-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UXE96WZch9+0l/+1gtucmMrzjVeddJs8qPpnU1rurD3JRH1YsL/ptBmQq2GqLs5z JOC+T8YKBmnFOwymCarnOw== 0000947871-02-001462.txt : 20020726 0000947871-02-001462.hdr.sgml : 20020726 20020726160917 ACCESSION NUMBER: 0000947871-02-001462 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20020726 EFFECTIVENESS DATE: 20020726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAE INC CENTRAL INDEX KEY: 0001173382 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-97185 FILM NUMBER: 02712196 BUSINESS ADDRESS: STREET 1: ROYAL BANK PLAZA STREET 2: SUITE 3060 CITY: TORONTO ONTARIO STATE: A6 ZIP: 00000 BUSINESS PHONE: 4168650070 MAIL ADDRESS: STREET 1: ROYAL BANK PLAZA STREET 2: SUITE 3060 CITY: TORONTO ONTARIO STATE: A6 ZIP: 00000 S-8 1 s8_071802.txt FORM S-8 As filed with the Securities and Exchange Commission on July 26, 2002 Registration No. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------- CAE INC. (Exact name of registrant as specified in its charter) Canada Not Applicable (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Royal Bank Plaza, South Tower Suite 3060 Toronto, Ontario Canada M5J 2J1 (416) 865-0070 (Address of principal executive offices, including zip code) ----------------------------- CAE Inc. Employee Stock Purchase Plan CAE Inc. Employee Stock Option Plan (as Amended and Restated) (Full titles of the plans) CT Corporation System 111 8th Avenue, 13th Floor New York, New York, 10011 (212) 894-8700 (Name, address and telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------- Title of Amount Proposed Proposed Maximum Amount Securities to be Maximum Aggregate of to be Registered Offering Price Offering Registration Registered (1) Per Share Price Fee - ----------------------------------------------------------------------------------------------- Common Shares, no par value 17,000 (2) U.S.$4.22 (3) U.S.$ 71,740 (3) U.S.$ 6.61 62,250 (2) U.S.$7.75 (3) U.S.$ 482,438 (3) U.S.$ 44.39 14,500 (2) U.S.$8.98 (3) U.S.$ 130,210 (3) U.S.$ 11.98 221,000 (2) U.S.$8.07 (3) U.S.$1,783,470 (3) U.S.$164.08 800,000 (4) U.S.$6.40 (5) U.S.$5,120,000 (5) U.S.$471.04 - ----------------------------------------------------------------------------------------------- Total 1,114,750 U.S.$7,587,858 U.S.$698.10 - -----------------------------------------------------------------------------------------------
(1) This registration statement on Form S-8 (this "Registration Statement") shall also cover any additional common shares, no par value (the "Common Shares"), of CAE Inc. (the "Registrant") which become issuable under any of the Registrant's plans registered pursuant to this Registration Statement by reason of any stock dividend, stock split, recapitalization or any other similar transaction or similar transaction effected without the receipt of consideration which results in an increase in the number of the Registrant's outstanding Common Shares. Pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the "Securities Act"), this Registration Statement also covers an indeterminate amount of plan interests to be offered or sold pursuant to the CAE Inc. Employee Stock Purchase Plan. (2) Represents 314,750 Common Shares subject to outstanding awards under the CAE Inc. Employee Stock Option Plan (as Amended and Restated). (3) Pursuant to Rules 457(c) and 457(h) under the Securities Act, the Proposed Maximum Offering Price Per Share and the Proposed Maximum Aggregate Offering Price are based on the per share exercise price of the stock options, translated into U.S. dollars at the noon buying rate in New York City on July 24, 2002, for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York on that date. (4) Represents an aggregate of 800,000 Common Shares, of which 500,000 Common Shares are available for future issuance under the CAE Inc. Employee Stock Option Plan (as Amended and Restated) and 300,000 Common Shares are available for future purchase under the CAE Inc. Employee Stock Purchase Plan. (5) Pursuant to Rules 457(c) and 457(h) under the Securities Act, the Proposed Maximum Offering Price Per Share and the Proposed Maximum Aggregate Offering Price for an aggregate of 800,000 Common Shares available for future awards under the CAE Inc. Employee Stock Option Plan (as Amended and Restated) and the CAE Inc. Employee Stock Purchase Plan are estimated based on the average of the high and low prices of the Common Shares reported on the Toronto Stock Exchange on July 24, 2002, translated into U.S. dollars at the noon buying rate in New York City on July 24, 2002, for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York on that date. Such estimate is being utilized solely for the purpose of calculating the registration fee. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS ITEM 1. Plan Information.* ITEM 2. Registrant Information and Employee Annual Information.* - -------------------------------- * Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordane with Rule 428 under the Securities Act and the "Note" to be Part I of Form S-8. