Law Times

PAGE 14 FOCUS may 11/18, 2009 • Law Times Trick is to give agreement a 'terminal point' Continued from page 9 RIM and Certicom had been dealing with each other since 2000. During that peri- od, they entered into two non- disclosure agreements. Th e fi rst was aimed at an acquisi- tion and included a 12-month standstill period during which RIM would not make a hostile bid for Certicom. Th e second, which at RIM's insistence did not contain a standstill, was executed in the ordinary course of the parties' dealings, and allowed RIM to use the Fishing for a great Digital Pocket Memo? Setting new standards in advanced functionality and style for dictation confi dential information to establish or further a business or contractual relationship be- tween the parties. After the standstill expired, RIM launched an unsolic- ited bid for Certicom. Certi- com's lawyers, Neil Finkelstein, Help is here with Philips LFH9600 Voice commands, on-board file encryption and password protection are but a few of the powerful features. Seumas Woods, and Ryder Gilliland, all partners with Blake Cassels & Graydon LLP's Toronto offi ce, applied for an injunction based on RIM's improper use of the confi dential agreement. Hoy found that RIM had used the confi dential infor- mation provided under both agreements in weighing its hostile takeover bid. In her view, the information could not be used for that purpose because it was not being used, in the words of the fi rst agreement, in the context of a "business combination be- tween the parties." While a hostile bid was — as argued by RIM's lawyers, Robert Staley and Lincoln Caylor, both partners with Bennett Jones LLP's Toronto offi ce — a "business combina- tion," Hoy concluded that the combination was not "between the parties" to the agreement. "Based on the ordinary and usual meaning and diction- ary defi nition of the word C To order please quote code #40075-00 your your LAW OFFICE PRODUCTIVITY source 1-888-393-3874 R source U Fax: 1-800-263-2772 dyedurhambasics.ca D&D_LT_May11/18_09.indd 2 N 19 PREFERRED SUPPLIER & 9 E C 5/6/09 3:10:17 PM H A 'between' and the manner in which the word is used [in the agreement], a takeover bid would in my view only amount to a business combination be- tween the parties if Certicom consented to, or endorsed, the transaction and in that man- ner participated with RIM in RIM's bid," she wrote. Hoy also ruled that Certi- com did not have to establish irreparable harm to obtain an injunction, as the restrictions on use of the information amounted to negative cov- enants. Th ere was also a public policy interest in the enforce- 'The court found that a stand- still obligation presumes the use of confidential information and prohibits its use for a short period of time,' says Patrice Walch-Watson. ment of confi dentiality agree- ments so as to foster transac- tions that maximized value and provided certainty to stake- holders in the M&A process. "Th e result of the court's in- terpretation is that the confi - dentiality provisions in the non- disclosure agreements had the eff ect of a standstill, even though there was no valid ongoing sepa- rate standstill obligation in eff ect at the time the hostile bid was commenced," says Walch-Wat- son's colleague Andrew Gray, an associate with Torys. Apart from enjoining the Regulatory and Corporate Liability: From Due Diligence to Risk Management Discusses the first conviction under Bill C-45 Find expert guidance and insightful analysis on: • the basis for regulatory and criminal liability • how regulations apply to organizations and individuals • in-depth analysis of Bill C-45 The Honourable Justice Dennis O'Connor, Court of Appeal of Ontario Gain important perspective on the liability of organizations in regulatory and criminal contexts, and find out how to limit liability and the risk of prosecution. This resource deals with issues that are relevant to many areas of the law including occupational health and safety, the environment, competition and securities. • how to deal with charges • how the principles of sentencing will impact upon a given scenario • navigating the regulatory and criminal liability systems in Canada ORDER your copy today Looseleaf & binder • $205 • Releases invoiced separately (1-2/yr) P/C 0134030000 • ISBN 0-88804-420-8 current bid, Hoy expressed the view that RIM was prob- ably precluded from ever launching a hostile bid against Certicom. "Th is case means that from a corporate point of view, you just can't sign borderline confi - dentiality agreements," Walch- Watson says. "It also means that people negotiating agreements can't just assume that they're not bound by non-confi dentiality agreements in the future if the negotiations break down." Interestingly, Certicom did suggest in argument that RIM could launch another hostile bid provided that it created a separate acquisition team for the bid and set up a fi rewall to ensure that the team did not use the confi dential information. "In other words, compa- nies that fi nd themselves in a similar position to RIM should make sure they have a mecha- nism to keep track of their ob- ligations under confi dentiality agreements, and if they launch a hostile bid, they should con- sider establishing Chinese walls or restricting access to the con- fi dential information in other ways," Walch-Watson says. Care should also be taken in drafting confi dentiality agree- ments. "Th e trick is to give the agreement a terminal point so that no obligations are hanging around afterward," Gray says. Still, what's clear is this: in For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com ARCHIBALD_Regulatory and Corporate Liability (LT 1-3x4).indd 1 5/6/09 11:56:56 AM LT0511 Certicom v. RIM, targets with a pre-existing confi dentiality agreement have added a weap- on to their defensive arsenal against hostile bids. LT The Honourable Todd L. Archibald, Kenneth E. Jull and Kent W. Roach "In analyzing the principles underlying both regulatory offences and defences such as due diligence, the authors provide a sound analytical framework for the development of the law." Criminal Code (Criminal Liability of Organizations) An Act to Amend the 8 D M Y o E D I S e W ' r e a y C n a n a a p d i m a n

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