following the issuance or distribution of any rights or warrants pursuant to any rights plan BlackBerry implements after the date of the BlackBerry Indenture, the separation of such rights or warrants from the Shares in certain circumstances; (f) a cash distribution (other than a Distribution Paid in the Ordinary Course or upon liquidation or dissolution of BlackBerry) to all holders of Shares; (g) the expiration of certain issuer bids for Shares made by BlackBerry or any of its subsidiaries; (h) the issuance of Shares pursuant to a non-public offering (other than in certain circumstances described in the BlackBerry Indenture) at a price per Share (or bearing a conversion price per Share) that is less than 95% of the then-current market price, subject to TSX approval, and (i) the taking of certain other actions affecting the Shares which, in the opinion of the board of directors, would materially affect the conversion rights of holders of Debentures, subject to TSX approval.
 
If any of the following events occur (each a “Business Combination”): (a) any recapitalization, reclassification or change (other than a change resulting from a combination or subdivision) of the Shares, (b) any consolidation, amalgamation, merger, arrangement or combination involving BlackBerry, (c) any sale, conveyance or lease of all or substantially all of the property and assets of BlackBerry, other than to one or more of BlackBerry’s subsidiaries, or (d) any statutory share exchange, the terms of the conversion privilege shall be adjusted to give appropriate effect thereto.
 
Redemption and Purchase
 
The Debentures may not be redeemed by BlackBerry before the third anniversary of the Closing Date. On or after the third anniversary of the Closing Date and prior to maturity, the Debentures may be redeemed by BlackBerry, in whole or in part from time to time, at the option of BlackBerry on not more than 60 days and not less than 40 days’ prior notice for cash at the following redemption prices:
 
 
·
104% of the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest, if redeemed prior to the 4th anniversary of the Closing Date;
 
 
·
103% of the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest, if redeemed on or after the 4th anniversary of the Closing Date and prior to the 5th anniversary of the Closing Date;
 
 
·
102% of the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest, if redeemed on or after the 5th anniversary of the Closing Date and prior to the 6th anniversary of the Closing Date; and
 
 
·
101% of the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest, if redeemed on or after the 6th anniversary of the Closing Date and prior to the 7th anniversary of the Closing Date.
 
Provided that no Event of Default has occurred and is continuing, BlackBerry will have the right at any time and from time to time to purchase all or any of the Debentures in the market, by tender or by private contract, at any price and subject to compliance with applicable securities laws.
 
Maturity
 
On the Maturity Date, BlackBerry will repay the indebtedness represented by the Debentures in whole or in part, by paying to the Trustee in lawful money of the United States an amount equal to the
 
 
 

 
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aggregate principal amount of the outstanding Debentures which have matured, together with accrued and unpaid interest thereon.
 
Fractional Shares
 
No fractional Shares shall be delivered to the Trustee or holders of Debentures upon conversion, but, in lieu thereof, if such a fraction shall become owing, BlackBerry shall pay to the Trustee on account of the holders of Debentures, at the time of delivery of the Shares, the cash equivalent thereof determined on the basis of the then current market value of the fractional share. The current market value of a fractional share shall be determined (calculated to the nearest 1/100th of a share) by multiplying the closing price of the Shares on the Trading Day immediately preceding the date of delivery by such fractional share and rounding the product to the nearest whole cent.
 
Cancellation
 
All Debentures converted, redeemed or purchased will be cancelled and may not be reissued or resold.
 
Change of Control
 
If a Change of Control (as defined below) occurs prior to the Maturity Date, BlackBerry shall be required to make an offer to the holders of Debentures to repurchase for cash all or any portion of the Debentures of such holder (the “Change of Control Repayment Offer”), at a price equal to 115% of the principal amount of the Debenture to be purchased, plus any accrued and unpaid interest (the “Change of Control Repurchase Price”) on a date that is not less than 30 nor more than 45 days after the date of the Change of Control Issuer Notice referred to below (the “Change of Control Repurchase Date”) (provided that in the case of a Change of Control caused by Fairfax or any affiliate thereof, whether by itself or together with any other person with whom Fairfax or any such affiliate is acting jointly or in concert, BlackBerry shall not be required to make a Change of Control Repayment offer with respect to any Debentures beneficially held by Fairfax or any affiliate thereof or any other such person). As promptly as practicable following the Change of Control, but in any event within ten (10) days after the occurrence of such Change of Control, BlackBerry shall provide notice (the “Change of Control Issuer Notice”) of the Change of Control to the Trustee and the holders of Debentures and make the offer to repurchase the Debentures in the manner provided in the Indenture. A holder may accept a Change of Control Repayment Offer by delivering written notice (a “Change of Control Repurchase Notice”) to BlackBerry or the Trustee at any time prior to the close of business on the second business day next preceding the Change of Control Repurchase Date, subject to extension to comply with applicable laws. BlackBerry is only obliged to purchase a portion of a Debenture if the principal amount of such portion is U.S.$1,000 or an integral multiple of U.S.$1,000. Any holder delivering the Change of Control Repurchase Notice has the right to withdraw such Change of Control Repurchase Notice in whole or in a portion thereof that is a principal amount of U.S.$1,000 or in an integral multiple thereof, at any time prior to the close of business on the third business day prior to the Change of Control Repurchase Date by delivering a written notice of withdrawal to the Trustee. Upon receipt by the Trustee of a Change of Control Repurchase Notice, the holder will be entitled to receive the Change of Control Repurchase Price with respect to such Debenture.
 
A “Change of Control” will be defined in the BlackBerry Indenture as (a) the acquisition by any person or one or more members of a group of persons acting jointly or in concert, directly or indirectly, in a single transaction or a series of related transactions, of voting control or direction over more than 35% of the then outstanding Shares; (b) the acquisition of all or substantially all of the assets of BlackBerry and its subsidiaries; or (c) the completion of a merger, amalgamation, arrangement or similar transaction
 
 
 

 
- 4 -

which results in holders of Shares immediately prior to the completion of such transaction holding, in the aggregate, less than 50% of the then outstanding Shares of the resulting entity immediately after the completion of such transaction.
 
Events of Default
 
The BlackBerry Indenture will provide that an event of default (“Event of Default”) in respect of the Debentures will occur if any one or more of the following events occurs with respect to the Debentures: (a) a default in payment of any principal amount or any purchase price, or Change of Control Repurchase Price with respect to the Debentures, when the same becomes due and payable; (b) a default in payment of interest (including any Additional Amounts) on any Debentures when due and payable and the continuance of such default for ten (10) days; (c) a default in the observance of a covenant contained in certain sections of the BlackBerry Indenture and the continuance of such default for five (5) business days; (d) default in the delivery to any holder when due of Shares and any cash payable in respect of fractional shares upon conversion with respect to the Debentures, which default continues for three (3) business days; (e) a default by BlackBerry or any Guarantor in performing or observing any of the other covenants, agreements or obligations of BlackBerry or the Guarantor, as the case may be, as described in the BlackBerry Indenture, and the continuance of such default for thirty (30) days after written notice to BlackBerry by the Trustee or by the holders of not less than 25% in the principal amount of Outstanding Debentures requiring the same to be remedied; (f) the failure to make a Change of Control Repayment Offer upon the occurrence of a Change of Control; (g) certain events of bankruptcy or winding-up involving BlackBerry or a Guarantor; (h) any of the Guarantees shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any person acting on behalf of a Guarantor, denying or disaffirming its obligations under its Guarantee; and (i) (A) if BlackBerry or any Guarantor is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make whole amount on any Indebtedness that is outstanding in an aggregate principal amount of more than U.S.$50,000,000 (or its equivalent in the relevant currency of payment) beyond any period of grace provided with respect thereto, or (B) if BlackBerry or any Guarantor is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of more than U.S.$50,000,000 (or its equivalent in the relevant currency of payment) or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and in each case as a consequence of such default or condition such Indebtedness has become or has been declared due and payable before its stated maturity or before its regularly schedule dates of payment, or (C) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness in equity interests), BlackBerry or any Guarantor becomes obligated to purchase or repay Indebtedness (including any Specified Senior Indebtedness) before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of more than U.S.$50,000,000 or its equivalent in the relevant currency of payment).
 
Amendments
 
The rights of the holders of the Debentures may be amended or supplemented in accordance with the terms of the Indenture. Any such amendment or supplement will require the consent of the holders of such portion of the aggregate principal amount of the Debentures then outstanding as will be specified in the BlackBerry Indenture.
 
Negative Covenants
 
Without the consent of the holders of not less than 66 ⅔% of the aggregate principal amount of the Debentures then Outstanding, (i) BlackBerry shall not, and shall not permit any of its subsidiaries to,
 

 
 

 
- 5 -

directly or indirectly, incur, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness or permit any Indebtedness to be outstanding, other than as set out in the Indenture, including Specified Senior Indebtedness in an aggregate principal amount at any one time outstanding not to exceed U.S.$550,000,000 at any time, indebtedness up to an aggregate amount not to exceed U.S.$450,000,000 in relation to certain ordinary course indebtedness, and Indebtedness that is subordinated to the Debentures, and (ii) in certain circumstances, none of BlackBerry or the Guarantors will create, incur, assume or suffer to exist any Lien on their present or future property or assets, except for Permitted Liens.
 
Governing Law
 
Each of the BlackBerry Indenture and the Debentures will be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein.
 

 
 

 

 
DOCUMENT 2

 
 

 
EXECUTION VERSION

SUBSCRIPTION AGREEMENT
 
November 4, 2013
 

 
BlackBerry Limited
295 Phillip Street
Waterloo, Ontario
Canada N2L 3W8
 
Dear Sirs/Mesdames:
 
This letter agreement (the “Agreement”) is further to our recent meetings and discussions regarding a transaction (the “Transaction”) pursuant to which the undersigned, Fairfax Financial Holdings Limited (“Fairfax”), Mackenzie Financial Corporation, Canso Investment Counsel Ltd., Markel Corporation, Brookfield Asset Management Inc. and Qatar Holding LLC (collectively the “Purchasers” and each a “Purchaser”), will subscribe for, and BlackBerry Limited (“BlackBerry”) will issue to each Purchaser, the principal amount set out beside its name on Schedule A of 6% unsecured subordinated convertible debentures of BlackBerry (the “Initial Debentures”) on a private placement basis, for an aggregate subscription price of U.S.$1,000,000,000 (the “Purchase Price”). BlackBerry hereby grants Fairfax an irrevocable option to arrange for the purchase, in whole or in part, on a private placement basis, of additional 6% unsecured subordinated convertible debentures (the “Additional Debentures”) for an aggregate subscription price of up to U.S.$250,000,000 by giving notice to BlackBerry on or prior to the 30th day following the Closing Date. Fairfax shall have the right to allow one or more new investors who agree to be bound by the terms of this Agreement as a purchaser (provided that the inclusion of any such new investor would not materially hinder or delay closing of the Transaction or cause any additional approvals, clearances, consents, registrations, permits, authorizations, notices and other confirmations to be required to be obtained from any Governmental Authority (as defined below) or other entity or person), to subscribe for such Additional Debentures. The Initial Debentures and the Additional Debentures are collectively referred to herein as the “Debentures”. Any portion of the principal amount of the Debentures outstanding is convertible into common shares of BlackBerry (the “Underlying Common Shares”) in accordance with the terms of the Indenture.
 
This Agreement sets out the terms and conditions upon which, for good and valuable consideration, BlackBerry and each of the Purchasers (collectively, the “parties”) agree to complete the Transaction.  All rights and obligations of the Purchasers hereunder are several, and not joint nor joint and several. BlackBerry acknowledges that one or more of the Purchasers is a registered portfolio manager acting on behalf of one or more fully managed accounts managed by it and, as such, would be deemed by Section 2.3(4) of NI 45-106 (as defined below) to be purchasing the Debentures as principal.
 
1.
Purchase of the Debentures.
 
Each Purchaser hereby subscribes for and agrees, severally and not jointly, to purchase from BlackBerry, and BlackBerry hereby agrees to issue or cause to be issued to each such Purchaser on the Closing Date, that principal amount of Debentures as is set out beside its name on Schedule A for aggregate consideration equal to such principal amount, on the terms and conditions set forth in this Agreement.
 
 
 

 
- 2 -

2.
Mutual Conditions of Closing.
 
Each Purchaser’s obligation to purchase the applicable principal amount of Debentures from BlackBerry and BlackBerry’s obligation to issue and sell the applicable principal amount of Debentures to each Purchaser are subject to the fulfilment of each of the following conditions, which conditions are for the mutual benefit of the Purchasers and BlackBerry and may be waived only by the mutual consent of the Purchasers and BlackBerry:
 
 
(a)
the Toronto Stock Exchange (“TSX”) shall have approved the issuance of the Debentures and the listing of the Underlying Common Shares and the NASDAQ Global Select Market (“NASDAQ”) shall have approved the listing of the Underlying Common Shares, in each case subject only to the satisfaction of customary listing conditions, and without the requirement to seek the approval of the shareholders of BlackBerry;
 
 
(b)
the Indenture has been entered into by the Indenture Trustee, BlackBerry and the Guarantors;
 
 
(c)
there shall not be in effect any applicable domestic or foreign federal, national, state, provincial or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, notice, order, injunction, judgment, decree, ruling or other similar requirement enacted, made, issued, adopted, promulgated or applied by a Governmental Authority (collectively, “laws”) that makes the consummation of the Transaction illegal or otherwise prohibits or enjoins any party from consummating the Transaction, or that is made in connection with the Transaction and imposes any material restrictions, limitations or conditions on any of the parties; and
 
 
(d)
no Governmental Authority shall have commenced any action or proceeding to enjoin the issuance and sale of the Debentures to the Purchasers pursuant to this Agreement or to suspend or cease or stop trading of securities of BlackBerry, and no Governmental Authority shall have given written notice to any party of its intention to commence any such action or proceeding.
 
3.
Conditions of Closing for the Benefit of BlackBerry.
 
Each Purchaser acknowledges and agrees that BlackBerry’s obligation to issue and sell the Debentures to the Purchasers is subject to the fulfilment of each of the following conditions, which conditions are for the exclusive benefit of BlackBerry and may be waived, in whole or in part, by BlackBerry in its sole discretion:
 
 
(a)
the representations, warranties and acknowledgements of each Purchaser set forth in this Agreement shall be true and correct in all material respects as at the Closing Date, with the same force and effect as if made as at the Closing Date (except for representations, warranties and acknowledgements made as of a specified date, the accuracy of which shall be determined as of that specified date, and except in each case, for those representations, warranties and acknowledgements that are subject to a materiality qualification, which must be true and correct in all respects); and
 
 
 

 
- 3 -

 
(b)
all covenants of each Purchaser under this Agreement to be performed prior to the Closing shall have been duly performed in all material respects.
 
4.
Conditions of Closing for the Benefit of the Purchasers.
 
BlackBerry acknowledges and agrees that each Purchaser’s obligation to purchase the Debentures from BlackBerry is subject to the fulfilment of each of the following conditions, which conditions are for the exclusive benefit of the Purchasers and may be waived, in whole or in part, by the Purchasers in their sole discretion:
 
 
(a)
the representations and warranties of BlackBerry set forth in this Agreement shall be true and correct in all material respects as at the Closing Date, with the same force and effect as if made by BlackBerry as at the Closing Date (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date, and except in each case, for those representations and warranties that are subject to a materiality or Material Adverse Effect qualification, which must be true and correct in all respects);
 
 
(b)
all covenants of BlackBerry to be performed under this Agreement shall have been duly performed in all material respects;
 
 
(c)
John Chen shall have been appointed to the Board and Prem Watsa shall have been appointed to the Board as lead director and as chair of the Compensation, Nomination and Governance Committee of the Board with the total number of directors following such appointments remaining at 8;
 
 
(d)
from and including the date hereof up to and including the Closing Date, there shall not have occurred a Material Adverse Effect;
 
 
(e)
each Purchaser shall have received a legal opinion addressed to the Purchasers in form and substance satisfactory to the Purchasers and their counsel, acting reasonably, dated the Closing Date, from counsel to BlackBerry (who may rely, as to matters of fact, on certificates of public officials and officers of BlackBerry) with respect to the following matters:
 
 
(i)
that BlackBerry is a corporation existing under the laws of Ontario and has the corporate power to enter into and perform its obligations under this Agreement, and has the corporate power and capacity to own or hold its properties and to conduct the businesses carried on by it;
 
 
(ii)
as to the authorized share capital of BlackBerry;
 
 
(iii)
that the execution and delivery of and performance by BlackBerry of this Agreement has been authorized by all necessary corporate action on the part of BlackBerry;
 
 
(iv)
that this Agreement has been duly executed and delivered by BlackBerry, and constitutes a legal, valid and binding agreement of BlackBerry enforceable against it in accordance with its terms, subject to customary qualifications;
 
 
 

 
- 4 -

 
(v)
that neither the execution and delivery of this Agreement, the Indenture or the Debentures, nor the performance by BlackBerry of its obligations hereunder or thereunder, will conflict with or result in any breach of the constating documents or by-laws of BlackBerry;
 
 
(vi)
that the issuance of the Debentures has been authorized by all necessary corporate action on the part of BlackBerry, that the Debentures have been duly executed and delivered by BlackBerry and that subject to receipt of payment in full for them, the Debentures will be legal, valid and binding agreements of BlackBerry enforceable against it in accordance with their terms, subject to customary qualifications;
 
 
(vii)
that the execution and delivery of and performance by BlackBerry of the Indenture has been authorized by all necessary corporate action on the part of BlackBerry;
 
 
(viii)
that the Indenture has been duly executed and delivered by BlackBerry, and constitutes a legal, valid and binding agreement of BlackBerry enforceable against it in accordance with its terms, subject to customary qualifications;
 
 
(ix)
that the Underlying Common Shares have been validly authorized for issuance by BlackBerry and, upon the conversion of the Debentures in accordance with the terms and conditions of the Debentures, and when issued, will be validly issued and outstanding as fully paid Common Shares;
 
 
(x)
that the issuance and sale by BlackBerry of the Debentures to the Purchaser in accordance with this Agreement is exempt from the prospectus and registration requirements of applicable securities laws in Ontario and no documents are required to be filed by BlackBerry (other than customary private placement reports accompanied by requisite filing fees), proceedings taken or approvals, permits, consents or authorizations obtained under the applicable securities laws in Ontario to permit such issuance and sale;
 
 
(xi)
no filing, proceeding, approval, consent or authorization is required to be made, taken or obtained under the laws of Ontario to permit the issuance by BlackBerry of the Underlying Common Shares upon the conversion of the Debentures in accordance with the terms and conditions of the Debentures to the holders of the Debentures;
 
 
(xii)
the first trade of the Debentures in Ontario will not be a distribution or otherwise subject to the prospectus and registration requirements of applicable securities laws in Ontario if:
 
 
(A)
BlackBerry is and has been a reporting issuer in a jurisdiction of Canada for the four months immediately preceding such first trade;
 
 
 

 
- 5 -

 
(B)
at the time of the first trade, at least four months have elapsed from the date of distribution of the Debentures;
 
 
(C)
the certificates representing the Debentures carry a legend, or an ownership statement issued under a direct registration system or other electronic book-entry system acceptable to the regulators bears a legend restriction notation, as required by Section 2.5(2)3(a) of National Instrument 45-102 Resale of Securities;
 
 
(D)
the trade is not a “control distribution” as defined in National Instrument 45-102 Resale of Securities;
 
 
(E)
no unusual effort is made to prepare the market or to create a demand for the Debentures subject to such trade and no extraordinary commission or consideration is paid to a person or company in respect of the trade; and
 
 
(F)
if the seller of the Debentures is an “insider” or “officer” of BlackBerry (as those terms are defined in applicable securities laws), the seller has no reasonable grounds to believe that BlackBerry is in default of any requirement of securities legislation; and
 
 
(xiii)
the first trade by a holder of Underlying Common Shares upon the conversion of the Debentures in accordance with the terms and conditions of the Debentures will not be a distribution or otherwise subject to the prospectus and registration requirements of applicable securities laws in Ontario, and no filing, proceeding, approval, consent or authorization will be required to be made, taken or obtained under the laws of Ontario to permit such trade or distribution, through investment dealers or brokers, if required, registered under the applicable legislation of Ontario who have complied with the relevant provisions of such legislation.
 