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 3. Incorporation of Documents by Reference. The following documents previously filed with the Securities and Exchange Commission (the "SEC") by the Registrant are incorporated by reference in this Registration Statement: (a) the Registrant's Registration Statement on Form 40-F (No. 1-31402), as filed with the Commission on July 25, 2002 (the "Registration Statement on Form 40-F"), pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which contains audited financial statements for the Registrant's latest financial year for which such statements have been filed; and (b) the description of the Registrant's Common Shares set forth in Exhibit 14 to the Registration Statement on Form 40-F, including any amendment or report for the purpose of updating such description. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities remaining unsold, shall be deemed to be a part hereof from the date of filing such documents. In addition, reports on Form 6-K furnished by the Registrant to the SEC shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date such documents are furnished to the SEC. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement incorporated by reference herein modified or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. ITEM 4. Description of Securities. Not applicable. ITEM 5. Interests of Named Experts and Counsel. Not applicable. ITEM 6. Indemnification of Directors and Officers. Under the Canada Business Corporations Act (the "CBCA"), a corporation may indemnify a current or former director or officer of the corporation or another individual who acts or acted at the corporation's request as a director or officer, or an individual acting in a similar capacity, of another entity (each, an "Indemnified Individual"), against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity (collectively, "Costs"). A corporation may advance moneys to an Indemnified Individual for the Costs referred to above. A corporation may not indemnify an Indemnified Individual as aforesaid unless the individual (a) acted honestly and in good faith with a view to the best interests of the corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the corporation's request and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual's conduct was lawful. If the Indemnified Individual does not fulfill conditions (a) and (b) referred to above, the individual shall repay the moneys advanced by the corporation. A corporation may, with the approval of a court, indemnify or advance moneys as aforesaid in connection with a derivative action. An Indemnified Individual is not entitled to indemnity from the corporation in respect of all Costs if the individual seeking indemnity was not judged by the court or other competent authority to have committed any fault or admitted to do anything that the individual ought to have done and does not fulfill the conditions (a) and (b) referred to above. In accordance with the CBCA, the by-laws of the Registrant indemnify a director or officer of the Registrant, a former director or officer of the Registrant or a person who acts or acted at the Registrant's request as a director or officer of a body corporate of which the Registrant is or was a shareholder or creditor and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Registrant or such body corporate, if (i) he acted honestly and in good faith with a view to the best interests of the Registrant, and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. A policy of directors' and officers' liability insurance is maintained by the Registrant which insures its directors and officers for losses as a result of claims based upon their acts or omissions as directors and officers of the Registrant, and also reimburses the Registrant for amounts paid by the Registrant to indemnify its directors and officers as a result of such claims. ITEM 7. Exemption from Registration Claimed. Not applicable. ITEM 8. Exhibits. See attached exhibit list. ITEM 9. Undertakings. (a) The Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof, and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Country of Canada, on this 26th day of July, 2002. CAE INC. By: /s/ D.H. Burney ----------------------------------------- Name: D.H. Burney Title: President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration statement on Form S-8 has been signed by the following persons in the capacities indicated on the date indicated. Signature Title Date * President and Chief 7/26/02 - ----------------------------------- Executive Officer and D.H. Burney and Director (Principal Executive Officer) * 7/26/02 - ----------------------------------- Director John A. (Ian) Craig * 7/26/02 - ----------------------------------- Director Richard (Dick) J. Currie, C.M. * 7/26/02 - ----------------------------------- Director R. Fraser Elliott, C.M., Q.C * 7/26/02 - ----------------------------------- Director H. Garfield Emerson, Q.C. * 7/26/02 - ----------------------------------- Director Anthony S. Fell * 7/26/02 - ----------------------------------- Director The Honourable James A. Grant, P.C., Q.C. - ----------------------------------- Director James F. Hankinson * 7/26/02 - ----------------------------------- Director E. Randolph (Randy) Jayne II * 7/26/02 - ----------------------------------- Director