Struggling BlackBerry Limited may have to shell out USD 157 million to Fairfax Financial if the smartphone maker backs out from the proposed USD 4.7 billion takeover offer.
BlackBerry Limited would be liable to pay the break-up fee if the company enters into an alternative transaction within three months from November 4, when Fairfax is set to complete its six-week due diligence for the proposed deal.
The phone maker would be required to pay "Fairfax a fee of USD 0.30 for each issued and outstanding Blackberry share." This would amount to USD 157.2 million.
BlackBerry's total outstanding shares stood at 524 million as of June 30, as per data available with Nasdaq.
According to a US SEC filing, the break-up fee would also come into play even if the handset maker publicly announces an alternative deal during the due diligence period.
However, the smartphone manufacturer would not be required to pay the fee if Fairfax reduces its offer price from USD 9 per share.
The terms of the agreement signed between BlackBerry Limited and the consortium led by Fairfax said that during the six-week diligence period, if the company enters into any letter of intent or definitive agreement providing for an alternative transaction, it shall pay the break-fee "immediately upon entering into such agreement."
"(Also), if during the diligence period, the company (BlackBerry Limited) ceases to negotiate with the consortium in good faith with a view to entering into definitive agreement by the end of the diligence period," the break-up fee would be applicable immediately upon such cessation, BlackBerry said in the filing on Monday.
The break-up fee would also be applicable if during the three-month period after November 4, 2013, BlackBerry Limited enters into any pact providing for an alternative deal "with a person with whom discussions regarding an alternative transaction were held before or during the diligence period" and finally is consummated.
The break-off fee would also be applicable if during the diligence period, an alternative transaction other than as contemplated is publicly proposed or publicly announced by a third person and such