5.
Delivery and Payment.
 
The closing of the issuance of the Initial Debentures (the “Closing”) will, subject to the satisfaction or waiver of each of the conditions set forth in Sections 2, 3 and 4 of this Agreement, take place on the third Business Day following the date that the parties have received notice from BlackBerry that the condition of Closing set forth in Section 2(a) of this Agreement has been satisfied, or as soon thereafter as the other conditions of Closing can be satisfied or have been waived (such date, the “Closing Date”), at 10:00 a.m. (Toronto time) at the offices of Torys LLP, 79 Wellington Street West, Toronto, Ontario, M5K 1N2; or at such other time and date or such other place as may be agreed upon orally or in writing by the parties. The closing of any issuance of the Additional Debentures (the “Additional Debenture Closing”) shall take place on the third Business Day following the date on which BlackBerry receives notice of the exercise of the option described in the first paragraph of this Agreement. The Purchasers have appointed BMO Nesbitt Burns Inc. (the “Settlement Agent”) as settlement agent to act on behalf of the Purchasers for the purposes of the Closing and the Additional Debentures Closing and the settlement of the purchase of the Debentures.
 
 
 

 
- 6 -

6.
Break Fee
 
(1)
If prior to the Closing, BlackBerry enters into a binding written agreement providing for a transaction that if completed would constitute a Change of Control, each Purchaser has the right to terminate its obligations under this Agreement, provided that it provides notice prior to Closing to BlackBerry and the other Purchasers of such decision. In such case, if the Purchasers are not prepared as a group to purchase all but not less than all of the Initial Debentures offered on the terms hereof as contemplated in Section 6(2), the Purchasers shall so notify BlackBerry and upon delivery of such notice this Agreement shall terminate. BlackBerry covenants and agrees that it will pay to the Purchasers a fee equal to an aggregate of U.S.$250 million within one Business Day of the termination of this Agreement as provided in this Section 6(1), such fee to be paid to Fairfax on behalf of all Purchasers, to be divided amongst the Purchasers as they will determine.
 
(2)
If prior to the Closing, BlackBerry enters into a binding written agreement providing for a transaction that if completed would constitute a Change of Control, and this Agreement has not been terminated pursuant to Section 6(1) and the Purchasers are prepared as a group (along with any other purchaser or purchasers that are willing to enter into this Agreement and become a Purchaser hereunder and who are approved by the remaining Purchasers) to purchase all but not less than all of the Initial Debentures offered on the terms hereof, the remaining and new, if any, Purchasers will have the right to purchase the Initial Debentures on the terms hereof and Schedule A will be amended accordingly. In such case, BlackBerry covenants and agrees that it will pay to the Purchasers who purchase the Debentures at Closing a fee equal to an aggregate of U.S.$135 million, within one Business Day following the Closing, such fee to be paid to Fairfax on behalf of all Purchasers, to be divided amongst the Purchasers as they will determine.
 
(3)
If at any time following the Closing but no later than the 30th day following the Closing, BlackBerry enters into a binding written agreement  providing for a transaction that if completed would constitute a Change of Control, BlackBerry covenants and agrees that it will pay to the Purchasers who purchased the Debentures a fee equal to an aggregate of U.S.$135 million, within one Business Day of entering into such agreement, such fee to be paid to Fairfax on behalf of all Purchasers, to be divided amongst such Purchasers as they will determine.
 
(4)
In no event shall the Purchasers be entitled to receive a fee under more than one clause under this Section 6.
 
7.
Covenants
 
(1)
The Purchasers shall deliver or cause to be delivered to BlackBerry at or prior to Closing:
 
 
(a)
all documentation as may be required from the Purchasers by applicable securities laws (including the rules and requirements of the TSX and NASDAQ, as applicable) in connection with the purchase by the Purchasers of the Debentures;
 
 
(b)
wire transfers in immediately available United States funds to an account designated by BlackBerry in writing at least 2 days prior to Closing, in the aggregate amount of the subscription price for the Debentures being purchased,
 
 
 

 
- 7 -

such wire transfers to be made by the Settlement Agent on behalf of the Purchasers;
 
 
(c)
a certificate of each Purchaser, signed on behalf of such Purchaser, without personal liability, by a senior officer of such Purchaser, addressed to BlackBerry and dated the Closing Date certifying that (i) the representations, warranties and acknowledgements of such Purchaser set forth in this Agreement which are qualified by materiality are true and correct in all respects as at the Closing Date, with the same force and effect as if made by the Purchaser as at the Closing Date (except to the extent that such representations, warranties and acknowledgements expressly speak of an earlier date, in which event, such representations, warranties and acknowledgements shall be true and correct as of such earlier date), (ii) all other representations, warranties and acknowledgements of such Purchaser set forth in this Agreement are true and correct in all material respects as at the Closing Date, with the same force and effect as if made by such Purchaser as at the Closing Date (except to the extent that such representations, warranties and acknowledgements expressly speak of an earlier date, in which event, such representations, warranties and acknowledgements shall be true and correct in all material respects as of such earlier date), and (iii) such Purchaser has performed in all material respects its obligations under this Agreement required to be performed on or prior to the Closing Date; and
 
(2)
At or prior to Closing, BlackBerry shall:
 
 
(a)
deliver or cause to be delivered to the Settlement Agent on behalf of the Purchasers:
 
 
(i)
one or more global certificates representing the Debentures registered in the name of “CDS & CO.” or as the Purchasers may otherwise direct in writing, against payment by the Settlement Agent of the subscription price for the Debentures being purchased, with such Debentures to be issued in “book-entry only” form in accordance with registration instructions provided by the Purchasers;
 
 
(ii)
a certificate of BlackBerry, signed on behalf of BlackBerry, without personal liability, by a senior officer of BlackBerry, addressed to each Purchaser and dated the Closing Date certifying that (i) the representations and warranties of BlackBerry set forth in this Agreement which are qualified by materiality or Material Adverse Effect are true and correct in all respects as at the Closing Date, with the same force and effect as if made by BlackBerry as at the Closing Date (except to the extent that such representations and warranties expressly speak of an earlier date, in which event, such representations and warranties shall be true and correct as of such earlier date), (ii) all other representations and warranties of BlackBerry set forth in this Agreement are true and correct in all material respects as at the Closing Date, with the same force and effect as if made by BlackBerry as at the Closing Date (except to the extent that such representations and warranties expressly speak of an earlier date, in which event, such representations and warranties shall be true and correct in all material respects as of such earlier date), (iii)
 
 
 

 
- 8 -

BlackBerry has performed in all material respects its obligations under this Agreement required to be performed on or prior to the Closing Date, and (iv) since the date hereof, there has not occurred a Material Adverse Effect;
 
 
(iii)
certified copies of (i) the articles and by-laws of BlackBerry and each Guarantor, and (ii) all resolutions of the board of directors of BlackBerry approving the entering into and completion of the transactions contemplated by this Agreement;
 
 
(iv)
a certificate of Computershare Investor Services Inc. confirming the issued and outstanding Common Shares;
 
 
(v)
evidence satisfactory to the Purchasers of the approval of the listing and posting for trading on the TSX and NASDAQ of the Underlying Common Shares subject only to the satisfaction by BlackBerry of customary listing conditions, which conditions shall not include a requirement of shareholder approval prior to the issuance of the Debentures;
 
 
(vi)
the Guarantees executed by the Guarantors; and
 
 
(vii)
the opinion contemplated in Section 4(e) of this Agreement;
 
 
(b)
execute and deliver the Indenture;
 
 
(c)
cause John Chen to be appointed as the Executive Chair of BlackBerry on the employment terms attached as Schedule B to this Agreement and to be appointed as a director of BlackBerry;
 
 
(d)
cause Prem Watsa to be appointed as the lead director of BlackBerry and the Chair of the Compensation, Nomination and Governance Committee of the Board; and
 
 
(e)
pay, or cause to be paid, to Fairfax an amount equal to all of the reasonable and documented third party, out-of-pocket fees and expenses incurred by Fairfax in connection with (i) the evaluation of the transaction contemplated in a letter of intent between BlackBerry and Fairfax dated September 23, 2013, (ii) the negotiation of that letter of intent, and (iii) the evaluation and initiation of the issue of Debentures, in all cases including without limitation the fees and expenses of all consultants, valuators, and financial and legal advisors to Fairfax, provided that payments under this Section 7(2)(e) will not exceed in the aggregate, U.S.$40 million.
 
(3)
At or prior to any Additional Debenture Closing, (a) the Purchasers shall deliver or cause to be delivered to BlackBerry the documentation and wire transfer required to be delivered under Section 7(1); and (b) BlackBerry shall deliver or cause to be delivered to the Settlement Agent on behalf of the Purchasers the documentation required by Section 7(2)(a)(i) and (ii), in each case, in respect of the Additional Debentures to be issued at the Additional Debenture Closing and dated as at the date of the Additional Debenture Closing.
 
 
 

 
- 9 -

(4)
Within two years following the Closing Date, if a Purchaser, acting reasonably, so requests in writing, BlackBerry shall use its reasonable commercial efforts to obtain TSX approval of the listing of the Debentures.
 
(5)
BlackBerry shall pay a placement fee to the Settlement Agent in connection with the transactions contemplated by this Agreement in an amount to be agreed upon by BlackBerry and the Settlement Agent, provided such amount shall not exceed U.S.$3 million.
 
(6)
BlackBerry shall use its reasonable commercial efforts to obtain a waiver of (i) the provisions of Section 6.11(a)(ii) and (iii) of the ABL Facility (as defined in the Indenture), and (ii) the requirement in paragraph (q) of the definition of “Permitted Indebtedness” in Schedule 1.1 of the ABL Facility that requires any Indebtedness (as defined in the ABL Facility) incurred by BlackBerry pursuant to such paragraph (q) be in compliance with Section 6.11(a)(ii) and (iii) of the ABL Facility, it being agreed that obtaining the waiver will not be a condition to Closing.
 
8.
Standstill
 
For a period of one year following the Closing Date, neither Fairfax nor its affiliates (including The Sixty Two Investment Company) shall, directly or indirectly and whether alone or by acting jointly or in concert with any other person, in any manner acquire or offer to acquire (whether publicly or otherwise) by any means whatsoever beneficial ownership of any Common Shares or securities convertible into, or exchangeable or exercisable for, Common Shares if, following any such acquisition, Fairfax and its affiliates would, in the aggregate, directly or indirectly, together with their joint actors, beneficially own more than 19.9% of the outstanding Common Shares (assuming, for this purpose, the conversion into, or exchange or exercise for, all securities beneficially owned by Fairfax and its affiliates and their joint actors that are convertible into, or exchangeable or exercisable for, Common Shares).
 
9.
Hold Period
 
For a period of one year following the Closing Date, Fairfax and its affiliates shall not, directly or indirectly, transfer, sell, assign, gift, pledge, encumber, hypothecate, mortgage, exchange or otherwise dispose (each, a “Transfer”) of any Common Shares or securities convertible into, or exchangeable or exercisable for, Common Shares, if after such Transfer, Fairfax and its affiliates would, in the aggregate, directly or indirectly own less than 9.9% of the outstanding Common Shares (assuming, for this purpose, the conversion into, or exchange or exercise for, all securities beneficially owned by Fairfax and its affiliates and their joint actors that are convertible into, or exchangeable or exercisable for, Common Shares).
 
10.
Outside Date.
 
Each Purchaser and BlackBerry agree that if Closing has not occurred on or prior to November 27, 2013 (the “Outside Date”), then any of the Purchasers or BlackBerry may terminate this Agreement, except that the right to terminate this Agreement will not be available to a party whose breach of this Agreement has been the cause of, or resulted in, the failure of Closing to occur by such date. If any closing in respect of Additional Debentures has not occurred by the 30th day following the Closing, the option described in the first paragraph of this Agreement shall expire. If this Agreement is properly terminated pursuant to the foregoing,
 
 
 

 
- 10 -

then there shall be no further liability of the parties hereunder. Nothing in this Section 10 will relieve any party from liability for any breach of this Agreement.
 
11.
Use of Proceeds.
 
BlackBerry agrees that the net proceeds from the Transaction shall be used for general corporate purposes.
 
12.
Mutual Covenant regarding Closing.
 
Subject to the terms and conditions of this Agreement, the Purchasers and BlackBerry shall use their reasonable commercial efforts, on a cooperative basis, to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws to consummate the Transaction as soon as practicable, including:
 
 
(a)
BlackBerry using its reasonable commercial efforts to obtain and maintain all approvals, clearances, consents, registrations, permits, authorizations, notices and other confirmations required to be obtained from any domestic or foreign federal, provincial, state, municipal or other governmental department, court, tribunal, commission or commissioner, bureau, minister or ministry, board or agency, or other regulatory authority, including any securities regulatory authority, the NASDAQ and the TSX (each, a “Governmental Authority”) or other third party including any person or entity exercising governmental powers that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement (the “Approvals”);
 
 
(b)
BlackBerry preparing and filing as promptly as practicable all necessary documents, registrations, statements, petitions, filings and applications for the Approvals; and
 
 
(c)
BlackBerry or the Purchasers, as the case may be, using reasonable commercial efforts to oppose, lift or rescind any injunction or restraining or other order or notice seeking to stop, or otherwise adversely affecting its ability to consummate, the Transaction or imposing any material restrictions, limitations or conditions on the parties or the Transaction.
 
The parties shall co-operate in the preparation of any application for the Approvals and any other orders, clearances, consents, notices, rulings, exemptions, certificates, no-action letters and approvals reasonably deemed by either the Purchasers or BlackBerry to be necessary to discharge their respective obligations under this Agreement or otherwise advisable under applicable laws in connection with the Transaction.
 
Subject to applicable laws, the parties shall cooperate with and keep each other fully informed as to the status of and the processes and proceedings relating to obtaining the Approvals and any other actions or activities pursuant to this Section 12, and shall promptly notify each other of any material communication from any Governmental Authority in respect of the Transaction or this Agreement, and shall not make any submissions, correspondence or filings, or participate in any communications or meetings with any Governmental Authority in respect of any filings, investigations or other inquiries or proceedings related to the Transaction or this Agreement unless it consults with the other parties in advance and, to the extent not precluded by such Governmental Authority, gives the other parties the opportunity to review
 
 
 

 
- 11 -

drafts of, and provides final copies of, any submissions, correspondence or filings, and to attend and participate in any communications or meetings.
 