James W. McCutcheon, Q.C. - ----------------------------------- Director George K. Petty * 7/26/02 - ----------------------------------- Executive Vice President, Chief Paul G. Renaud Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer) - ----------------------------------- Director Lawrence N. Stevenson * 7/26/02 - ----------------------------------- Chairman of the Board of Directors Lynton R. Wilson *By: /s/ Paul G. Renaud 7/26/02 --------------------------- Paul G. Renaud (Attorney-in-fact) CAE Inc. Employee Stock Purchase Plan. Pursuant to the requirements of the Securities Act, the trustee (or other persons who administer the employee benefit plan) has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Province of Quebec, Country of Canada, on this 26th day of July, 2002. CAE INC. EMPLOYEE STOCK PURCHASE PLAN By: /s/ Genevieve Faribault ---------------------------------- Name: Genevieve Faribault Title: Secretary for Standard Life Assurance Company AUTHORIZED REPRESENTATIVE Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the Authorized Representative has duly caused this Registration Statement to be signed on its behalf by the undersigned, solely in its capacity as the duly authorized representative of CAE Inc. in the United States, in the City of Toronto, Province of Ontario, Country of Canada, on this 26th day of July, 2002. CAE (US) INC. (Authorized U.S. Representative) By: /s/ Paul G. Renaud ------------------------------ Name: Paul G. Renaud Title: Director Exhibit Index Exhibit Number Description 4.1* Registrant's Articles of Amalgamation. 4.2* Registrant's By-laws. 4.3* Registrant's Amended and Restated Shareholder Rights Plan Agreement dated June 14, 2000 and Assignment of Agencies Agreement dated January 15, 2001. 4.4* CAE Inc. Employee Stock Purchase Plan. 4.5* CAE Inc. Employee Stock Option Plan (as Amended and Restated). 5.1* Consent of Stikeman Elliot as to the Legality of the Common Shares.** 23.1* Consent of PricewaterhouseCoopers LLP, Montreal, Quebec. 23.2* Consent of Stikeman Elliot (contained in Exhibit 5.1). 24.1* Powers of Attorney. - --------------------------------- * Filed herewith. ** The Common Shares registered on this Registration Statement with respect to the CAE Inc. Employee Stock Purchase Plan are not original issuance securities. Pursuant to Item 8(a) of Part II of Form S-8, an opinion of counsel as to the legality of the Common Shares with respect to such plan is not required. EX-4.1 3 ex4_1-072202.txt EX-4.1, CERTIFICATE OF AMALGAMATION EXHIBIT 4.1 [Canadian Flag] Industry Canada Industrie Canada CERTIFICATE CERTIFICAT OF AMALGAMATION DE FUSION CANADA BUSINESS LOI CANADIENNE SUR CORPORATIONS ACT LES SOCIETES PAR ACTIONS - ------------------------------------------------------------------------------ CAE INC. 387674-8 - ---------------------------------- --------------------------------------- Name of corporation - Denomination Corporation number - Numero de la de la de la societe societe I hereby certify that the above-named Je certifie que la societe corporation resulted from an susmentionnee est issue d'une fusion, amalgamation, under section 185 of the en vertu de l'article 185 de la LOI CANADA BUSINESS CORPORATIONS ACT, of CANADIENNE SUR LES SOCIETES PAR the corporations set out in the ACTIONS, des societes dont les attached articles of amalgamation. denominations apparaissent dans les statuts de fusion ci-joints. By: /s/ Director of Industry Canada APRIL 1, 2001 / LE 1 AVRIL 2001 Date of Amalgamation - Date de fusion - ------------------------------------------------------------------------------ [Canada logo] CANADA BUSINESS CORPORATIONS ACT FORM 9 ARTICLES OF AMALGAMATION (SECTION 185) 1. Name of amalgamated corporation: CAE Inc. 2. The place in Canada where the registered office is to be situated: City of Toronto. 3. The classes and any maximum number of shares that the Corporation is authorized to issue: An unlimited number of common shares ("Common Shares") and an unlimited number of preferred shares, issuable in series ("Preferred Shares"). 3.1 The Preferred Shares shall have attached thereto, as a class, the following rights, privileges, restrictions and conditions: 3.1.1 DIRECTORS TO ISSUE IN ONE OR MORE SERIES: The Preferred Shares may at any time or from time to time be issued in one or more series, each series to consist of such number of shares as may, before the issue thereof, be determined by resolution of the board of directors of the Corporation and confirmed and declared by certificate and articles of amendment. 