National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from the insider reporting requirements for insider in respect of exercise of options and the acquisition, transfer and disposition of commons shares pursuant to automatic securities disposition plans, subject to insider filing an annual report of such transactions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 107(2), 121(2)(a)(ii).
Ontario Securities Commission's Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Purchase Plans.
December 17, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
MIKE LAZARIDIS (the Insider) AND
RESEARCH IN MOTION LIMITED (RIM, and
collectively with the Insider, the Filers)
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption pursuant to section 121(2)(a)(ii) of the Securities Act (Ontario) (the Act) from the requirements set out in section 107(2) of the Act that the Insider file an insider report within 5 days of each of the following:
(i) an Exercise (as defined below) effected pursuant to the Plans (as defined below),
(ii) an acquisition of Shares (as defined below) by the Insider as a result of an Exercise under the Plans,
(iii) a Disposition (as defined below) effected pursuant to the Plans, and
(iv) an acquisition of control or direction over Shares as a result of a donation of Shares to The Lazaridis Family Foundation pursuant to the Plans
(the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined in this decision.
This decision is based on the following facts represented by the Filers:
1. RIM is a corporation amalgamated under the Business Corporations Act (Ontario).
2. RIM's registered and principal business office is 295 Phillip Street, Waterloo, Ontario, N2L 3W8.
3. RIM is a reporting issuer in each of the provinces of Canada and its Shares are listed for trading on the Toronto Stock Exchange and the NASDAQ Global Select Market.
4. The Insider is the Co-Chief Executive Officer of RIM and is a "reporting insider" of RIM as that term is defined in the Legislation.
5. On September 28, 2010, the Insider, The Lazaridis Family Foundation, a registered charitable foundation established by the Insider, and 1258701 Ontario Limited, an entity owned and controlled by the Insider, each adopted an Automatic Securities Dispostion Plan (each, a Plan and together, the Plans). Pursuant to the Plans, the Insider and 1258701 Ontario Limited, as applicable, will exercise certain options (Options) to acquire common shares of RIM (Shares) and will sell or donate certain Shares, and The Lazaridis Family Foundation will sell certain Shares. In accordance with RIM's Insider Trading Policy, the Plans were pre-cleared by the Compensation, Nomination & Governance Committee of RIM's Board of Directors, which is comprised of independent directors. At the time of entry into the Plans, the Insider was not in possession of any material undisclosed information in relation to RIM.
6. Under the Plans, a registered investment dealer (the Broker) has been appointed as broker to effect the exercises of Options (Exercises) on behalf of the Insider and sales and donations of Shares (each sale or donation, a Disposition) pursuant to the Plans. The Exercises and Dispositions will be effected by the Broker subject to the terms and conditions of the Plans and in accordance with the pre-determined instructions which are appended to the Plans as to the date of exercise, the number of Options to be exercised, the number or dollar value of Shares to be donated or sold, and other relevant information.
7. Apart from setting trading parameters when the Plans were established, the Insider has no authority, influence or control over any Exercises or Dispositions effected by the Broker pursuant to the Plans, and has agreed not to attempt to exercise any authority, influence or control over such Exercises or Dispositions.
8. At the time of entry into the Plans, the Insider provided the Broker with a certificate of RIM confirming that RIM had pre-cleared the adoption of the Plans in accordance with RIM's Insider Trading Policy and certifying that, to the best of RIM's knowledge, the Insider was not in possession of material non-public information about RIM.
9. The Plans provide for the Disposition of 1,050,000 Shares issuable upon the Exercise of Options. Of the 1,050,000 Shares, 350,000 will be donated by the Insider to The Lazaridis Family Foundation. The remaining 700,000 Shares will be sold over the up to 18-month term of the Plans, which generally provide for weekly dispositions, subject to certain volume and other limits.
10. In addition to the 1,050,000 Shares referenced in paragraph 9 above, the Insider will effect weekly charitable donations of Shares under the Plans to The Lazaridis Family Foundation, subject to volume limits and a limit order price, over the term of the Plans until the aggregate value of such donations, together with the value of the donation of 300,000 of the Shares issuable upon exercise of the Options described above, equals Cdn$100 million. Under the terms of its Plan, The Lazaridis Family Foundation will immediately sell the Shares received from the Insider.
11. The Insider will also effect weekly sales under the Plans, subject to volume limits and a limit order price, until the aggregate amount of such sales, together with the proceeds from the sales of 600,000 of the Shares issuable upon exercise of the Options described above, equals Cdn$200 million.
12. Exercises and Dispositions under the Plans will not commence until after the expiry of a waiting period following the adoption of the Plans in accordance with RIM's Insider Trading Policy.
13. The Broker will execute Share sales under each of the Plans in accordance with principles of best execution and subject to volume restrictions intended to minimize any negative price impact of such sales on the market and to attempt to maximize the prices obtained for the Shares sold.
14. Each of the Plans will automatically terminate on the earliest to occur of:
(a) 4:00 p.m. (Eastern time) on March 15, 2012 or March 31, 2012, depending on the particular Plan;
(b) The date on which all of the Shares subject to the Plan have been disposed of;
(c) The date when all Dispositions set forth in the schedules to the Plan have been completed;
(d) Three business days following the date upon which the Plan participant provides written notice to the Broker and notice to the public by way of filing on the System for Electronic Disclosure for Insiders (SEDI) providing reasons for such termination and including a representation that the Plan participant is not aware of any material non-public information about RIM and/or the securities of RIM and has no knowledge of a material fact, material change or privileged information (as defined under applicable Canadian securities laws) with respect to RIM or any securities of RIM that has not been generally disclosed;
(e) The date on which the Broker's investment advisor responsible for executing the Plan receives notice of (i) a publicly announced take-over bid or tender or exchange offer with respect to the Shares or merger, amalgamation, arrangement, acquisition, reorganization, recapitalization or comparable transaction affecting the securities of RIM as a result of which the Shares are to be exchanged or converted into cash and/or securities of another entity, or (ii) the commencement or impending commencement of any proceedings in respect of or triggered by the bankruptcy or insolvency of the Plan participant or (iii) in the case of the Insider's Plan, the death or mental incapacity of the Insider; and
(f) 9:30 a.m. (Eastern time) on the date which is the 61st day after the Insider's employment at RIM has ceased for any reason.
15. A Plan participant may amend or modify a Plan only upon the prior written consent of the Broker and RIM and upon notice to the public by way of filing on SEDI providing reasons for such amendment or modification. Such notice to the public must include a representation that the Plan participant is not aware of any material non-public information about RIM and/or the securities of RIM and has no knowledge of a material fact, material change or privileged information with respect to RIM or any securities of RIM that has not been generally disclosed.
16. In the event of a modification or amendment of a Plan, no Dispositions shall be effected during the thirty days immediately following such amendment or modification, other than Dispositions already provided for in the Plan prior to such amendment or modification.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the Insider shall file a report, in the form prescribed for insider trading reports under the Legislation, disclosing on a transaction-by-transaction basis or in acceptable summary form (as such term is defined in National Instrument 55-104 Insider Reporting Requirements and Exemptions):
(a) all Exercises under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year;
(b) all related acquisitions of Shares by the Insider as a result of an Exercise under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year;
(c) all Dispositions under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year; and
(d) all related acquisitions of control or direction over Shares as a result of donations of Shares to The Lazaridis Family Foundation under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year.