Blackberry 2009 Annual Report Download - page 81

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directors and officers of public companies. Angelo Loberto
is also prohibited from acting as a director or officer of
any Canadian reporting issuer until he completes a course
acceptable to the staff of the OSC regarding the duties of
directors and officers of public companies.
As part of the OSC settlement, the Company agreed to
enter into an agreement with an independent consultant
to conduct a comprehensive examination and review of the
Company and report to the Company’s board of directors
and the staff of the OSC the Company’s governance practices
and procedures and its internal control over financial
reporting. A summary of the consultant’s recommendations
in the final report will be posted on the OSC’s website and
disclosed in the Company’s MD&A.
In addition, as announced by the Company on February
17, 2009, the Company, Messrs. Balsillie, Lazaridis, Kavelman
and Loberto, entered into settlements with the SEC that
resolved the previously disclosed SEC investigation of
the Company’s historical stock option granting practices.
The Company consented, without admitting or denying
allegations in a complaint filed by the SEC, to the entry of an
order enjoining it from violations of certain provisions of the
U.S. federal securities laws, including the antifraud provisions.
The Company was not required to pay disgorgement or a
monetary penalty.
Jim Balsillie and Mike Lazaridis consented, without
admitting or denying allegations in the complaint filed
by the SEC, to the entry of an order enjoining them from
violations of certain provisions of the U.S. federal securities
laws, including the non-scienter based antifraud provisions.
The order also provided that Jim Balsillie and Mike Lazaridis
are liable for disgorgement of profits gained as a result of
conduct alleged in the complaint together with prejudgment
interest, although it also provided that those amounts are
deemed paid in full because Jim Balsillie and Mike Lazaridis
had already voluntarily paid those amounts to the Company.
Those repayments were made earlier as part of a series of
recommendations of a Special Committee of the Company’s
Board of Directors following the Review.
Dennis Kavelman and Angelo Loberto consented, without
admitting or denying allegations in the complaint filed by the
SEC, to the entry of an order enjoining them from violations
of certain provisions of the U.S. federal securities laws,
including the antifraud provisions. The order also provided
that Dennis Kavelman and Angelo Loberto are liable for
disgorgement of profits gained as a result of conduct alleged
in the complaint together with prejudgment interest, although
it also provided that those amounts are deemed paid in
(c) Other
As previously disclosed, on February 5, 2009, a panel of
Commissioners of the OSC approved a settlement agreement
with the Company, Jim Balsillie, the Co-Chief Executive
Officer of the Company, Mike Lazaridis, the President and Co-
Chief Executive Officer of the Company, Dennis Kavelman,
previously Chief Financial Officer (currently with the Company
in another role), Angelo Loberto, previously Vice-President
of Finance (currently with the Company in another role),
Kendall Cork, a former Director of the Company, Douglas
Wright, a former Director of the Company, James Estill, a
Director of the Company, and Douglas Fregin, a former
Director of the Company, relating to the previously disclosed
OSC investigation of the Company’s historical stock option
granting practices. Pursuant to the terms of the settlement
agreement with the OSC, the Company agreed to submit
to a review of its governance practices and procedures
by an independent person selected by the OSC and paid
for by the Company. Jim Balsillie agreed not to act as a
director of any Canadian reporting issuer until the later of
twelve months from the date of the OSC settlement and
the Company’s public disclosure of how it is addressing the
recommendations arising from the independent review.
Messrs. Balsillie, Lazaridis and Kavelman also agreed to
contribute, in aggregate, a total of approximately CAD $83.1
million to RIM, consisting of (i) a total of CAD $38.3 million
to RIM in respect of the outstanding benefit arising from
incorrectly priced stock options granted to all RIM employees
from 1996 to 2006, and (ii) a total of CAD $44.8 million to
RIM (CAD $15.0 million of which had previously been paid)
to defray costs incurred by RIM in the investigation and
remediation of stock option granting practices and related
governance practices at RIM. These contributions are being
made through Messrs. Balsillie, Lazaridis and Kavelman
undertaking not to exercise vested RIM options to acquire an
aggregate of 1,160,129 common shares of RIM. These options
have a fair value equal to the aggregate contribution amounts
determined using a BSM calculation based on the last trading
day prior to the day the OSC issued a notice of hearing in
respect of the matters giving rise to the settlement. Messrs.
Balsillie, Lazaridis, Kavelman and Loberto also paid a total
of CAD $9.1 million to the OSC as an administrative penalty
and towards the costs of the OSC’s investigation. Dennis
Kavelman is also prohibited from acting as a director or
officer of any Canadian reporting issuer until the later of
(a) five years from the date of the OSC’s order approving
the settlement, and (b) the date he completes a course
acceptable to the staff of the OSC regarding the duties of