3.1.2 DIRECTORS TO FIX TERMS OF EACH SERIES: The directors of the Corporation shall have the right, by resolution, but subject to the provisions of the laws governing the Corporation, as now existing or hereafter amended (such laws being herein referred to as the "Act") and subject to the provisions herein contained and to any conditions in that regard attaching to any outstanding series of Preferred Shares, from time to time before issue, to fix the number of shares in, the designation of, and to determine the respective rights, privileges, restrictions and conditions attaching to each series of Preferred Shares, including, but without in any way limiting or restricting the generality of the foregoing: (a) provisions, if any, with respect to the rights of the holders of the shares of the series to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting; - 2 - (b) the rate or amount of preferential dividends and whether or not they are cumulative or non-cumulative, the currency or currencies of payment, the date or dates from or on which such preferential dividends shall accrue or be payable; (c) the rights of the Corporation, if any, to purchase or redeem the Preferred Shares of the series and the consideration therefor, premium (if any) and the terms and conditions of any such purchase or redemption; (d) the conversion rights, if any; (e) the terms and conditions, if any, under which a series of the Preferred Shares shall or may be purchased by the Corporation; and (f) the restrictions, if any, respecting payment or dividends on Common Shares or on any other shares ranking junior to the Preferred Shares; the whole to be subject to the issue of a certificate and articles of amendment setting forth the designation of and the rights, privileges, restrictions and conditions attaching to such series of Preferred Shares. 3.1.3 PRIORITY OF DIVIDENDS: The Preferred Shares of each series shall, with respect to the payment of dividends, be entitled to preference over the Common Shares and over any other shares of the Corporation ranking junior to the Preferred Shares. 3.1.4 PRIORITY OF DISTRIBUTION: In the event of the liquidation, dissolution or winding-up of the Corporation or other distribution of the assets of the Corporation among shareholders for the purpose of winding-up its affairs, the holders of the Preferred Shares shall, before any amount shall be paid to or any property or assets of the Corporation distributed among the holders of the Common Shares or any other shares of the Corporation ranking junior to the Preferred Shares, be entitled to receive to the extent provided for with respect to each series: (a) an amount equal to the price at which such shares were issued; (b) such premium, if any, as has been provided for with respect to such series; - 3 - (c) in the case of any series of Preferred Shares entitled to cumulative dividends, all unpaid cumulative dividends (which for such purpose shall be calculated as if such cumulative dividends were accruing from day to day for the period from the expiration of the last period for which cumulative dividends have been paid up to and including the date of distribution); and (d) in the case of any series of Preferred Shares entitled to non-cumulative dividends, all declared but unpaid dividends. After payment to the holders of Preferred Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the property or assets of the Corporation. 3.1.5 PARITY OF SERIES: The Preferred Shares of all series shall participate rateably in respect of the payment of accumulated dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary; provided, however, that if such assets are not sufficient to pay in full the amount due on all the Preferred Shares, then such assets shall be distributed rateably as follows: (a) firstly to the payment of an amount equal to the price at which the Preferred Shares of each series were issued and the premium if any payable thereon; and (b) secondly if assets remain after the payment of all amounts to be paid pursuant to paragraph 3.1.5(a) above, to the payment of accrued and unpaid cumulative dividends and declared but unpaid non-cumulative dividends owing on the Preferred Shares. 3.1.6 LIMITATION ON VOTING RIGHTS: Except as otherwise provided in the provisions attached to any Preferred Shares as a series, the holders of Preferred Shares shall not be entitled to receive any notice of or attend at any meeting of shareholders of the Corporation and shall not be entitled to vote at any such meeting. Holders of Preferred Shares shall not be entitled to vote separately as a class, nor shall the holders of any series of Preferred Share be entitled to vote separately as a series, in the case of an amendment to the articles of the Corporation referred to in paragraphs (a), (b) or (e) of subsection (1) of Section 176 of the Act as now existing. - 4 - 3.1.7 APPROVAL: Any approval to be given by the holders of Preferred Shares separately as a class or by the holders of a series thereof separately as a class, as the case may be, shall be deemed to have been sufficiently given if it shall have been given in writing by the holders of at least two-thirds (2/3) of the outstanding Preferred Shares or the outstanding shares of such series, as the case may be, or by a resolution passed at a meeting of holders of Preferred Shares or such series, as the case may be, duly called and held, by the affirmative vote of not less than two-thirds (2/3) of the votes cast at such meeting. The formalities to be observed with respect to the giving of notice of any meeting of the holders of the Preferred Shares or any series thereof, the conduct of such meeting and the quorum therefor shall be those prescribed in the by-laws of the Corporation with respect to the Preferred Shares or, in the absence thereof, the formalities prescribed in the by-laws of the Corporation for meetings of the holders of voting shares shall apply mutatis mutandis. 