13.
Purchasers’ Acknowledgements.
 
Each Purchaser covenants to execute and deliver all documentation as may be required to be executed and delivered by it pursuant to applicable securities laws in connection with the Transaction. Each Purchaser acknowledges that:
 
 
(a)
BlackBerry is required to file a report of trade with all applicable securities regulators containing personal information about each Purchaser. This report of trade will include the full name, residential address and telephone number of each Purchaser, the number and type of purchased securities, the Purchase Price, the date of the Closing and the prospectus and registration exemption relied upon under applicable securities laws to complete such purchase. In Ontario, this information is collected indirectly by the Ontario Securities Commission under the authority granted to it under, and for the purposes of the administration and enforcement of, the securities legislation in Ontario. The Purchaser may contact the Administrative Assistant to the Director of Corporate Finance at Suite 1903, Box 5520 Queen Street West, Toronto, Ontario, M5H 3S8 or by telephone at (416) 593-8086 for more information regarding the indirect collection of such information by the Ontario Securities Commission. BlackBerry may also be required pursuant to applicable securities laws to file this Agreement on the System for Electronic Document Analysis and Retrieval (“SEDAR”). By completing this Agreement, the Purchaser authorizes the indirect collection of the information described in this Section 13(a) by all applicable securities regulators and consents to the disclosure of such information to the public through (i) the filing of a report of trade with all applicable securities regulators and (ii) the filing of this Agreement on SEDAR;
 
 
(b)
the Debentures and the Underlying Common Shares are subject to resale restrictions under applicable Canadian and U.S. securities laws;
 
 
(c)
the certificates representing the Debentures and the Underlying Common Shares (or alternatively the ownership statement or written notice provided to the Purchaser if the Debentures and the Underlying Common Shares are issued under a direct registration system or other electronic book-entry system) will bear the restrictive legends as set forth in the Indenture;
 
 
(d)
the Debentures and the Underlying Common Shares have not been and will not be registered under U.S. Securities Act, and may not be offered or sold in the United States or to U.S. persons unless registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available;
 
 
(e)
the Debentures are being offered and sold to the Purchaser on a “private placement” basis;
 
 
(f)
it is not purchasing the Debentures as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or
 
 
 

 
- 12 -

broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;
 
 
(g)
no securities commission or similar regulatory authority has reviewed or passed on the merits of the Debentures;
 
 
(h)
there is no government or other insurance covering the Debentures;
 
 
(i)
it has had access to such additional information, if any, concerning BlackBerry as it has considered necessary in connection with its investment decision to acquire the Debentures;
 
 
(j)
it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Debentures and the Underlying Common Shares and is able to bear the economic risks of such investment;
 
 
(k)
there are risks associated with the purchase of the Debentures; and
 
 
(l)
there are restrictions on a Purchaser’s ability to resell the Debentures and the Underlying Common Shares, and it is the responsibility of the Purchaser to find out what those restrictions are and to comply with them before selling the Debentures or the Underlying Common Shares.
 
14.
Purchasers’ Representations and Warranties.
 
Each Purchaser hereby severally and not jointly makes the following representations and warranties with respect to itself to BlackBerry, and acknowledges that BlackBerry is relying upon such representations and warranties in connection with the issue and sale of the Debentures, that:
 
 
(a)
Organization and Good Standing. As of the date hereof and as of the Closing Date, it is a corporation or limited liability company duly incorporated or established and validly existing under the jurisdiction of its organization.
 
 
(b)
Due Authorization. As of the date hereof and as of the Closing Date, (i) the execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby are within their respective corporate powers and have been duly authorized, and no other corporate proceedings on the part of the Purchaser are necessary to authorize the execution, delivery and performance of this Agreement or the transactions contemplated hereby; and (ii) this Agreement has been duly executed and delivered by the Purchaser and when duly executed and delivered by each of the other parties hereto, this Agreement will constitute a legal, valid and binding agreement of the Purchaser enforceable against it in accordance with its terms, except in each case as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, regardless of whether considered in a proceeding in equity or at law.
 
 
 

 
- 13 -

 
(c)
Governmental Authorization. As of the date hereof and as of the Closing Date, the execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby, require no action by or in respect of, or filing with or approval from, or consent or authorization from, any Governmental Authority, other than (i) filings under applicable securities laws; and (ii) any actions, filings or approvals the absence of which would not reasonably be expected to materially impair the ability of it to complete the Transaction on or prior to the Outside Date.
 
 
(d)
Non-Contravention. As of the date hereof and as of the Closing Date, the execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the articles of incorporation, by-laws or resolutions of the shareholders or directors (or any committee thereof) of the Purchaser, (ii) assuming compliance with the matters referred to in paragraph (c) above, contravene, conflict with or result in a violation or breach of any provision of any applicable law, or (iii) require any consent or other action by any person under, or constitute, with or without notice or lapse of time or both, a breach of any material contract to which it is a party or by which it or any of its properties or assets may be bound, with such exceptions, in the case of each of clauses (ii) and (iii) above, as would not be reasonably expected to adversely affect the ability of the Purchaser to consummate the transactions contemplated hereby on or prior to the Outside Date.
 
 
(e)
Principal. The Purchaser is purchasing, or is deemed by Section 2.3(4) of NI 45-106 to be purchasing, the Debentures as principal.
 
 
(f)
Offering Memorandum. It has not been provided with an offering memorandum (as defined in any applicable Canadian securities laws) or any similar document in connection with its subscription for the Debentures, and the decision to execute this Agreement and to purchase the Debentures has not been based upon any verbal or written representations as to fact or otherwise made by or on behalf of BlackBerry, other than such written representations as are expressly contained in this Agreement.
 
 
(g)
Sufficient Funds. The Purchaser will have on the Closing Date, sufficient funds on hand to pay in full the portion of the Purchase Price to be paid by such Purchaser. BlackBerry acknowledges that such payment may be made by the Settlement Agent on behalf of such Purchaser.
 
 
(h)
Investment Purposes. The Purchaser is purchasing the Debentures for investment purposes only and not with a view to any resale, distribution or other disposition of the Debentures or the Underlying Common Shares in violation of applicable securities laws, and not in a transaction or series of transactions involving a purchase and sale or a repurchase and resale in the course of or incidental to a distribution.
 
 
(i)
Purchaser Status. Either (1) the Purchaser is not a person within the United States or a “U.S. Person” (as such term is defined in Rule 902(k) of Regulation
 
 
 

 
- 14 -

S under the U.S. Securities Act), the Debentures were not offered to the Purchaser in the United States and this Agreement has not been signed by the Purchaser in the United States or (2) the Purchaser is a “qualified institutional buyer” within the meaning of Rule 144A under the U.S. Securities Act.
 
 
(j)
The Purchaser is acquiring the Debentures for its own account and is not (a) acting together, within the meaning of the TSX Company Manual, or (b) acting jointly or in concert, within the meaning of Canadian securities laws, in each case, with any other person or entity in respect of its investment in BlackBerry.
 
15.
Representations and Warranties of BlackBerry.
 
BlackBerry represents and warrants to each Purchaser, and acknowledges that each Purchaser is relying upon such representations and warranties in purchasing the Debentures, that:
 
 
(a)
Organization and Good Standing. As of the date hereof and as of the Closing Date, each of BlackBerry and its subsidiaries has been duly created, incorporated, amalgamated or organized and is validly existing and in good standing and up to date in all corporate filings under the laws of its respective jurisdictions of organization, is duly qualified to do business in each jurisdiction in which its respective ownership or lease of property or the conduct of its respective businesses requires such qualification, and has all power and authority necessary to own or hold its respective properties and to conduct the businesses currently and customarily carried on by it, except where the failure to be so qualified or have such power or authority would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect. As of the date hereof, the subsidiaries listed on page 7 of BlackBerry’s Annual Information Form dated March 28, 2013 are the only subsidiaries of BlackBerry material to the business, earnings, assets, condition (financial or otherwise), liabilities, results of operations or business prospects of BlackBerry and its subsidiaries, taken as a whole.
 
 
(b)
Capitalization. As of October 24, 2013, there are 526,070,940 Common Shares, no Class A common shares and no preference shares issued and outstanding and since October 24, 2013 to the date hereof, no Common Shares have been issued or become issuable other than pursuant to BlackBerry’s equity incentive plans. As of the date hereof and as of the Closing Date, (i) BlackBerry’s authorized share capital consists of an unlimited number of Common Shares, an unlimited number of Class A common shares and an unlimited number of preference shares, issuable in series; (ii) all the outstanding shares of capital stock or other equity interests of BlackBerry and of each subsidiary of BlackBerry have been duly and validly authorized and issued and are fully paid and non-assessable; (iii) all the outstanding shares of capital stock or other equity interests of each subsidiary of BlackBerry (including each of the subsidiaries of BlackBerry reflected in the BlackBerry Public Documents) are owned directly or indirectly by BlackBerry, in each case, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer (except as may be set out in the constating documents of each subsidiary of BlackBerry or liens, charges, or encumbrances, that have been publicly disclosed) or any other claim of any third party, in each case, except (A) as
 
 
 

 
- 15 -

publicly disclosed by BlackBerry or (B) as would not result in a Material Adverse Effect; (iv) other than the Debentures or in connection with the Debentures there are no securities convertible into, or exchangeable or exercisable for, or other rights to acquire from BlackBerry, Common Shares of BlackBerry or other equity interests in BlackBerry, other than (A) as disclosed or referred to the audited consolidated financial statements and the related notes thereto of BlackBerry and its consolidated subsidiaries for the year ended March 2, 2013 or the interim consolidated financial statements and the related notes thereto of BlackBerry and its consolidated subsidiaries for the six months ended August 31, 2013, (B) securities issued in the normal course after August 31, 2013 in connection with the issuance of employee stock options by BlackBerry or securities issued in connection with retention arrangements, and (C) as contemplated by this Agreement; and (v) there are no contractual obligations of BlackBerry or any subsidiary to repurchase, redeem or otherwise acquire any outstanding securities or indebtedness of BlackBerry or any subsidiary, except in the case of subsidiaries of BlackBerry, any such obligations entered into in the ordinary course of business that would not individually or collectively result in a Material Adverse Effect. For the purposes of this Agreement, a matter shall be considered to be “publicly disclosed” only to the extent it is disclosed in one of the BlackBerry Public Documents filed on SEDAR prior to the date hereof.
 
 
(c)
Guarantors. Each of the Guarantors are wholly-owned subsidiaries of BlackBerry.
 
 
(d)
Due Authorization. As of the date hereof and as of the Closing Date, the execution, delivery and performance by BlackBerry of this Agreement and the consummation by BlackBerry of the transactions contemplated hereby are within the corporate powers of BlackBerry and have been duly authorized, and no other corporate proceedings on the part of BlackBerry are necessary to authorize the execution, delivery and performance of this Agreement, or the transactions contemplated hereby. This Agreement has been duly executed and delivered by BlackBerry and when duly executed and delivered in accordance with its terms by each of the parties thereto, this Agreement will constitute a legal, valid and binding agreement of BlackBerry enforceable against BlackBerry in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, regardless of whether considered in a proceeding in equity or at law;
 
 
(e)
Power and Authority. BlackBerry has all requisite power and authority: (i) to enter into the Indenture; (ii) to carry out all the terms and provisions of the Indenture; and (iii) to issue and deliver the Debentures in accordance with the provisions of this Agreement and the Underlying Common Shares in accordance with the provisions of the Indenture. The Guarantors each have all requisite power and authority: (i) to enter into the Guarantees and (ii) to carry out all the terms and provisions of the Guarantees.
 
 
(f)
Authorization. When executed and delivered, the Indenture and the Guarantees will constitute legal, valid and binding obligations of BlackBerry and the Guarantors, respectively, enforceable in accordance with its terms, except
 
 
 

 
- 16 -

as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, regardless of whether considered in a proceeding in equity or at law;
 
 
(g)
Authorization of Debentures. The issuance of the Debentures by BlackBerry to the Purchasers in accordance with the terms of this Agreement has been authorized by all necessary action of BlackBerry, and upon payment therefor in accordance with this Agreement, the Debentures will be validly issued and outstanding;
 
 
(h)
Authorization of Underlying Common Shares. The issuance of the Underlying Common Shares in accordance with the terms of the Indenture has been authorized by all necessary action of BlackBerry, and upon the conversion, and when issued will be validly issued and outstanding as fully paid and non-assessable Common Shares;
 
 
(i)
BlackBerry Securities. As of the date hereof and as of the Closing Date: i) no order, ruling or decision granted by a securities commission, court of competent jurisdiction or regulatory or administrative body or other Governmental Authority having jurisdiction is in effect, pending or (to the best of BlackBerry’s knowledge) threatened that restricts any trades in any securities of BlackBerry including any cease trade orders; ii) the currently issued and outstanding Common Shares are listed and posted for trading on the TSX and the NASDAQ and BlackBerry are in compliance in all material respects with all of the listing conditions on such exchanges; and iii) the Debentures to be sold pursuant to this Agreement have been duly authorized for issuance and sale by all necessary action on the part of BlackBerry and, when issued and delivered by BlackBerry against payment of the consideration therefor pursuant to this Agreement will have been validly issued and outstanding and will not have been issued in violation of or subject to any pre-emptive rights or other contractual rights to purchase securities issued by BlackBerry.
 
 
(j)
Governmental Authorization. As of the date hereof and as of the Closing Date, the execution, delivery and performance by BlackBerry of this Agreement, the Indenture and the Debentures or by the Guarantors of the Guarantees, and the consummation by BlackBerry and the Guarantors of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with or approval from, or consent or authorization from any Governmental Authority, other than (i) filings under applicable securities laws (including filings with the TSX and the NASDAQ); and (ii) any actions or filings the absence of which would not reasonably be expected to materially impair the ability of BlackBerry to complete the Transaction on or prior to the Outside Date.
 
 
(k)
Non-Contravention. As of the date hereof and as of the Closing Date, the execution, delivery and performance by BlackBerry of this Agreement, the Indenture and the Debentures and by the Guarantors of the Guarantees and the consummation by BlackBerry and the Guarantors of the transactions contemplated hereby and thereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the articles of amalgamation, by-laws or resolutions of the shareholders or directors (or any
 
 
 

 
- 17 -

committee thereof) of BlackBerry or any of its subsidiaries; (ii) assuming compliance with the matters referred to in paragraph (j) above, contravene, conflict with or result in a violation or breach of any provision of any applicable law; or (iii) require any consent or other action by any person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which BlackBerry or any of its subsidiaries is entitled under any provision of any material contract to which BlackBerry or any of its subsidiaries is a party or by which it or any of its properties or assets may be bound, with such exceptions, in the case of each of clauses (ii) and (iii) above, as would not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or adversely affect the ability of BlackBerry to consummate the transactions contemplated hereby on or prior to the Outside Date.
 
 
(l)
Compliance with Laws. BlackBerry and its subsidiaries are and have been in compliance with, and conduct their businesses in conformity with, all applicable laws, except where the failure to be in compliance or conformity would not result in a Material Adverse Effect. BlackBerry is a reporting issuer under the securities laws of each of the provinces of Canada (collectively the “Canadian Jurisdictions”) that recognizes the concept of reporting issuer, is in compliance in all material respects with the applicable securities legislation of the Canadian Jurisdictions, and the respective rules, regulations and written and published policies thereunder, and is not on the list of defaulting reporting issuers maintained by the applicable securities regulatory authority in each such Canadian Jurisdiction that maintains such a list. BlackBerry is subject to Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) and has filed all reports required under the Exchange Act in the last twelve month period.
 
 
(m)
Financial Statements. The audited consolidated financial statements and the related notes thereto of BlackBerry and its consolidated subsidiaries for the years ended March 2, 2013, March 3, 2012 and February 26, 2011 and interim consolidated financial statements and the related notes thereto of BlackBerry and its consolidated subsidiaries for the six months ended August 31, 2013 (the “Financial Statements”) comply in all material respects with the applicable requirements of the Canadian securities laws and present fairly the financial position of BlackBerry and its subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified, and have been prepared in conformity with United States generally accepted accounting principles, in each case applied on a consistent basis throughout the periods covered thereby (except (i) as otherwise indicated in such financial statements and notes thereto, or, in the case of audited statements, in the related report of BlackBerry independent auditors, as the case may be, or (ii) in the case of unaudited interim statements, are subject to nominal period-end adjustments and may omit notes which are not required by applicable laws in the unaudited statements). None of BlackBerry or its subsidiaries has any liabilities, obligations, indebtedness or commitments, whether accrued, absolute, contingent or otherwise, which are not disclosed or referred to in the Financial Statements, other than liabilities, obligations, or indebtedness or commitments (i) incurred in the normal course of business, (ii)
 
 
 

 
- 18 -

which have been publicly disclosed by BlackBerry, or (iv) which would not or would not reasonably be expected to have a Material Adverse Effect.
 
 
(n)
No Material Adverse Change. Between March 2, 2013 and the date hereof, (i) there has not been any material change in the share capital or long-term debt of BlackBerry or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by BlackBerry on any class of shares, or, individually or in the aggregate, a Material Adverse Effect; (ii) neither BlackBerry nor any of its subsidiaries has entered into any transaction or agreement that is material to BlackBerry and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to BlackBerry and its subsidiaries taken as a whole; and (iii) neither BlackBerry nor any of its subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or Governmental Authority, except in each of clauses (i) through (iii) above as otherwise publicly disclosed by BlackBerry or as disclosed to Fairfax.
 
 
(o)
No Violation or Default. Other than as publicly disclosed by BlackBerry, neither BlackBerry nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default of, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which BlackBerry or any of its subsidiaries is a party or by which BlackBerry or any of its subsidiaries is bound or to which any of the property or assets of BlackBerry or any of its subsidiaries is subject; or (iii) in violation of any laws, except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
 
 
(p)
Legal Proceedings. Except as publicly disclosed by BlackBerry or as disclosed in Section (p) of the Disclosure Letter, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which BlackBerry or any of its subsidiaries is or may be a party or to which any property of BlackBerry or any of its subsidiaries is or may be the subject that, individually or in the aggregate, if determined adversely to BlackBerry or any of its subsidiaries, would or would reasonably be expected to have a Material Adverse Effect, and no such investigations, actions, suits or proceedings are threatened or, to the knowledge of BlackBerry, contemplated by any Governmental Authority or threatened by others.
 
