Blackberry 1999 Annual Report Download - page 32

Each common share purchase warrant entitles the holder to acquire one common share for $4.50 until
August 12, 2002.
(b) Stock option plan -
The Company has an incentive stock option plan for all of its directors, officers and employees. The option
exercise price is the fair market value of the Company’s common shares at the date of grant. These options
vest over a period of five years after which they are exercisable for seven or ten years after the grant date. As at
February 28, 1999, there were 6,482,150 options outstanding with exercise prices ranging from $3.40 to $13.40.
Options for 915,400 shares have vested. There are 3,113,850 shares available for future grants under the plan.
11. GOVERNMENT ASSISTANCE
Agreements have been signed which provide the Company with government assistance equal to 50% of current
and capital research and development expenditures with respect to the Ontario Technology Fund and 30% with
respect to Technology Partnerships Canada.
Government assistance from the Ontario Technology Fund may be repayable in the form of royalties based on
future sales related to the technology funded. Such amounts, if any, that may be repayable will be accounted for in
the period in which conditions arise that will cause repayment. These royalty payments will be repayable over a
period of ten years from the date of commencement of the future sales related to the technology funded or until
the total aggregate amount of all royalty payments equals the total amount of government assistance, whichever
occurs first. The royalty payments will be based on the Company’s value added component to the products, being
the excess of selling price over material costs, and will be 1% in year 1, 2% in year 2, 3% in year 3, 4% in year 4 and
5% in each of years 5 to 10, subject to annual maximum contributions of $100,000 in year 1, $400,000 in year 2,
$600,000 in year 3, $800,000 in year 4, $1,000,000 in year 5 and $1,250,000 per year in each of years 6 to 10, inclusive,
until the total $4,710,000 of the grant has been paid back.
Government assistance from Technology Partnerships Canada (“TPC”) is subject to royalty payments of 2.2% of
gross product revenues based on future sales related to the technology funded. The first royalty payment is due
46 days after February 28, 2000. If by February 28, 2003, the royalty payments paid or due are equal to or exceed
$9,100,000, no further royalty payments will be payable. If by February 28, 2003, the royalty payments paid or due
do not equal or exceed $9,100,000, royalty payments will continue to be payable to a limit of $9,100,000, but such
royalty payments shall be payable on revenue from all two-way pager products instead of solely products
developed with the TPC funding.
No amounts have been accrued with respect to repayments as the conditions for repayment have not been met.
12. INTEREST AND INCOME TAXES PAID
The following summarizes the interest and income taxes paid during the year (in thousands):
1999 1998 1997
Interest paid $ – $ 82 $ 253
Income taxes paid $ 579 $ – $ 36
13. SEGMENT DISCLOSURES
The Company, after reviewing its reporting systems, has determined that it has one reportable segment. The
Company’s operations are substantially all related to the research, design, manufacture and sales of wireless data
communications products. Operations include the manufacture of radios and other network access devices for
original equipment manufacturers as well as wireless products for the aftermarket. Substantially all revenue is
derived from sales to North American customers. All assets of the business support these operations.
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