 
(q)
Reports. BlackBerry has, in accordance with applicable laws, filed with securities regulatory authorities, the TSX and the NASDAQ, as applicable, true and complete copies of all forms, reports, schedules, statements, material change reports, circulars, press releases, disclosures relating to options and other stock based incentive plans, prospectuses, other offering documents and all other documents required to be filed by it with securities regulatory authorities, the TSX or the NASDAQ as applicable since February 27, 2011 (such forms, reports, schedules, statements and other documents, including any
 
 
 

 
- 19 -

financial statements or other documents, including any schedules included therein, are referred to herein as the “BlackBerry Public Documents”). The BlackBerry Public Documents (i) at the time filed did not; (ii) as of the date hereof (taken as a whole after giving effect to all filings made prior to the date hereof), do not; and (iii) as of the Closing Date (taken as a whole after giving effect to all filings made prior to the Closing Date) will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading except to the extent that such statements have been modified or superseded by a later-filed company filing. BlackBerry has not filed any confidential material change report with any of the securities regulatory authorities, the TSX, the NASDAQ or any other self-regulatory authority that remains confidential.
 
 
(r)
Title to Real and Personal Property. Except as publicly disclosed by BlackBerry, BlackBerry and its subsidiaries have good and marketable, in the case of real property, and valid, in the case of personal property, title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property that are used or held by BlackBerry and its subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that (i) do not materially interfere with the use made and proposed to be made of such property by BlackBerry and its subsidiaries; (ii) would not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or (iii) have been granted in connection with BlackBerry’s outstanding credit agreements and other applicable debt obligations, in each case as publicly disclosed by BlackBerry.
 
 
(s)
Licenses and Permits. Except as publicly disclosed by BlackBerry, BlackBerry and its subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate Governmental Authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as publicly disclosed by BlackBerry or as would not have a Material Adverse Effect, neither BlackBerry nor any of its subsidiaries has (to the best knowledge of BlackBerry) received any written notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course.
 
 
(t)
Compliance with Environmental Laws. Except as publicly disclosed by BlackBerry, BlackBerry and its subsidiaries (i) are in compliance with any and all applicable laws relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) have received and are in compliance in all material respects with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) have not received written notice of any actual or potential liability for the investigation or remediation of any disposal or release of
 
 
 

 
- 20 -

hazardous or toxic substances or wastes, pollutants or contaminants, except in any such case for any such failure to comply with, or failure to receive required permits, licenses or approvals, or liability as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
(u)
Disclosure Controls. BlackBerry and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act and National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”)) that are intended to provide reasonable assurance that information required to be disclosed by BlackBerry in its annual filings, interim filings or other reports filed or submitted under the Exchange Act and Canadian securities laws is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’s and Canadian securities authorities’ rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to BlackBerry’s management as appropriate to allow timely decisions regarding required disclosure. BlackBerry and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act and as contemplated under NI 52-109.
 
 
(v)
Accounting Controls. BlackBerry and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act and NI 52-109) that comply with the requirements of the Exchange Act and NI 52-109 and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles, including internal accounting controls sufficient to provide reasonable assurance (i) that transactions are executed in accordance with management’s general or specific authorizations; (ii) that transactions are recorded as necessary to permit preparation of financial statements in conformity with Canadian generally accepted accounting principles and to maintain asset accountability; (iii) that access to assets is permitted only in accordance with management’s general or specific authorization; (iv) that the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) regarding prevention or timely detection of unauthorized acquisition, use or disposition of BlackBerry’s assets that could have a material effect on BlackBerry’s annual financial statements or interim financial statements. Since the date of the most recent balance sheet of BlackBerry publicly disclosed by BlackBerry, BlackBerry’s auditors and the Audit Committee of the Board have not been advised of: (A) any significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect BlackBerry’s ability to record, process, summarize and report financial information; and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in BlackBerry’s internal control over financial reporting. Except as publicly disclosed by BlackBerry, there are no material weaknesses in BlackBerry’s internal controls.
 
 
 

 
- 21 -

 
(w)
Certain Payments. Neither BlackBerry nor any of its subsidiaries nor, to the best knowledge of BlackBerry, any director, officer, agent, employee or other person associated with or acting on behalf of BlackBerry or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977 or the Corruption of Foreign Public Officials Act (Canada); (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment, except in each case as would not be material to BlackBerry and its subsidiaries, taken as a whole; (v) directly or indirectly, obtained or induced or attempted to so obtain or induce the procurement of this Agreement or any contract, consent, approval, right, interest, privilege or other obligation or benefit related to this Agreement or the Transaction or your other dealings with any of the Purchasers or their Connected Persons through any violation of law or regulation; or (vi) have not given or agreed to give and shall not give or agree to give to any person, either directly or indirectly, any placement fee, introductory fee, arrangement fee, finder’s fee or any other fee, compensation, monetary benefit or any other benefit, gift, commission, gratification, bribe or kickback, whether described as a consultation fee or otherwise, with the object of obtaining or inducing the procurement of the Transaction or any contract, right, interest, privilege or other obligation or benefit related to the Transaction, except as set forth in Section (w) of the Disclosure Letter.  As used herein, “Connected Persons” means, with respect to a Purchaser: (A) its affiliates; (B) the advisers, agents, representatives and consultants of it and its affiliates; and (C) the directors, officers, partners and employees of it, its affiliates and of its and their advisers, agents, representatives and consultants.
 
 
(x)
Compliance with Money Laundering Laws. The operations of BlackBerry and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Proceeds of Crime (Money Laundering) Act (Canada), the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency to which BlackBerry and its subsidiaries are subject (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any Governmental Authority or body or any arbitrator involving BlackBerry or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of BlackBerry, threatened.
 
 
(y)
No Broker’s Fees. Neither BlackBerry nor any of its subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Purchasers for a brokerage commission, finder’s fee or like payment in connection with the issuance and sale of the Debentures.
 
 
(z)
Independent Accountants. Ernst & Young LLP, which has audited certain financial statements of BlackBerry and its subsidiaries, is an independent registered public accounting firm with respect to BlackBerry and its subsidiaries within the applicable rules and regulations adopted by the Canadian securities
 
 
 

 
- 22 -

regulators and the Public Accounting Oversight Board (United States) and as required by the Securities Act. There has not been any reportable event (within the meaning of National Instrument 51-102 of the Canadian Securities Administrators) with Ernst & Young LLP.
 
 
(aa)
Investment Company Act. BlackBerry is not and, after giving effect to the offering and sale of the Debentures and the application of the proceeds thereof as described herein, will not be required to be registered as an “investment company” pursuant to the Investment Company Act of 1940, as amended, and the rules and regulations of the United States Securities and Exchange Commission thereunder.
 
 
(bb)
Taxes. Except as publicly disclosed by BlackBerry, BlackBerry and each subsidiary has timely filed or caused to be filed all tax returns and reports required to have been filed by it and has paid or caused to be paid all taxes required to have been paid by it, except (i) taxes that are being contested in good faith by appropriate proceedings and for which BlackBerry or such subsidiary has set aside on the Financial Statements a reasonable reserve, or (ii) taxes that commenced being contested in good faith by appropriate proceedings during the period after the most recent period covered in the Financial Statements and in which case BlackBerry or such subsidiary has set aside on its books a reasonable reserve for such taxes. In Canada and each of its provinces and territories, there will be no stamp duty, stamp tax or similar indirect taxes upon issuance, redemption or conversion of the Debentures.
 
 
(cc)
BlackBerry is not, and after giving effect to the offering and sale of the Debentures and the application of the proceeds thereof as described herein will not be, an "investment fund" as that term is used in paragraph (q) of the definition of "accredited investor" in Section 1.1 of NI 45-106.
 
 
(dd)
Assuming the accuracy of the Purchasers’ representations and warranties contained in Section 14, no registration under the U.S. Securities Act of 1933, as amended, of the Debentures and no qualification of the Indenture under the Trust Indenture Act of 1939, as amended, is required for the offer and sale of the Debentures by BlackBerry to the Purchasers.
 
16.
Indemnification.
 
 
(a)
The representations, warranties and covenants of BlackBerry contained in this Agreement are made by BlackBerry with the intent that they may be relied upon by the Purchasers in entering into this Agreement, determining whether to purchase the Debentures and consummating the transactions contemplated hereby, and BlackBerry covenants and agrees to indemnify and save harmless each Purchaser (and their respective affiliates and their respective shareholders, officers, directors, employees and agents) from and against all (i) civil or administrative penalties arising from violations or alleged violations of applicable laws, (ii) losses, claims, damages, liabilities, costs and expenses, including all amounts paid to settle actions (provided BlackBerry has previously consented to such settlement) or satisfy judgements or awards, and (iii) reasonable legal fees and expenses relating to the above, in each case caused by or arising directly or indirectly by reason of any inaccuracy in or breach by
 
 
 

 
- 23 -

BlackBerry of any representation, warranty or covenant made by BlackBerry under this Agreement.
 
 
(b)
The representations, warranties and covenants of each Purchaser contained in this Agreement are made by each Purchaser severally and not jointly with the intent that they may be relied upon by BlackBerry in entering into this Agreement, determining whether to issue the Debentures and consummating the transactions contemplated hereby, and each Purchaser severally and not jointly covenants and agrees to indemnify and save harmless BlackBerry (and its affiliates and their respective shareholders, officers, directors, employees and agents) from and against all (i) civil or administrative penalties arising from violations or alleged violations of applicable laws, (ii) losses, claims, damages, liabilities, costs and expenses, including all amounts paid to settle actions (provided the Purchaser has previously consented to such settlement) or satisfy judgements or awards, and (iii) reasonable legal fees and expenses relating to the above, in each case caused by or arising directly or indirectly by reason of any inaccuracy in or breach by such Purchaser of any representation, warranty or covenant made by the Purchaser under this Agreement.
 
17.
Survival of Representations, Warranties and Covenants.
 
The Purchasers and BlackBerry agree that the representations and warranties made by each of them in this Agreement, including pursuant to Sections 14 and 15 of this Agreement, and in any certificate delivered pursuant hereto, shall survive until the end of the second anniversary of the Closing Date; provided, however, that the representations and warranties set forth in Sections 14(a), 14(b), 14(d), 15(a), 15(b), 15(c), 15(d) and 15(f) shall survive indefinitely.
 
The Purchasers and BlackBerry agree that unless required to be performed on or prior to the Closing Date or unless otherwise expressly set forth herein, the covenants made pursuant hereto shall survive indefinitely. For greater certainty, the Purchasers and BlackBerry each acknowledge and agree that in the event of a breach or threatened breach of its covenants hereunder, the harm suffered would not be compensable by monetary damages alone and, accordingly, in addition to other available legal or equitable remedies, each non-breaching party shall be entitled to apply for an injunction or specific performance with respect to such breach or threatened breach, without proof of actual damages (and without the requirement of posting a bond, undertaking or other security), and each of the Purchasers and BlackBerry agree not to plead sufficiency of damages as a defence in such circumstances.
 
18.
Governing Law.
 
The Purchasers and BlackBerry agree that this Agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each of the Purchasers and BlackBerry irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto, and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
 
19.
Notices.
 
Any notice, direction or other communication given pursuant to this Agreement (each a “Notice”) must be in writing, sent by personal delivery, courier, or email and addressed:
 
 
 

 
- 24 -
 

 
if to a Purchaser:
 
 
See Schedule A for notice information for each Purchaser
 
 
and with a copy
in each case to: 
 
 
McCarthy Tétrault LLP
66 Wellington St. W
Suite 5300
Toronto, Ontario M5K 1E6
 
 
   
Attention:   David B. Tennant
Email:        dtennant@mccarthy.ca
Fax:           416.868.0673
 
- and-
 
 
   
Sherman & Sterling LLP
Commerce Court West
Suite 4405
P.O. Box 247
Toronto, Ontario M5L 1E8
 
 
   
Attention: Jason Lehner
Email: jlehner@shearman.com
Fax: 416.360.2958
 
 
if to BlackBerry:
 
 
BlackBerry Limited
295 Phillip Street
Waterloo, Ontario
Canada N2L 3W8
 
 
   
Attention:   Steve Zipperstein
Email:        szipperstein@blackberry.com
Fax:           519.883.4946
 
 
with a copy to:
 
 
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, New York 10036
 
 
   
Attention:   Neil Stronski
Email:        Neil.Stronski@skadden.com
Fax:           917.777.3000
 
- and -
 

 
 

 
- 25 -


   
Torys LLP
Suite 3000, 79 Wellington Street W.
Toronto, Ontario M5K 1N2
 
 
   
Attention:   John Emanoilidis
Email:        jemanoilidis@torys.com
Fax:           416.865.7380
 
- and -
 
 
   
Blake, Cassels & Graydon LLP
199 Bay Street, Suite 4000
Toronto, Ontario M5L 1A9
 
 
   
Attention:   Jeff Lloyd
Email:        jeff.lloyd@blakes.com
Fax:           416.863.2653
 

Any Notice, if personally delivered or couriered, shall be deemed to have been validly and effectively given and received on the date of such delivery to the recipient, if delivered before 5:00 p.m. on a Business Day in the place of delivery, or the Business Day in the place of delivery, if not delivered on a Business Day or if sent after 5:00 p.m., and if sent by email, shall be deemed to have been validly and effectively been given and received on the Business Day next following the day it was transmitted. Any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Section 19.
 
20.
Assignment.
 
The Purchasers and BlackBerry agree that none of the Purchasers or BlackBerry may assign or transfer this Agreement or any of the rights or obligations under it without the prior written consent of the other parties. Notwithstanding the foregoing, any of the Purchasers shall be entitled to assign its rights under this Agreement without the consent of BlackBerry to any affiliates of such Purchaser that agree to be bound by all of the covenants of such Purchaser contained herein and comply with the provisions of this Agreement and deliver to BlackBerry a duly executed undertaking to such effect in form and substance satisfactory to BlackBerry, acting reasonably, and provided that any such assignment shall not relieve such Purchaser of any of its obligations hereunder and shall not provide subscription rights to such affiliates that are greater in aggregate than those held by such Purchaser.
 
21.
Announcements.
 
The Purchasers and BlackBerry agree that during the period up to and including the Closing Date, no press release, public statement or announcement or other public disclosure (a “Public Statement”) with respect to this Agreement or the Transaction may be made except with the prior written consent and joint approval of BlackBerry and the Purchasers or if required by law or a Governmental Authority, and that where the Public Statement is required by law or a Governmental Authority, the person required to make the Public Statement will use reasonable commercial efforts to obtain the approval of the others as to the form, nature and extent of the disclosure.
 
 
 

 
- 26 -

22.
Entire Agreement.
 
The Purchasers and BlackBerry agree that this Agreement, contains, for good and valuable consideration, the entire agreement of the Purchasers and BlackBerry relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. This Agreement may not be amended or modified in any respect except by written instrument executed by each of the Purchasers and BlackBerry. BlackBerry and Fairfax agree that the letter of intent dated September 23, 2013 between them is terminated and that each party thereto fully and finally releases the other party from any and all obligations thereunder.
 
23.
Expenses.
 
Subject to the provisions of Section 7(2)(e), the Purchasers and BlackBerry agree that all costs and expenses (including the fees and disbursements of legal counsel and other professional advisors) incurred in connection with this Agreement and the transactions contemplated herein shall be paid by the party incurring such expenses.
 
24.
Enurement.
 
The Purchasers and BlackBerry agree that this Agreement is binding upon and enures to the benefit of each of the Purchasers and BlackBerry and their respective successors and assigns.
 
25.
Severability.
 
The Purchasers and BlackBerry agree that if any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct.
 
26.
Interpretation.
 
The Purchasers and BlackBerry agree that in this Agreement:
 
 
(a)
including” means including without limitation;
 
 
(b)
words importing the singular number only shall include the plural and vice versa and words importing arty gender shall include all genders;
 
 
(c)
if a word or phrase is defined, its other grammatical forms have a corresponding meaning;
 
 
(d)
the division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenient reference only and do not affect the Agreement’s interpretation;
 
 
(e)
all amounts in this Agreement referred to by “$” or “U.S.$” mean United States currency;
 
 
 

 
- 27 -

 
(f)
“Board” means the board of directors of BlackBerry;
 
 
(g)
Business Day” means any day other than a Saturday, Sunday or any day on which banks are generally not open for business in the City of Toronto. In the event that any action is required or permitted to be taken under this Agreement on or by a date that is not a Business Day, such action may be taken on or by the Business Day immediately following such date;
 
 
(h)
Change of Control” means any of the following:
 
 
(i)
the acquisition by any person or one or more members of a group of persons, acting jointly or in concert, directly or indirectly, in a single transaction or a series of related transactions, of voting control or direction over more than 35% of BlackBerry’s then outstanding Common Shares;
 
 
(ii)
the acquisition by any person (other than BlackBerry or any of the Guarantors) or one or more members of a group of persons acting jointly or in concert (other than a group consisting solely of two or more of BlackBerry and any of the Guarantors), directly or indirectly, in a single transaction or a series of related transactions, of all or substantially all of the assets of BlackBerry and its subsidiaries, taken as a whole; or
 
 
(iii)
the completion of a merger, amalgamation, arrangement or similar transaction which results in the holders of Common Shares immediately prior to the completion of such transaction holding, in the aggregate, less than 50% of the then outstanding Common Shares of the resulting entity immediately after the completion of such transaction;
 
 
(i)
Closing and “Closing Date have the meanings ascribed to those terms in Section 5 hereof;
 
 
(j)
Common Shares” means the common shares in the capital of BlackBerry;
 
 
(k)
Disclosure Letter” means the disclosure letter delivered by Blackberry to the Purchasers immediately prior to the execution of this Agreement;
 
 
(l)
Guarantors” means each of BlackBerry Corporation, BlackBerry UK Limited, BlackBerry Finance, LLC and BlackBerry Singapore Pte. Limited and any other Person (as defined in the Indenture) who from time to time guarantees the obligations of BlackBerry under Specified Senior Indebtedness (as defined in the Indenture);
 
 
(m)
Guarantees” means the guarantees contemplated by the Indenture to be executed and delivered by the Guarantors in substantially the form contemplated by the Indenture;
 
 
(n)
“Indenture” means the convertible debenture indenture providing for the creation, issuance and governance of and in connection with the Debentures, substantially in the form attached as Schedule C;
 
 
 

 
- 28 -

 
(o)
“Indenture Trustee” means Computershare Trust Company of Canada, the trustee under the Indenture;
 
 
(p)
Material Adverse Effect” means any fact, circumstance, change, event, occurrence or effect that, individually or in the aggregate is, or would reasonably be expected to be, materially adverse to the business, assets, condition (financial or otherwise), liabilities or results of operations of BlackBerry and its subsidiaries taken as a whole, provided that, none of the following will constitute or be taken into account in determining whether a “Material Adverse Effect” has occurred or could occur: (i) any change in United States generally accepted accounting principles; (ii) any adoption, proposal, implementation or change in applicable law or any interpretation thereof by any Governmental Authorities; (iii) any change in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in general economic, business, regulatory, political or market conditions or in national or global financial or capital markets; (iv) any pandemic, earthquake, hurricane, tornado or other natural disaster; and (v) any action taken by the BlackBerry or any of its subsidiaries which is required pursuant to the Agreement; provided, however, that with respect to clauses (i), (ii), (iii) and (iv) of this definition, such matter does not have a materially disproportionate effect on BlackBerry and its subsidiaries, taken as a whole, relative to other comparable companies and entities operating in the industries in which BlackBerry and/or its subsidiaries operate;
 
 
(q)
for purposes of this Agreement, it shall in each case be a question of fact as to whether two persons are dealing “at arm’s length” in connection with securities of BlackBerry, and without limitation: (i) a person will not be considered to be dealing not at arm’s length with another person solely because it is under common ownership with such person; (ii) persons who are affiliates of each other will be presumed not to deal at arm’s length; (iii) persons who are acting jointly or in concert with one another in connection with securities of BlackBerry are not dealing at arm’s length; (iv) where one or more persons is controlling in fact the actions of another person in connection with securities of BlackBerry, then such persons are not dealing at arm’s length; and (v) where two or more persons are, directly or indirectly, acting under the common direction of a single person in connection with securities of BlackBerry, then such persons are not dealing at arm’s length;
 
 
(r)
the term “person” is to be broadly interpreted and includes an individual, a natural person, a firm, a corporation, a partnership, a trust, an unincorporated organization, the government of a country or any political subdivision thereof, or any agency or department of any such government, and the executors, administrators or other legal representatives of an individual in such capacity;
 
 
(s)
a person is deemed to be an “affiliate” of another person if one is a subsidiary of the other, or if both are subsidiaries of the same person, or if each of them is controlled by the same person;
 
 
(t)
a person is deemed to be a “subsidiary” of another person if it is controlled directly or indirectly by that person, and includes a subsidiary of that subsidiary; and
 
 
 

 
- 29 -

 
(u)
control” means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, an agreement or arrangement or otherwise.
 
27.
Further Assurances.
 
Each of the parties upon the request of the other, whether before or after Closing, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.
 
28.
Time of Essence.
 
The Purchasers and BlackBerry agree that time is of the essence in this Agreement.
 
29.
Counterparts.
 
The Purchasers and BlackBerry agree that this Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. Counterparts may be executed either in original or electronic form and the parties may rely on delivery by electronic delivery of an executed copy of this Agreement.
 
30.
Acceptance.
 
If the foregoing accurately reflects your understanding of our agreement, please sign in the space provided below and return it to us by no later than 8:00 a.m. on November 4, 2013, failing which it shall immediately become null and void.
 
 
Yours truly,
 
 
FAIRFAX FINANCIAL HOLDINGS LIMITED
     
     
 
by:  
“Paul Rivett”
   
Name: Paul Rivett
   
Title: President
 
 
 
 
CANSO INVESTMENT COUNSEL LTD.,
acting on behalf of certain managed
accounts managed by such entity
     
     
 
by:  
“G.R. Mudie”
   
Name: G.R. Mudie
   
Title: Vice President
 
 
 

 
- 30 -
 
 
 
MACKENZIE FINANCIAL CORPORATION
     
     
 
by:  
“Lawrence Chin”
   
Name: Lawrence Chin
   
Title: Senior Vice President

 
 
MARKEL CORPORATION
     
     
 
by:  
“Steve A. Markel”
   
Name: Steve A. Markel
   
Title: Vice President

 
 
BROOKFIELD ASSET MANAGEMENT INC.
     
     
 
by:  
George Myhal”
   
Name: George Myhal
   
Title: Senior Managing Partner

 
 
QATAR HOLDING LLC
     
     
 
by:  
“Ahmad M. Al-Sayed”
   
Name: Ahmad M. Al-Sayed
   
Title: Managing Director
 
 
 

 
- 31 -

Agreed as of this 4th Day of November, 2013
 
BLACKBERRY LIMITED
 
     
     
     
by: 
 “Brian Bidulka”
 
 
Name: Brian Bidulka
 
 
Title: Chief Financial Officer
 
     

 
BMO NESBITT BURNS INC., as
settlement agent of the Purchasers and
not as principal
 
     
     
     
by: 
“Manprit Singh Dhillon”
 
 
Name: Manprit Singh Dhillon
 
 
Title: Director
 
     

 

 
 

- 32 -

SCHEDULE A
PURCHASERS
 
Name of Purchaser
 
Address for notice purposes
 
Principal amount of Debentures to be purchased at Closing
 
Fairfax Financial Holdings Limited
 
Suite 800
95 Wellington Street West
Toronto Ontario M5J 2N7
 
Attention: Paul Rivett
Email: privett@hwic.ca
 
 
$250,000,000
 
Mackenzie Financial Corporation
 
Mackenzie Investments
180 Queen Street West
Toronto, ON  M5V 3K1
 
 
$200,000,000
 
Canso Investment Counsel Ltd.
 
Canso Investment Counsel Ltd.
100 York Boulevard , Suite 550
Richmond Hill, ON  L4B 1J8
 
Attention:
Fax: (905) 881-1466
 
 
$300,000,000
 
Markel Corporation
 
Markel Corporation
4521 Highwoods Parkway
Glen Allen, VA 23060
 
Attention:  Vice Chair
Email: smarkel@markelcorp.com
 
 
$100,000,000
 
Brookfield Asset Management Inc.
 
Brookfield Asset Management
181 Bay Street, Suite 300,
Toronto, ON M5J 2T3
 
Attention: George Myhal
 
 
$50,000,000
 
Qatar Holding LLC
 
Qatar Holding LLC
Q-Tel Tower
Diplomatic Area Street, West Bay
Doha, Qatar
 
Attention:  Head, Mergers & Acquisitions Department
Email: notices.m&a@qatarholding.qa
with a copy to:
 
 
$100,000,000
 

 
 

 
- 33 -


 
General Counsel
Legal Department
Qatar Holding LLC
Q-Tel Tower
Diplomatic Area Street, West Bay
Doha, Qatar
 
Email:  notices.legal@qatarholding.qa
 
 
 

 

 
 

- 34 -

SCHEDULE B
SUBSTANTIVE TERMS FOR EMPLOYMENT AGREEMENT FOR JOHN CHEN

 
Title: Executive Chairman
 
Key Responsibilities: Control over strategic direction, strategic relationships, and organization goals of BlackBerry and authority over hiring, retention, duties, and responsibilities of all officers, executives and other employees
 
Cash Compensation: Base Salary of $1,000,000 and Performance Bonus of 200% of Base Salary, or $2,000,000
 
Equity Compensation: 13,000,000 restricted share units (~2.0% fully-diluted for $1.25bn convert), vesting over five years:
 
o 25% upon 3rd anniversary
o 25% upon 4th anniversary
o 50% upon 5th anniversary
 
Employment Termination Clause: Without cause, paid remaining full year salary as well as 2x base salary and 2x base bonus (total of $6,000,000), benefits for 18 months (excl. transportation)
 
Chen Termination for “Good Reason”: Includes breach of agreement, reduction in compensation, reduction in authorities and duties, requirement for Chen to move more than 50 miles from home, material change in business strategy without Chen’s consent, or change of control; Company has 30 day cure period for “good reason” conditions listed
 
Benefits: Customary (medical, dental, etc.), four weeks paid vacation, and car and driver


 
 

 
- 35 -

SCHEDULE C
FORM OF INDENTURE
 

 
 

 
 
 
 

BLACKBERRY LIMITED
 
as Issuer,
 
the GUARANTORS named herein,
 
- and -

 
[Computershare Trust Company of Canada]
 
as Trustee

 
INDENTURE
 

 
 
Dated as of November ●, 2013
 
providing for the issue of 6% Convertible
 
Unsecured Debentures due November ●, 2020
 
 

 
 

 

TABLE OF CONTENTS
 
Page
 
ARTICLE 1 INTERPRETATION
2
1.1
Definitions
2
1.2
Interpretation
15
1.3
Accounting Terms
15
1.4
Headings and Table of Contents
16
1.5
Section and Schedule References
16
1.6
Governing Law
16
1.7
Currency
16
1.8
Non-Business Days
16
1.9
Time
16
1.10
Independence of Covenants
16
1.11
Form of Documents Delivered to Trustee
17
1.12
Acts of Holders
17
1.13
Interest Payments and Calculations
18
1.14
English Language
19
1.15
Successors and Assigns
19
1.16
Severability Clause
19
1.17
Benefits of Indenture
19
1.18
Unclaimed Debentures
19
1.19
Schedules
19
1.20
Benefits of Indenture through Trustee
20
1.21
Form of Consideration
20
ARTICLE 2 THE DEBENTURES
20
2.1
Limit of Issue and Designation of Debentures
20
2.2
Form and Terms of Debentures
21
2.3
Interest
21
2.4
Prescription
22
2.5
Issue of Debentures
22
2.6
Execution
22
2.7
Certification by Trustee
23
2.8
Registration of Exchanges
23
2.9
Persons Entitled to Payment
24
2.10
Payment of Principal and Interest on Definitive Debentures
24
2.11
Book-Based System
26
2.12
Discontinuation of Book-Based System
26
2.13
Payments of Principal and Interest for Book-Entry Only Debentures
27
2.14
Rank
27
2.15
Register and Transfer
28
2.16
Additional Amounts
31
2.17
Cancellation of Debentures
33
2.18
Mutilated, Lost, Stolen or Destroyed Debentures
34
2.19
Access to Lists of Holders
35
2.20
Canadian Private Placement Legend
35
2.21  
U.S. Legend on Debentures
35
 
 
 

 
- ii -
 
2.22
Payment in Shares
36
ARTICLE 3 REPURCHASE AND CANCELLATION OF DEBENTURES
37
3.1
Purchase of Debentures
37
3.2
Repurchase of Debentures at Option of the Holder upon a Change of Control
37
3.3
Effect of Change of Control Repurchase Notice
40
3.4
Deposit of Change of Control Repurchase Price
41
3.5
Repayment to the Issuer
41
3.6
Debentures Purchased in Part
42
3.7
Optional Redemption of Debentures
42
3.8
Notice of Redemption
43
3.9
Debentures Due on Redemption Date
43
3.10
Deposit of Redemption Moneys
43
3.11
Payment and Surrender of Debentures
43
3.12
Compliance with Applicable Securities Laws upon Purchase of Debentures
44
3.13
Cancellation of Purchased Debentures
44
ARTICLE 4 SUBORDINATION OF DEBENTURES
44
4.1
Applicability of Article
44
4.2
Order of Payment
44
4.3
Subrogation to Rights of Holders of Specified Senior Indebtedness
46
4.4
Obligation to Pay Not Impaired
46
4.5
No Payment if Specified Senior Indebtedness in Default
47
4.6
Payment on Debentures Permitted
48
4.7
Confirmation of Subordination
48
4.8
Knowledge of Trustee
49
4.9
Trustee May Hold Specified Senior Indebtedness
49
4.10
Rights of Holders of Specified Senior Indebtedness Not Impaired
49
4.11
Altering the Specified Senior Indebtedness
49
4.12
Right of Holder to Receive Common Shares Not Impaired
50
4.13  
Contesting Security
50
ARTICLE 5 CONVERSION
50
5.1
Conversion Right
50
5.2
Completion of Conversion
51
5.3
Relating to the Issue of Common Shares
52
5.4
U.S. Legend on Common Shares
52
5.5
No Remuneration for Soliciting Conversions
53
ARTICLE 6 MATURITY
54
6.1
Payment of Principal and Interest at Maturity
54
ARTICLE 7 ADJUSTMENTS
54
7.1
Adjustment of Conversion Rate
54
7.2
No Adjustment
62
7.3
Notice of Adjustment
63
7.4
Notice of Certain Transactions
63
7.5
Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale
63
 
 
 

 
- iii -
 
7.6
Voluntary Increase
65
7.7
Protection of Trustee
65
ARTICLE 8 NEGATIVE COVENANTS
65
8.1
Limitation on Indebtedness
65
8.2
Negative Pledge
66
8.3
Dividend Increase
67
8.4
No Merger
67
8.5
Hedging
67
ARTICLE 9 COVENANTS OF THE ISSUER
67
9.1
Payment of Principal, Premium and Interest
67
9.2
Corporate Existence; Books of Account
67
9.3
Compliance Certificate
68
9.4
Notice of Default
68
9.5
Securities Laws
68
9.6
Reporting
68
9.7
Reserved
70
9.8
Performance of Covenants by Trustee
70
9.9
Payment of Trustee’s Remuneration
70
9.10
Permitted Conversion Period Notice
70
9.11
Further Instruments and Acts
71
9.12
No Dividends on Common Shares if Event of Default
71
ARTICLE 10 EVENTS OF DEFAULT AND REMEDIES
71
10.1
Events of Default and Enforcement
71
10.2
Notice of Event of Default
74
10.3
Waiver of Acceleration
74
10.4
Waiver
75
10.5
Other Remedies
75
10.6
Application of Money Collected
75
10.7
Control by Holders
76
10.8
Limitation on Suits
76
10.9
Collection Suit by Trustee
76
10.10  
Trustee May File Proofs of Claim
77
10.11
Undertaking for Costs
77
10.12
Remedies Cumulative
77
10.13
Delay or Omission Not Waiver
77
10.14
Judgment Against the Issuer
77
10.15
Rights of Holders to Receive Payment and to Convert
78
ARTICLE 11 GUARANTEE
78
11.1
Guarantors
78
11.2
Waiver Regarding Material Information
78
11.3
Opinion Regarding Guarantors
78
ARTICLE 12 SATISFACTION AND DISCHARGE
79
12.1
Non-Presentation of Debentures
79
12.2
Discharge
79
 
 
 

 
- iv -
 
ARTICLE 13 THE TRUSTEE
80
13.1
Duties of Trustee
80
13.2
Employ Agents
80
13.3
Reliance on Evidence of Compliance
80
13.4
Provision of Evidence of Compliance to Trustee
81
13.5
Contents of Evidence of Compliance
81
13.6
Advice of Experts
82
13.7
Trustee May Deal in Debentures
82
13.8
Conditions Precedent to Trustee’s Obligation to Act
82
13.9
Trustee Not Required to Give Security
83
13.10  
Resignation or Removal of Trustee; Conflict of Interest
83
13.11
Authority to Carry on Business; Resignation
84
13.12
Protection of Trustee
84
13.13
Additional Representations and Warranties of Trustee
86
13.14
Third Party Interests
87
13.15
Trustee Not Bound to Act
87
13.16
Compliance with Privacy Laws
87
ARTICLE 14 MEETINGS OF HOLDERS
88
14.1
Purposes for Which Meetings May be Called
88
14.2
Call, Notice and Place of Meetings
88
14.3
Proxies
88
14.4
Persons Entitled to Vote at Meetings
89
14.5
Quorum; Action
89
14.6
Determination of Voting Rights; Chairman; Conduct and Adjournment of Meetings
90
14.7
Counting Votes and Recording Action of Meetings
91
14.8
Instruments in Writing
91
14.9
Holdings by the Issuer Disregarded
91
ARTICLE 15 AMALGAMATION, CONSOLIDATION, CONVEYANCE, TRANSFER OR LEASE
92
15.1
Amalgamation and Consolidations of Issuer and Conveyances Permitted Subject to Certain Conditions
92
15.2
Rights and Duties of Successor Issuer
93
ARTICLE 16 NOTICES
94
16.1
Notice to Issuer
94
16.2
Notice to Holders
94
16.3
Notice to Trustee
95
ARTICLE 17 AMENDMENTS, SUPPLEMENTS AND WAIVERS
95
17.1
Without Consent of Holders
95
17.2
With Consent of Holders
96
17.3
Execution of Supplemental Indentures
97
17.4
Effect of Supplemental Indentures
98
17.5
Reference in Debentures to Supplemental Indentures
98
17.6
Prior Approval of Recognized Stock Exchange
98
ARTICLE 18 MISCELLANEOUS PROVISIONS
98
18.1
Acceptance of Trusts
98
 
 
 

 
- v -
 
18.2  
Protection of Trustee
98
18.3
Judgment Currency
99
18.4
Counterparts and Formal Date
99
 

 
 

 

THIS INDENTURE dated as of November ●, 2013.
 
BETWEEN:
BLACKBERRY LIMITED, a corporation governed by the laws of Ontario;
 
(the “Issuer”)
 
Each of the Guarantors (as defined herein);
 
- and -
 
[Computershare Trust Company of Canada], a trust company existing under the laws of Canada.
 
(the “Trustee”)
 

 
RECITALS
 
A.         The Issuer wishes to provide for the creation and issue of Convertible Unsecured Debentures with the designation of 6% Convertible Unsecured Debentures due November ●, 2020” (the “Debentures”), all upon the terms and conditions set forth in this Indenture (as hereinafter defined);
 
B.         All necessary acts and proceedings have been done and taken and all necessary resolutions have been passed to authorize the execution and delivery of this Indenture by the Issuer and the Guarantors, to make the same effective and binding upon the Issuer and the Guarantors, and to make the Debentures, when certified by the Trustee and issued as provided in this Indenture, valid, and legally binding obligations of the Issuer with the benefit and subject to the terms of this Indenture, and each Guarantor has done all things necessary to make its Guarantee (as defined herein), when executed by such Guarantor, the valid and legally binding obligation of such Guarantor;
 
D.         All necessary acts and proceedings have been done and taken and all necessary resolutions have been passed to authorize the issuance of the Common Shares (as hereinafter defined) that may be issued upon conversion or maturity of the Debentures; and
 
E.         The foregoing recitals are made as representations and statements of fact by the Issuer and the Guarantors and not by the Trustee;
 
THEREFORE, it is hereby covenanted, agreed and declared as follows:
 
 
 

 
- 2 -

ARTICLE 1
INTERPRETATION
 
1.1
Definitions
 
In this Indenture and in the Debentures, unless there is something in the subject matter or context inconsistent therewith, the expressions below shall have the following meanings:
 
“ABL Facility” means the existing asset backed lending facility established by the Issuer under a credit agreement dated as of August 27, 2013, between the Issuer, certain of its Subsidiaries and Wells Fargo Bank, NA as Administrative Agent and the lenders party thereto, as amended from time to time;
 
“Act” or “Act of Holder(s)”, when used with respect to any Holder(s), shall have the meaning specified in subsection 1.12(a);
 
“Additional Amount” has the meaning ascribed thereto in subsection 2.16(a);
 
“Affiliate” shall have the meaning ascribed thereto in the Securities Act (Ontario);
 
“Applicable Law” shall mean, at any time, with respect to any Person, property, transaction, event or other matter, as applicable, all laws, rules, statutes, regulations, treaties, orders, judgments and decrees, and all official requests, directives, rules, guidelines, orders, policies, practices and other requirements of any Governmental Authority relating or applicable at such time to such Person, property, transaction, event or other matter, and shall also include any interpretation thereof by any Person having jurisdiction over it or charged with its administration or interpretation;
 
“Applicable Securities Law” shall mean any Applicable Law in any jurisdiction regulating, or regulating disclosure with respect to, any sale or distribution of securities in, or to residents of, such jurisdiction;
 
“Applicants” has the meaning ascribed thereto in subsection 2.19(b);
 
“Beneficial Holder” means a Person who is the beneficial owner of a Debenture, as shown on a list maintained by a Participant or the Depository;
 
“Board of Directors” shall mean either the Board of Directors of the Issuer, or any committee of that board duly authorized to make a decision on the matter in question, or to the extent that a Successor Issuer is not a corporation, the persons performing the equivalent function of such Successor Issuer;
 
“Board Resolution” shall mean a copy of a resolution certified by the Chairman, Chief Executive Officer, the Chief Financial Officer, or any Vice-President, Secretary or Assistant Secretary of the Issuer, or to the extent that a Successor Issuer is not a corporation, the persons performing the equivalent function of such
 
 
 

 
- 3 -

Successor Issuer, to have been duly adopted by the Board of Directors and to be in full force and effect and unamended on the date of such certification;
 
“Book-Based System” shall mean, in relation to a Global Debenture, the debt clearing, record entry, transfer and pledge systems and services established and operated by or on behalf of the Depository for the Debentures (including, where applicable, pursuant to one or more agreements between such Depository and its Participants establishing the rules and procedures for such systems and services) or any successor systems or services thereof;
 
“Book-Entry Only Debentures” means Debentures issued pursuant to the Book-Based System of the Depository;
 
Business Combination” has the meaning ascribed thereto in section 7.5;
 
“Business Day” shall mean any day of the week, other than Saturday, Sunday or a statutory holiday in the Province of Ontario, on which banking institutions are open for business in the City of Toronto, Ontario;
 
 “Capital Lease” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, is required to be classified and accounted for as a capital lease on a balance sheet of such Person;
 
“CDS” shall mean CDS Clearing and Depository Services Inc., together with its successors from time to time;
 
“Change of Control” means any of the following:
 
 
(a)
the acquisition by any Person or one or more members of a group of Persons, acting jointly or in concert, directly or indirectly, in a single transaction or a series of related transactions of voting control or direction over more than 35% of the then outstanding Common Shares;
 
 
(b)
the acquisition by any Person (other than the Issuer or any of the Guarantors) or one or more members of a group of Persons acting jointly or in concert (other than a group consisting solely of two or more of the Issuer and any of the Guarantors), directly or indirectly, in a single transaction or a series of related transactions, of all or substantially all of the assets of the Issuer and its Subsidiaries, taken as a whole; or
 
 
(c)
the completion of a merger, amalgamation, arrangement or similar transaction which results in the holders of the Issuer’s Common Shares immediately prior to the completion of such transaction holding, in the aggregate, less than 50% of the then outstanding Common Shares of the resulting entity immediately after the completion of such transaction;
 
 
 

 
- 4 -

 
“Change of Control Bid” means a public announcement by the Issuer or any other Person of a transaction which, if consummated would constitute a Change of Control;
 
“Change of Control Bid Notice” has the meaning attributed thereto in section 5.1(c);
 
“Change of Control Issuer Notice” has the meaning attributed thereto in section 3.2(a);
 
“Change of Control Repayment Offer” has the meaning ascribed thereto in subsection 3.2(a);
 
“Change of Control Repurchase Date” means the date that is not less than thirty (30) nor more than forty-five (45) days after the date of the Change of Control Issuer Notice;
 
Change of Control Repurchase Notice” has the meaning attributed thereto in subsection 3.2(b);
 
“Change of Control Repurchase Price” of any Debenture means 115% of the principal amount of the Debenture to be purchased, plus any accrued and unpaid interest thereon;
 
“Common Share Payment” means a payment in accordance with section 2.22;
 
“Common Shares” means the common shares in the share capital of the Issuer;
 
Consolidated Assets” means the consolidated assets of the Issuer determined in accordance with GAAP as set out in the most recent quarterly or annual financial statements of the Issuer;
 
Consolidated Revenues” means the consolidated revenues of the Issuer determined in accordance with GAAP as set out in the most recent quarterly or annual financial statements of the Issuer;
 
“Conversion Date” has the meaning ascribed thereto in section 5.1(b);
 
“Conversion Notice” has the meaning ascribed thereto in subsection 5.1(b);
 
“Conversion Price” per Common Share means the quotient of (i) $1,000 divided by (ii) the then applicable Conversion Rate, rounded to the nearest cent; the Conversion Price shall initially be $10.00 per Common Share;
 
“Conversion Rate” means the rate at which Common Shares shall be delivered upon conversion, which rate shall initially be 100 common shares per $1,000 principal amount of Debentures, as adjusted from time to time pursuant hereto;
 
“Convertible Securities” has the meaning ascribed thereto in section 7.1(h);
 
 
 

 
- 5 -

“Corporate Trust Office” shall mean the principal office or offices of the Trustee in the City of Toronto, Province of Ontario, at which at any particular time its corporate trust business shall be administered;
 
“Counsel” shall mean, in the case of Counsel to the Trustee, any barrister, solicitor or other lawyer or firm of barristers, solicitors or other lawyers retained or employed by the Trustee and, in the case of Counsel to the Issuer, any barrister, solicitor or other lawyer or firm of barristers, solicitors or other lawyers retained or employed by the Issuer;
 
“Current Dividend Rate” means initially $0.00 per Common Share per year and if the Issuer declares a semi-annual, quarterly or other periodic dividend other than a Special Dividend, means that amount expressed as an annual amount per Common Share;
 
“Current Market Price” on any date means the Weighted Average Trading Price per Common Share for the twenty (20) consecutive Trading Days ending five (5) Trading Days prior to such date;
 
“Debentures” means the 6% Convertible Unsecured Debentures due November ●, 2020 issued under this Indenture and certified pursuant to this Indenture;
 
“Debenture Liabilities” has the meaning ascribed thereto in section 4.1;
 
“Default” means any event or condition that constitutes an Event of Default or that would constitute an Event of Default with the giving of notice, passage of time, or both;
 
“Definitive Debentures” means Debentures in the form of individual certificates in definitive fully registered form issued pursuant to section 2.2 and substantially in the form of Schedule 2.2;
 
“Depository”, in respect of the Book-Entry Only Debentures, means CDS and includes any successor corporation or any other depository subsequently appointed by the Issuer as the depository in respect of Book-Entry Only Debentures;
 
“Determination Date” has the meaning ascribed thereto in section 7.1(f);
 
“Distributed Securities” has the meaning ascribed thereto in section 7.1(d);
 
“Distributions Paid in the Ordinary Course” means cash dividends paid on the Common Shares in any financial year in the ordinary course of business in accordance with a dividend policy approved by the Board of Directors provided that the such dividend policy does not provide for such dividends to exceed an annual rate of 5% of net income of the Issuer (before extraordinary items) for its immediately preceding financial year, determined in accordance with GAAP from time to time applied on a basis consistent with those applied in the preparation of
 
 
 

 
- 6 -

the most recently completed audited consolidated financial statements of the Issuer;
 
“Dividend Increase” means the Issuer publicly announcing an increase in the dividend on the Common Shares to an amount higher than the then Current Dividend Rate;
 
“Event of Default” shall mean any of the events identified in subsection 10.1 as being an Event of Default;
 
“Excluded Holder” has the meaning ascribed thereto in section 2.16(a);
 
“Expiration Date” has the meaning ascribed thereto in section 7.1(g);
 
“Expiration Time” has the meaning ascribed thereto in section 7.1(g);
 
“Extraordinary Resolution” means a resolution at a meeting of Holders duly convened and held in accordance with the provisions of Article 14 passed by the favourable votes of 90% of the Holders of the Outstanding Debentures affected represented in person or by proxy at such meeting or a resolution signed in the manner contemplated by section 14.8;
 
“Fairfax” means Fairfax Financial Holding Limited;
 
“Fiscal Year” means any of the annual accounting periods of the Issuer ending on March 1 of each year;
 
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied and any change therein, including but not limited to, as a result of the adoption of International Financing Reporting Standards (“IFRS”) by the Issuer and its Subsidiaries;
 
“Global Debenture” means one or more fully registered global Debentures as described in subsection 2.11(a);
 
“Governmental Authority” shall mean, when used with respect to any Person, any government, parliament, legislature, regulatory authority, agency, tribunal, department, commission, board, instrumentality, court, arbitration board or arbitrator or other law, regulation or rule-making entity (including a Minister of the Crown, any central bank, Superintendent of Financial Institutions, Recognized Stock Exchange, or other comparable authority or agency) having or purporting to have jurisdiction on behalf of, or pursuant to the laws of, Canada or any country in which such Person is residing, incorporated, continued, amalgamated, merged or otherwise created or established or in which such Person carries on business or holds property, or any province, territory, state, municipality, district or political subdivision of any such country or of any such province, territory or state of such country;
 
“Guarantee” means the guarantee by each Guarantor of the obligations of the Issuer with respect to the Debentures; 

 
 

 
- 7 -

“Guarantor” means each of Research In Motion Corporation, Research In Motion UK Limited, RIM Finance, LLC and Research In Motion Singapore Pte. Limited, and any Person who executes a Guarantee in accordance the terms hereof;
 
“Holder(s)” means the registered holder(s) of Debentures for the time being, and including, for greater certainty, in the case of any Global Debenture, the Depository or its nominee in whose name such Global Debenture is registered, as the case may be;
 
“Indebtedness” means, with respect to a Person, and without duplication:
 
 
(a)
indebtedness of such Person for monies borrowed or raised, including any indebtedness represented by a note, bond, debenture or other similar instrument of such Person;
 
 
(b)
reimbursement obligations of such Person arising from bankers’ acceptance, letters of credit or letters of guarantee or similar instruments;
 
 
(c)
indebtedness of such Person for the deferred purchase price of property or services, other than for consumable non-capital goods and services purchased in the ordinary course of business, including arising under any conditional sale or title retention agreement, but excluding for greater certainty ordinary course accounts payable;
 
 
(d)
obligations of such Person under or in respect of Capital Leases, synthetic leases, Purchase Money Security Interests or sale and leaseback transactions;
 
 
(e)
the aggregate amount at which shares in the capital of such Person that are redeemable at fixed dates or intervals or at the option of the holder thereof may be redeemed; and
 
 
(f)
guarantees or Liens granted by such Person in respect of Indebtedness of another Person;
 
“Indenture” means or refers to this Indenture as amended or supplemented by any indenture, deed or instrument supplemental or ancillary thereto;
 
“Indenture Documents” means this Indenture, the Debentures and each other related document, instrument or agreement now or hereinafter executed and delivered by or on behalf of the Issuer or the Guarantors or under or pursuant to any of them;
 
“Independent Member of the IIROC” means a member firm of the Investment Industry Regulatory Organization of Canada that, in the determination of the Board of Directors acting reasonably, is independent of the Issuer having regard
 
 
 

 
- 8 -

to, among other things, the considerations set out in National Instrument 33-105 Underwriting Conflicts or any successor instrument;
 
“Ineligible Consideration” means any property (including cash) or securities that would not constitute Prescribed Securities;
 
“Interest Payment Date” means the last day of February, May, August and November in each year until all interest has been paid;
 
“Interest Period” has the meaning ascribed thereto in section 2.3(a);
 
“Interest Record Date” means, with respect to an Interest Payment Date, the date determined as the record date for the determination of the Holders to which interest on Debentures is payable on such Interest Payment Date, which date shall be the 15th day of the month in which such Interest Payment Date occurs (or if such day is not a Business Day, the immediately preceding Business Day);
 
“Issue Date” means the date on which the Debentures are first issued by the Issuer pursuant to this Indenture, being November ●, 2013 and such other date on which Debentures are issued by the Issuer under Section 2.1 as may be approved by the Board of Directors;
 
“Issuer” shall mean BlackBerry Limited until a Successor Issuer shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, “Issuer” shall mean such Successor Issuer;
 
“Issuer Request” or “Issuer Order” shall mean a written request or order signed in the name of the Issuer by any Responsible Officer of the Issuer and delivered to the Trustee;
 
“Last Issue Date” means the last date on which Debentures are issued by the Issuer pursuant to this Indenture;
 
“Lien” means any hypothec, security interest, mortgage, lien, right of preference, pledge, assignment by way of security or any other agreement or encumbrance of any nature that secures the performance of an obligation, and a Person is deemed to own subject to a Lien any property or assets that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital or synthetic lease or similar agreement (other than an operating lease (the determination of whether a lease is accounted for as an operating lease to be made in accordance with US GAAP as in effect on the date hereof)) relating to such property or assets;
 
“Market Capitalization” on any date means the Current Market Price on such date multiplied by the number of issued and outstanding Common Shares on such date;
 
“Maturity” shall mean the date on which principal becomes due and payable under the Debentures;
 
 
 

 
- 9 -

“Maturity Date” means November ●, 2020 or such other date on which the Debentures become due and payable;
 
“Non-Public Offering” has the meaning ascribed thereto in section 7.1(h);
 
“Notice” shall mean any notice, document or other communication required or permitted to be given under this Indenture;
 
“Officer’s Certificate” shall mean a written certificate signed by any Responsible Officer of the Issuer, and delivered to the Trustee;
 
“Opinion of Counsel” shall mean a written opinion addressed to the Trustee (among other addressees as applicable) by Counsel who shall be reasonably satisfactory to the Trustee;
 
“Outstanding” when used with respect to Debentures shall mean, as of the date of determination, all Debentures theretofore certified and delivered by the Trustee under this Indenture, except:
 
 
(i)
Debentures theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
 
 
(ii)
Debentures for whose payment, purchase, or repurchase money in the necessary amount has been theretofore deposited with the Trustee under gratuitous deposit or set aside and segregated in trust by the Issuer (if the Issuer shall act as its own paying agent) for the Holders of such Debentures; and
 
 
(iii)
Debentures that have been surrendered to the Trustee pursuant to section 2.17 or in exchange for or in lieu of which other Debentures have been certified and delivered pursuant to this Indenture, other than any such Debentures in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Debentures are held by a bona fide purchaser in whose hands such Debentures are valid obligations of the Issuer;
 
provided, however, that: (A) in determining whether the Holders of the requisite principal amount of Debentures then Outstanding have taken any Act of Holders hereunder, Debentures owned by the Issuer or any Subsidiary of the Issuer shall be disregarded and deemed not to be then Outstanding; (B) in determining whether the Trustee shall be protected in acting and relying upon such Act of Holders, only Debentures of which the Trustee has actual notice that they are so owned shall be so disregarded; (C) that Debentures so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to act with respect to such Debentures and that the pledgee is not the Issuer or any Affiliate of the Issuer; and (D) a Holder that has become an Affiliate of the Issuer as a result of it or one or more of its Affiliates having converted some or all of
 
 
 

 
- 10 -

its Debentures into Common Shares shall not be considered an Affiliate of the Issuer for the purposes of this determination;
 
“Participant” shall mean, in relation to a Depository, a broker, dealer, bank or other financial institution or other Person on whose behalf such Depository or its nominee holds Debentures pursuant to a Book-Based System operated by such Depository;
 
“Permitted Conversion Period” means the period starting on the 10th day following the issuance of the Debentures and ending on the third Business Day prior to the Maturity Date;
 
“Permitted Junior Payments” means any payment or other distribution to the holders of the Debentures or securities of the Issuer or a Guarantor or any other corporation that are equity securities or are subordinated in right of payment to all Specified Senior Debt to the substantially same extent or greater extent than the holders of the Debentures are so subordinated;
 
“Permitted Liens” means:
 
 
(a)
Liens securing Specified Senior Indebtedness permitted under Section 8.1(b);
 
 
(b)
Purchase Money Security Interests securing Indebtedness permitted under Section 8.1(c)(i);
 
 
(c)
Liens on real property incurred in connection with a sale and lease back of such real property securing Indebtedness permitted under Section 8.1(c)(ii);
 
 
(d)
Liens over receivables and related assets incurred in connection with a securitization or factoring of receivables to the extent permitted under Section 8.1(c)(iii);
 
 
(e)
Liens over the assets of a Subsidiary acquired by the Issuer or its subsidiaries securing indebtedness of such Subsidiary existing prior to its acquisition and not incurred in contemplation thereof to the extent permitted under Section 8.1(c)(iv);
 
 
(f)
Liens over insurance policies securing indebtedness incurred to finance premiums due under such insurance policies to the extent permitted under Section 8.1(c)(v)  ;
 
 
(g)
Liens imposed or arising by operation of law, in each case, in respect of obligations not yet due or which have been postponed or are being contested in good faith and by appropriate proceedings to the extent that adequate reserves are maintained;
 
 
 

 
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(h)
pledges or deposits made in the ordinary course of business in connection with bids or tenders or to comply with the requirements of any legislation or regulation applicable to the Person concerned or its business or assets;
 
 
(i)
easements, rights of way, encroachment agreements, servitudes, minor encroachments, minor irregularities in title or other similar encumbrances or privileges in respect of any real property which, either singly or in the aggregate, do not materially impair the value or the use thereof and which are not violated in any material respect by existing or proposed structures or land use, and any zoning restrictions and leases existing as at the date hereof;
 
 
(j)
undetermined or inchoate liens, rights of distress and charges incidental to current operations that have not at such time been filed or exercised and of which none of the Lenders has been given notice, or that relate to obligations not due or payable, or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person;
 
 
(k)
reservations, limitations, provisos and conditions expressed in any original grant from the Crown or other grants of real or immovable property, or interests therein, that do not materially affect the use of the affected land for the purpose for which it is used by that Person;
 
 
(l)
the right reserved to or vested in any Governmental Authority by the terms of any lease, licence, franchise, grant or permit acquired by that Person or by any statutory provision to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof; and
 
 
(m)
the Lien created by a judgement of a court of competent jurisdiction, as long as the judgement is being contested diligently and in good faith by appropriate proceedings by that Person and does not result in an Event of Default; and
 
 
(n)
any other Lien not prohibited by the ABL Credit Agreement, but subject to Section 8.1;
 
“Permitted Transactions” has the meaning ascribed thereto in section 7.1(h);
 
“Person” shall mean any natural person, corporation, firm, partnership, joint venture, trustee, executor, liquidator, administrator, legal representative or other unincorporated association, trust, unincorporated organization, government or Governmental Authority and pronouns relating thereto have a similar extended meaning;
 
“Prescribed Securities” means “prescribed securities” for the purpose of clause 212(1)(b)(vii)(E) of the Income Tax Act (Canada) as it applied on December 31, 2007;
 
 
 

 
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“Pricing Date” has the meaning ascribed thereto in section 7.1(h);
 
“Proceeding” shall mean any suit, action or other judicial or administrative proceeding;
 
 “Purchase Money Interest” means a Lien created or incurred by the Issuer or one of its Subsidiaries securing Indebtedness incurred to finance the acquisition of property (including the cost of installation thereof), provided that (i) such Lien is created substantially simultaneously with the acquisition of such Property, (ii) such Lien does not at any time encumber any Property other than the Property financed by such indebtedness, (iii) the amount of indebtedness secured thereby is not increased subsequent to such acquisition, and (iv) the principal amount of indebtedness secured by any such Lien at no time exceeds 100% of the original purchase price of such property and the cost of installation thereof, and for the purposes of this definition the term “acquisition” includes a Capital Lease;
 
“Purchased Shares” has the meaning ascribed thereto in section 7.1(g);
 
“Recognized Stock Exchange” means the TSX or, if the Common Shares are not listed on the TSX, any other major securities exchange or market (including without limitation the New York Stock Exchange or Nasdaq) on which the Common Shares are then listed and posted for trading;
 
“Redemption Amount” has the meaning ascribed thereto in section 3.8;
 
“Redemption Date” means the date indicated by the Issuer in the Redemption Notice as being the date on which the Redemption Amount shall be paid;
 
“Redemption Notice” has the meaning ascribed thereto in section 3.8;
 
“Redemption Share Price” has the meaning ascribed thereto in section 3.7(a)(ii);
 
“Regulation S” means Regulation S adopted by the United States Securities and Exchange Commission under the U.S. Securities Act;
 
“Responsible Officer of the Issuer” means the Chairman, the President, the Chief Executive Officer, the Chief Financial Officer, any Vice-President, the Secretary, any Assistant Secretary, or any other officer of the Issuer customarily performing functions similar to those performed by any of the above designated officers;
 
“Restricted Definitive Debenture” means a definitive certificate issued in accordance with section 2.2 that bears the U.S. Legend;
 
“Restricted Global Debenture” means a Global Debenture that bears the U.S. Legend;
 
“Rights” and “Rights Plan” have the meanings ascribed thereto in subsection 7.1(e);
 
 
 

 
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“Senior Creditor” means a holder or holders of Specified Senior Indebtedness and includes any representative or representatives or trustee or trustees of any such holder or holders;
 
“Senior Security” means all Liens held by or on behalf of any Senior Creditor and in any manner securing any Specified Senior Indebtedness;
 
“Special Dividend” means any dividend or other distribution of cash or property by the Issuer to the holders of Common Shares if the amount exceeds 5% of the closing price on the TSX for the Common Shares on the date that the board of directors of the Issuer declares the dividend or other distribution;
 
“Specified Senior Indebtedness” means, without duplication, the following Indebtedness not to exceed $550,000,000 at any one time:
 
 
(a)
other Indebtedness referred to in paragraphs (a) and (b) of the definition of Indebtedness;
 
 
(b)
renewals, extensions, restructurings, refinancings and refundings of any such indebtedness liabilities or obligations; and
 
 
(c)
guarantees of any of the foregoing;
 
As of the date hereof, the Specified Senior Indebtedness is the Indebtedness under the ABL Facility and thereafter, such Indebtedness as the Issuer shall notify the Trustee in writing, in all cases subject to the limitations herein and in Section 8.1.
 
Spinoff Securities” has the meaning ascribed thereto in section 7.1(d);
 
Spinoff Valuation Period” has the meaning ascribed thereto in section 7.1(d);
 
“Stated Maturity” shall mean, with respect to any principal of or accrued interest on a Debenture, the fixed date or dates specified on which such principal or interest is due and payable;
 
“Subordination Agreements” has the meaning ascribed thereto in section 4.7;
 
“Subsidiary” in relation to any specified Person, shall mean (a) any corporation, association or other business entity a majority of the outstanding Voting Securities of which are beneficially owned, directly or indirectly, by or for such Person and/or by or for any Subsidiary or one or more of the other Subsidiaries of that Person (or a combination thereof), and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are the Person or one or more Subsidiaries of that Person (or any combination thereof);
 
“Successor Issuer” or “Successor Guarantor” shall have the meaning ascribed thereto in subsection 15.1(a);
 
 
 

 
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“Supplemental Indenture” shall have the meaning ascribed thereto in subsection 17.3;
 
“Taxes” has the meaning ascribed thereto in section 2.16;
 
“Trading Day” means, with respect to any Recognized Stock Exchange or any other market for securities, any day on which such exchange or market is open for trading or quotation;
 
“Transfer Agent” shall mean Computershare Trust Company of Canada or other Person or Persons appointed as the transfer agent for the Common Shares, in such capacity, together with such Person’s or Persons’ successor from time to time in such capacity;
 
“Triggering Distribution” has the meaning ascribed thereto in section 7.1(f);
 
“Trustee” shall mean Computershare Trust Company of Canada until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder;
 
“TSX” means the Toronto Stock Exchange;
 
“Unrestricted Definitive Debenture” means a definitive certificate issued in accordance with section 2.2 that does not bear the U.S. Legend;
 
“Unrestricted Global Debenture” means a Global Debenture that does not bear the U.S. Legend;
 
“U.S. Legend” has the meaning ascribed thereto in section 2.20;
 
“U.S. Person” means a U.S. person as such term is defined in Regulation S;
 
“U.S. Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
 
“United States” or “U.S.” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
 
 “United States Dollar” or “Dollar” or “$” shall mean lawful currency of the United States;
 
 “Voting Securities” means a security conferring a right to vote in all circumstances or by reason of an event which has occurred and is occurring, and includes a security convertible into such a security, as well as an option or a right which may be exercised to acquire such a security and, in reference to the Issuer, includes for greater certainty the Common Shares of the Issuer;
 
“Weighted Average Trading Price” means, with respect to any security on a stock exchange or quotation service during a specified period, the quotient
 
 
 

 
- 15 -

obtained by dividing (i) the aggregate sale price of all such securities sold on such stock exchange or quotation service during such period by (ii) the total number of such securities sold on such stock exchange or quotation service during such period, as determined from time to time by the Board of Directors, or upon request of the Board of Directors, as determined by an Independent Member of the IIROC for such purpose;
 
“Written Order” means a written order or request, respectively, signed in the name of the Issuer by a Responsible Officer or director of the Issuer; and
 
all other terms which are used herein but not otherwise defined herein, and that are defined in the Securities Act (Ontario), either directly or by reference therein, shall have the meanings assigned to them therein.
 
1.2
Interpretation
 
 
(a)
Words importing the singular number shall include the plural and vice versa and words importing any gender shall include the masculine, feminine and neuter genders.
 
 
(b)
The words “hereto”, “herein”, “hereof”, “hereby”, “hereunder”, and other words of similar import refer to this Indenture as a whole and not to any particular article, section, subsection, paragraph, clause or other part of this Indenture.
 
 
(c)
Except as otherwise provided herein, any reference in this Indenture to any act, statute, regulation, policy statement, instrument, agreement, or section thereof shall be deemed to be a reference to such act, statute, regulation, policy statement, instrument, agreement or section thereof as amended, re-enacted or replaced from time to time;
 
 
(d)
Any reference herein to any agreement shall include such agreement as amended, restated, supplemented, replaced or otherwise modified from time to time to the extent permitted hereunder;
 
 
(e)
Any reference herein to any Person shall include such Person’s permitted successors and permitted assigns.
 
1.3
Accounting Terms
 
As used in this Indenture and in any certificate or other document made or delivered pursuant to this Indenture, accounting terms not defined in this Indenture, or in any such certificate or other document, and accounting terms partly defined in this Indenture or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms in this Indenture, or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Indenture, or in any such certificate or other document shall prevail.
 
 
 

 
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1.4
Headings and Table of Contents
 
The division of this Indenture, or any related document, into articles, sections, subsections, paragraphs, clauses and other subdivisions, the provision of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or any such related document.
 
1.5
Section and Schedule References
 
Unless something in the subject matter or context is inconsistent therewith, references in this Indenture to articles, sections, subsections, paragraphs, clauses, other subdivisions, exhibits, appendices or schedules are to articles, sections, subsections, paragraphs, clauses, other subdivisions, exhibits, appendices or schedules of or to this Indenture.
 
1.6
Governing Law
 
This Indenture and each Debenture issued hereunder shall be governed by, and construed with, the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts.
 
1.7
Currency
 
Unless expressly provided to the contrary in this Indenture or in any Debenture, all monetary amounts in this Indenture or in such Debenture refer to United States Dollars.
 
1.8
Non-Business Days
 
Unless expressly provided to the contrary in this Indenture or in any Debenture, whenever any payment shall be due, any period of time shall begin or end, any calculation is to be made or any other action is to be taken on, or as of, or from a period ending on, a day other than a Business Day, such period of time shall begin or end and such calculation shall be made as of the day that is not a Business Day, but such actions shall be taken and such payment shall be made, as the case may be, on the next succeeding Business Day.
 
1.9
Time
 
Unless otherwise expressly stated in this Indenture or in any Debenture, all references to a time will mean such time in Toronto, Ontario. Time shall be of the essence in this Indenture.
 
1.10
Independence of Covenants
 
Each covenant contained in this Indenture shall be construed (absent an express provision to the contrary) as being independent of each other covenant, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.
 
 
 

 
- 17 -

1.11
Form of Documents Delivered to Trustee
 
 
(a)
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
 
 
(b)
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
 
1.12
Acts of Holders
 
 
(a)
Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders voting in favour thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders duly called and held in accordance with the provisions of Article 14, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such requisite instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act of Holders” or the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and, subject to section 13.3, conclusive in favour of the Trustee and the Issuer, if made in the manner provided in this section 1.12. The record of any meeting of Holders shall be provided in the manner specified in section 14.7.
 
 
(b)
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to such notary public or other officer the execution thereof. Where such execution is by a signer acting in a capacity, other than such signer’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer’s authority.
 
 
 

 
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The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any manner that the Trustee deems sufficient.
 
 
(c)
If the Issuer or the Trustee shall solicit from the Holders any Act, the Issuer or the Trustee, as the case may be, may, at its option, fix in advance a record date for the determination of Holders entitled to take such Act, but the Issuer or the Trustee, as the case may be, shall have no obligation to do so. Any such record date shall be fixed at the Issuer’s or the Trustee’s discretion, as the case may be, provided that such record date shall be fixed on a date not more than sixty (60) days prior to the Act. If such a record date is fixed, such Act may be sought or taken before or after the record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of Debentures Outstanding have authorized or agreed or consented to such Act, and for that purpose the Debentures Outstanding shall be computed as of such record date.
 
 
(d)
Any Act of the Holder of any Debenture shall bind every future holder of the same Debenture and the Holder of every Debenture issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof in respect of anything done, suffered or omitted by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Debenture.
 
1.13
Interest Payments and Calculations
 
 
(a)
All interest payments to be made under this Indenture or any Debenture shall be paid without allowance or deduction for deemed re-investment or otherwise, both before and after Maturity and before and after default and/or judgment, if any, until payment of the amount on which such interest is accruing, and, to the extent permitted by Applicable Law, interest will accrue on overdue interest.
 
 
(b)
For the purposes of the Interest Act (Canada), if in this Indenture or in any Debenture a rate of interest is or is to be calculated on the basis of a period which is less than a full calendar year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the calendar year for which such calculation is made and divided by the number of days in such period.
 
 
(c)
The rate of interest stipulated in this Indenture or in any Debenture will be calculated using the nominal rate method of calculation, and will not be calculated using the effective rate method of calculation or on any other basis that gives effect to the principle of deemed re-investment of interest.
 
 
 

 
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(d)
In calculating interest under this Indenture or under a Debenture for any period, unless otherwise specifically stated, the first day of such period shall be included and the last day of such period shall be excluded.
 
1.14
English Language
 
The Issuer, the Trustee and, by their acceptance of Debentures and the benefits of this Indenture, the Holders, acknowledge having consented to and requested that this Indenture, each Debenture and each document related hereto and thereto be drawn up in the English language only. La Société, le fiduciaire des débentures et, par leur acceptation des débentures et des avantages de la présente convention, les porteurs, reconnaissent avoir accepté et demandé que la présente convention, chaque débenture et chaque document relié à celles-ci soient rédigés en langue anglaise.
 
1.15
Successors and Assigns
 
All covenants and agreements in this Indenture by the Issuer shall bind its successors and assigns, whether expressed or not.
 
1.16
Severability Clause
 
If any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
1.17
Benefits of Indenture
 
Nothing in this Indenture and in the Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any paying agent, any Person maintaining the record of the Holders pursuant to section 2.15, any Transfer Agent and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
 
1.18
Unclaimed Debentures
 
Subject to Applicable Law, all Debentures together with any interest thereon which remain unclaimed after a period of three (3) calendar years from the Maturity Date shall be forfeited and shall revert to the Issuer.
 
1.19
Schedules
 
The following Schedules form part of this Indenture:
 
Schedule  2.2 – Form of Debenture
 
Schedule 2.2(c) – Principal Amount Grid
 
Schedule 5.4 – Form of Declaration for Removal of U.S. Legend
 
 
 

 
- 20 -
 
Schedule 3.8 – Form of Redemption Notice
 
Schedule 5.1(b) – Form of Conversion Notice
 
Schedule 11.1 – Form of Guarantee
 
Schedule 11.3 – Opinions Regarding Guarantors
 
1.20
Benefits of Indenture through Trustee
 
For greater certainty, this Indenture is being entered into with the Trustee for the benefit of the Holders and the Trustee declares that it holds all rights, benefits and interests of this Indenture on behalf of and as the person holding the power of attorney of, the Holders and each such person who becomes a Holder of the Debentures from time to time.
 
1.21
Form of Consideration
 
Notwithstanding any other provision of this Agreement (for greater certainty including, but not limited to, sections 5.1, 7.1, 7.5, 8.4 and 15.1), if, prior to the date that is five years plus one day from the Last Issue Date, Holders would otherwise be entitled to receive, upon conversion of the Debentures, any property that would constitute Ineligible Consideration, such Holders shall not be entitled to receive such Ineligible Consideration but rather will be entitled to receive Prescribed Securities having a fair market value equal to the fair market value of such Ineligible Consideration. However, the Issuer shall have the right (at the sole option of the Issuer) to satisfy its obligation to deliver such “prescribed securities” by delivering either such Ineligible Consideration or other consideration (“other consideration”) consisting of Prescribed Securities, provided that such other consideration (i) has a market value on the date of delivery (as conclusively determined by the Board of Directors based on a formula analogous to the formula for determining Current Market Price) equal to the market value on such date of such Ineligible Consideration, (ii) is fully paid and non-assessable and free of any Lien or adverse claim, and (iii) is listed for trading on a Recognized Stock Exchange.
 
ARTICLE 2
THE DEBENTURES
 
2.1
Limit of Issue and Designation of Debentures
 
The Debentures authorized to be issued hereunder shall consist of, and be limited to, no more than $1,250,000,000 aggregate principal amount and shall be designated as “6% Convertible Unsecured Debentures due November ●, 2020” of which not more than $250,000,000 may be issued after the initial Issue Date but not later than 30 days after the initial Issue Date.
 
 
 

 
- 21 -

2.2
Form and Terms of Debentures
 
 
(a)
The Debentures shall be dated as of the Issue Date. The Debentures shall bear interest from and including the Issue Date at the rate of 6% per annum (after as well as before Maturity, default and judgment, with interest on overdue interest at the said rate), payable in equal quarterly instalments in arrears on each Interest Payment Date, subject to section 2.3, and the Debentures shall mature on the Maturity Date. Subject to the other terms hereof, the principal of the Debentures will be payable on the Maturity Date in lawful money of the United States against surrender thereof by the Holder at the Corporate Trust Office or at such place or places as may be designated by the Issuer for that purpose.
 
 
(b)
The Debentures shall be issued as fully registered Debentures in denominations of $1,000 and integral multiples of $1,000, or as a Global Debenture, and shall be convertible as provided for in Article 5.
 
 
(c)
The Debentures and the certificate of the Trustee endorsed thereon shall be substantially in the form set forth in Schedule 2.2 hereto, provided that if a Debenture is issued as a Global Debenture in accordance with section 2.11, it shall have appended thereto a principal amount grid in the form of Schedule 2.2(c), which shall be appropriately adjusted at such times as Debentures are converted or repurchased in accordance with the terms hereof.
 
2.3
Interest
 
Each Debenture issued hereunder, whether issued originally or in exchange for another Debenture, shall bear interest from and including the Issue Date or from and including the last Interest Payment Date on which interest shall have been paid or made available for payment on the Debentures then Outstanding, whichever shall be the later, to but excluding the earlier of:
 
 
(i)
the following Interest Payment Date;
 
 
(ii)
if purchased in accordance with section 3.1, the date of payment;
 
 
(iii)
if repurchased in accordance with section 3.2, the Change of Control Repurchase Date;
 
 
(iv)
if redeemed in accordance with section 3.7, the Redemption Date;
 
 
(v)
if converted in accordance with section 5.1, the Conversion Date; and
 
 
(vi)
the Maturity Date;
 
as the case may be (the “Interest Period”), upon due presentation and surrender thereof for payment on or after the appropriate date. The interest payable per $1,000 principal amount of Debentures in respect of an
 
 
 

 
- 22 -

Interest Period other than an Interest Period that begins and ends on an Interest Payment Date shall be calculated by multiplying $1,000 by the interest rate of 6% per annum, dividing the product so obtained by 365 or 366 days, as the case may be, and multiplying the quotient by the actual number of days in the said Interest Period. The interest payable per $1,000 principal amount of Debentures in respect of an Interest Period that begins and ends on an Interest Payment Date shall be calculated by multiplying $1,000 by the interest rate of 6% per annum and dividing the product so obtained by four.  If an Event of Default has occurred and is continuing, the interest payable in accordance with this Section 2.3 will be calculated on the basis of 10% per annum instead of 6% per annum for that part of the Interest Period commencing on the date that the Event of Default occurred up to and including the date on which such Event of Default is no longer occurring.
 
2.4
Prescription
 
The right of the Holders to exercise their rights under this Indenture shall become void unless the Debentures are presented for payment within a period of three (3) years from Maturity, after which payment thereof shall be governed by the provisions of Article 12 hereof. The Issuer shall have satisfied its obligations under the Debentures upon irrevocable remittance to the Trustee for the account of the Holders, upon repurchase, redemption, conversion or at the Maturity Date, of any and all consideration due hereunder in cash or, to the extent provided for and permitted hereunder, by the making of a Common Share Payment, subject to and in accordance with the provisions of this Indenture, and such remittance shall for all purposes be deemed a payment to the Holders, and to that extent such Debentures shall thereafter not be considered as Outstanding and the Holders shall have no right, except to receive payment out of the moneys so paid and deposited.
 
2.5
Issue of Debentures
 
Debentures in such aggregate principal amounts as the Board of Directors shall determine in accordance with the terms hereof and denominated in lawful money of the United States shall be executed by the Issuer from time to time and, forthwith after such execution, shall be delivered to the Trustee and shall be certified by the Trustee and delivered to the Issuer in accordance with the terms of section 2.7. Other than as contemplated by subsection 2.8(b), the Trustee shall receive no consideration for the certification of Debentures.
 
2.6
Execution
 
 
(a)
The Debentures shall be executed on behalf of the Issuer by any Responsible Officer of the Issuer. The signature of any of such officer on the Debentures may be manual or facsimile. Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Issuer shall bind the Issuer, notwithstanding that
 
 
 

 
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such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debentures.
 
 
(b)
If Debentures are issued as Definitive Debentures, the Issuer shall provide to the Trustee a supply of certificates to evidence such Definitive Debentures in such form, in such amounts, bearing such distinguishing letters and numbers, and as at such times as are necessary to enable the Trustee to fulfil its responsibilities under this Indenture.
 
2.7
Certification by Trustee
 
 
(a)
At any time and from time to time after the execution and delivery of this Indenture, and in accordance with the terms hereof, the Issuer may deliver Debentures executed on behalf of the Issuer to the Trustee for certification, pursuant to an Issuer Order applicable thereto and evidence of compliance, if requested by the Trustee, in accordance with section 13.4 and Applicable Law. Upon receipt by the Trustee of an Issuer Order applicable to such Debentures and such evidence of compliance, the Trustee shall certify and deliver such Debentures in the manner specified in such Issuer Order, without receiving any consideration for such certification and delivery.
 
 
(b)
No Holder shall be entitled to any right or benefit under this Indenture with respect to a Debenture, and such Debenture shall not be valid or binding for any purpose, unless such Debenture has been certified by the Trustee, as evidenced by the manual signature of an authorized officer of the Trustee. Such certification upon any Debenture shall be conclusive evidence, and the only evidence, that such Debenture has been issued under this Indenture.
 
 
(c)
Debentures bearing the manual signature of an individual who was, at the time that such signature was affixed, an authorized signing officer of the Trustee, shall be valid and binding on the Trustee notwithstanding that such individual ceased to be an authorized signing officer of the Trustee prior to the delivery of such Debentures.
 
 
(d)
The certification by the Trustee on the Debentures shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Debentures (except in respect of the due certification thereof and any other warranties implied by law) or as to the performance by the Issuer of its obligations under this Indenture and the Trustee shall in no respect be liable or answerable for the use made of the Debentures or any of them or of the proceeds thereof.
 
2.8
Registration of Exchanges
 
 
(a)
Subject to Section 2.15, Debentures may be exchanged for one or more Debentures in an equal aggregate principal amount upon surrender of the Debentures to be exchanged at the specified office of the Trustee;
 
 
 

 
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provided, however, that each Debenture issued in exchange for such original Debenture shall have a principal amount in an authorized denomination as provided for herein.
 
 
(b)
The Trustee may make a charge to reimburse itself for any stamp taxes or governmental charges required to be paid and a reasonable charge for its services and a reasonable sum per Debenture created and issued upon any exchange or transfer of Debentures effected by it. Payment of such charges will be made by the Person requesting the exchange or transfer as a condition precedent to such exchange or transfer.
 
2.9
Persons Entitled to Payment
 
 
(a)
Prior to due presentment for registration of a transfer of any Debenture, the Issuer, the Trustee and any other Person, as the case may be, may treat the Person in whose name any Debenture is registered in the applicable register (including in the case of a Global Debenture, the Depository or the nominee of such Depository in whose name such Global Debenture is registered) as the absolute and sole owner of such Debenture for all purposes including receiving payment of the principal of, and any premium, if any, interest or other amount on such Debenture, receiving any notice to be given to the Holder of such Debenture, and taking any Act of Holders with respect to such Debenture, whether or not any payment with respect to such Debenture shall be overdue, and none of the Issuer, the Trustee or any other Person, as the case may be, shall be affected by notice to the contrary.
 
 
(b)
Delivery of a Debenture to the Trustee by or on behalf of the Holder thereof shall, upon payment of such Debenture, be a valid discharge to the Issuer of all obligations evidenced by such Debenture. None of the Issuer, the Trustee or any other Person shall be bound to inquire into the title of any such Holder.
 
 
(c)
In the case of the death of one or more joint registered Holders of a Debenture, the principal of, and premium, if any, interest and any other amounts on such Debenture may be paid to the survivor or survivors of such registered Holders whose receipt of such payment, accompanied by the delivery of such Debenture, shall constitute a valid discharge to the Issuer and the Trustee.
 
2.10
Payment of Principal and Interest on Definitive Debentures
 
 
(a)
Subject to repurchase, redemption or conversion pursuant to the terms hereof, as payments in respect of interest on the Definitive Debentures become due, interest payable on the Definitive Debentures on an Interest Payment Date will be payable by the Issuer to the Holders thereof in whose names the Debentures are registered at the close of business on the Interest Record Date with respect to the applicable Interest Payment Date.  The Issuer shall, (A) no later than 10:00 a.m. on the day that is three (3)
 
 
 

 
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Business Days preceding such Interest Payment Date, deliver a certified cheque for the amount of such payment payable on such Interest Payment Date, to the order of the Trustee at the Corporate Trust Office, or (B) no later than 10:00 a.m. on the Business Day preceding such Interest Payment Date, provide to the Trustee such payment by electronic funds transfer to an account designated by the Trustee for all amounts due in respect of such interest, in each case to enable the Trustee to forward such payment to the Holder in whose name any Debenture is registered at the close of business on the Interest Record Date with respect to the applicable Interest Payment Date.
 
Subject to Section 2.16, the forwarding of such funds by the Issuer to the Trustee pursuant to subsection 2.10(a) above and the subsequent delivery of such funds by the Trustee to the Holders shall satisfy and discharge the Issuer’s liability for payment of the interest on the Debentures to the extent of the sums represented thereby, plus the amount of any withholding or other tax deducted in accordance with Applicable Law, unless such cheque is not paid at par on presentation; provided that in the event of the non-receipt of such cheque by the Holder, or the loss or destruction thereof, the Trustee on being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it shall issue to such Holder a replacement cheque for the amount of such cheque.
 
Notwithstanding the foregoing, if the Issuer is prevented by circumstances beyond its control (including, without limitation, any interruption in mail service) from making payment of any interest due on each Debenture in the manner provided above, the Issuer may make payment of such interest or make such interest available for payment in any other manner acceptable to the Trustee with the same effect as though payment had been made in the manner provided above so long as such payment is made in cash to the Holders and there is no delay in making such payment.
 
 
(b)
If a Debenture or a portion thereof is called or presented for repurchase, redemption or conversion and the Payment Date, Redemption Date or Conversion Date is subsequent to an Interest Record Date but prior to the related Interest Payment Date, interest accrued on such Debenture will be paid upon presentation and surrender of such Debenture or portion thereof up to but excluding the Payment Date, Redemption Date or Conversion Date to the Holders thereof in whose names the Debentures are registered at the close of business on the Interest Record Date.
 
 
(c)
Subject to the foregoing provisions of this section, each Debenture delivered in exchange for or in lieu of any other Debenture shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Debenture.
 
 
 

 
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2.11
Book-Based System
 
 
(a)
In the event that all of the Outstanding Definitive Debentures are registered in the name of “CDS & Co.”, the Trustee may issue, in replacement of the Definitive Debentures, one or more permanent global security certificates in the form of the certificate set out in Schedule 2.2 hereto together with the legend provided for in subsection (b) and section 2.20, as applicable (the “Global Debenture(s)”). The Global Debenture(s) shall be held by, or on behalf of, the Depository as depository of the Participants in the Book-Based System and shall be registered in the name of “CDS & Co.” (or such other name as the Depository may use from time to time as its nominee for the purposes of the Book-Based System). In the event that all of the Outstanding Debentures are registered in the name of “CDS & Co.”, no Beneficial Holder will receive Definitive Debentures representing their beneficial ownership in Debentures unless the Issuer determines to terminate the Book-Entry Only Debentures. Where all of the Outstanding Definitive Debentures are represented by a Global Debenture, the Debentures represented thereby shall be deemed for the purposes hereof to have been issued as Book-Entry Only Debentures.
 
 
(b)
The Global Debenture(s) shall bear a legend in substantially the following form subject to modification as required by the Depository:
 
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO [n] (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS AN INTEREST HEREIN. THIS CERTIFICATE IS ISSUED PURSUANT TO A MASTER LETTER OF REPRESENTATIONS OF THE ISSUER TO CDS, AS SUCH LETTER MAY BE REPLACED OR AMENDED FROM TIME TO TIME.”
 
2.12
Discontinuation of Book-Based System
 
If:
 
 
(a)
the Depository has notified the Issuer and the Trustee that the Depository is unwilling or unable to continue as Depository, or the Depository ceases to be a clearing agent registered or designated under the Applicable
 
 
 

 
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Securities Laws of the jurisdiction where the Depository has its principal offices; or
 
 
(b)
the Trustee has determined that an Event of Default has occurred and is continuing with respect to the Debentures and Beneficial Holders representing, in the aggregate, more than 25% of the aggregate principal amount of the Debentures then Outstanding advise the Depository in writing, through the Participants, that the continuation of the Book-Based System for such Debentures is no longer in their best interests and also provided that at the time of such transfer the Trustee has not waived the Event of Default pursuant to sections 10.3 or 10.4;
 
then the Beneficial Holders of the Debentures represented by the Global Debentures at such time shall receive Definitive Debentures for such Debentures.
 
2.13
Payments of Principal and Interest for Book-Entry Only Debentures
 
Subject to Article 6, as payments in respect of principal and interest on the Debentures represented by the Global Debenture(s) become due, the Issuer shall, no later than on the applicable Interest Payment Date, date of repurchase, redemption or conversion or on the Maturity Date, as the case may be, at the option of the Issuer:
 
 
(a)
deliver or cause to be delivered to the office of the Trustee at the Corporate Trust Office at or before 10:00 a.m. three (3) Business Days before such Interest Payment Date, date of repurchase, redemption or conversion or the Maturity Date, a certified cheque for the amount of such payment payable on such Interest Payment Date, date of repurchase, redemption or conversion or the Maturity Date, as the case may be, to the order of the Trustee and negotiable at par, or
 
 
(b)
provide to the Trustee such payment by electronic funds transfer to an account designated by the Trustee, at or before 10:00 a.m. on the Business Day preceding such Interest Payment Date, date of repurchase, redemption or conversion or the Maturity Date, as the case may be, for all amounts due in respect of such principal and interest on the Debentures represented by the Global Debenture(s) to enable the Trustee to forward or cause to be forwarded such funds to the Depository for credit by the Depository to Participants’ accounts.
 
Neither the Issuer nor the Trustee will be liable or responsible to any Person for any aspect of the records related to or payments made on account of beneficial interests in any Global Debenture or for maintaining, reviewing or supervising any records relating to such beneficial interests.
 
2.14
Rank
 
The Debentures shall be direct, unsecured obligations of the Issuer and the Guarantees will be direct, unsecured obligations of the Guarantors.
 
 
 

 
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2.15
Register and Transfer
 
 
(a)
The Issuer shall cause to be kept by and at the principal office of the Trustee in the City of Toronto, Province of Ontario, a register, and in such other place or places as the Issuer with the approval of the Trustee may designate, branch registers, in which shall be entered the names and latest known addresses of the Holders and all transfers of Debentures. Such registration shall be noted on the Debentures by the Trustee. No transfer of a Debenture shall be effective as against the Issuer unless made on one of the appropriate registers by the registered Holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, upon compliance with this Indenture and any other such requirements as the Trustee may prescribe, and unless such transfer shall have been duly noted on such Debenture by the Trustee;
 
 
(b)
with respect to Debentures issued as Book-Entry Only Debentures, the Issuer shall cause to be kept by and at the principal office of the Trustee in the City of Toronto, Province of Ontario, a central register in which shall be entered the name(s) and latest known address(es) of the Holder(s) of each Global Debenture (being the Depository, or its nominee, for such Global Debenture) and the other particulars prescribed by law of the Debentures held by it (them) and all transfers of Debentures. Notwithstanding any other provision of this Indenture, a Global Debenture may not be transferred by the registered holder thereof except through records maintained by CDS or its nominee in the following circumstances or as otherwise specified in a Board Resolution or Written Order;
 
 
(c)
a Global Debenture may be transferred by a Depository to a nominee of such Depository or by a nominee of a Depository to such Depository or to another nominee of such Depository or by a Depository or its nominee to a successor Depository or its nominee;
 
 
(d)
a Global Debenture may be transferred at any time after the Depository for such Global Debenture (i) has notified the Issuer that it is unwilling or unable to continue as Depository for such Global Debenture or (ii) ceases to be eligible to be a Depository provided that at the time of such transfer the Issuer has not appointed a successor Depository for such Global Debenture;
 
 
(e)
a Global Debenture may be transferred at any time after the Issuer has determined, in its sole discretion, to terminate the Book-Based System in respect of such Global Debenture and has communicated such determination to the Trustee in writing; and
 
 
(f)
a Global Debenture may be transferred at any time after the Trustee has determined that an Event of Default has occurred and is continuing with respect to the Debentures issued as a Global Debenture, provided that at
 
 
 

 
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the time of such transfer the Trustee has not waived the Event of Default pursuant to Article 10.