3.2 The Common Shares shall entitle the holders thereof to one vote per Common Share at all meetings of shareholders, except meetings at which only holders of another specified class or series of shares are entitled to vote, and shall, subject to the rights, privileges, restrictions and conditions attaching to the Preferred Shares, whether as a class or series, and to any other class or series of shares of the Corporation which ranks prior to the Common Shares, entitle the holders thereof to receive any dividend declared by the Corporation and the remaining property of the Corporation upon dissolution. 4. Restrictions if any on share transfers: None. 5. Number (or minimum and maximum number) of directors: A minimum of three (3) and a maximum of twenty-one (21). 6. Restrictions if any on business the Corporation may carry on: None. 7. Other provisions, if any: (a) The directors of the Corporation may, without authorization of the shareholders: (i) borrow money upon the credit of the Corporation; - 5 - (ii) issue, re-issue, sell or pledge any bonds, debentures, debenture stock or other debt obligations of the Corporation; and (iii) mortgage, hypothecate, pledge or otherwise create a security interest in all or any real or personal, movable or immovable property of the Corporation, owned or subsequently acquired, present or future, to secure any debt of the Corporation. The directors may, by resolution or by-law, provide for the delegation of such powers by the directors to such officers or directors of the Corporation to such extent and in such manner as may be set out in the resolution or by-law, as the case may be. (b) Subject to the provisions of the Act, the Corporation may purchase or otherwise acquire any shares issued by it. (c) In addition to any other right of the directors under the Act, the directors may, pursuant to section 106(8) of the Act, appoint one or more directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders. 8. The amalgamation has been approved pursuant to that section or subsection of the Act which is indicated as follows: / / 183 /X/ 184(1) / / 184(2) 9. Name the amalgamating corporations: CAE Inc. Corporation No.: 0104001 /s/ Paul G. Renaud ---------------------------------------- Date: March 27, 2001 Title: Executive V.P. C.F.O. & Secretary CAE Electronics Ltd./CAE Electronique Ltee Corporation No.: 364502-9 /s/ Paul G. Renaud ---------------------------------------- Date: March 27, 2001 Title: Executive V.P. C.F.O. & Secretary EX-4.2 4 ex4_2-072202.txt EX 4.2, BY-LAW NO. 73 EXHIBIT 4.2 BY-LAW NO. 73 A by-law relating generally to the transaction of the business and affairs of CAE INDUSTRIES LTD. CONTENTS One - Interpretation Two - Business of the Corporation Three - Borrowing and Securities Four - Directors Five - Committees Six - Officers Seven - Protection of Directors, Officers and Others Eight - Shares Nine - Dividends and Rights Ten - Meetings of Shareholders Eleven - Divisions and Departments Twelve - Notices Thirteen - Effective Date and Repeal BE IT ENACTED as a by-law of the Corporation as follows: - 2 - SECTION ONE INTERPRETATION 1.01 DEFINITIONS - In the by-laws of the Corporation, unless the context otherwise requires: "Act" means the Canada Business Corporations Act, and any statute that may be substituted therefor, as from time to time amended; "appoint" includes "elect" and vice versa; "articles" means the articles attached to the certificate of continuance dated August 3, 1977, of the Corporation as from time to time amended or restated; "board" means the board of directors of the Corporation; "by-laws" means this by-law and all other by-laws of the Corporation from time to time in force and effect; "Corporation" means the corporation continued under the Act and named CAE INDUSTRIES LTD.; "meeting of shareholders" means an annual meeting of shareholders and a special meeting of shareholders; "special meeting of shareholders" means a special meeting of all shareholders entitled to vote at an annual meeting of shareholders; "non-business day" means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Canada); "recorded address" means in the case of a shareholder his address as recorded in the securities register; and in the case of joint shareholders the address appearing in the securities register in respect of such joint holding or the first address so appearing if there are more than one; and in the case of a director, officer, auditor or member of a committee of the board, his latest address as recorded in the records of the Corporation; - 3 - "signing officer" means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by section 2.04 or by a resolution passed pursuant thereto; "unanimous shareholder agreement" means a written agreement among all shareholders of the Corporation, or among all such shareholders and a person who is not a shareholder, that restricts, in whole or in part, the powers of the directors to manage the business and affairs of the Corporation, as from time to time amended; save as aforesaid, words and expressions defined in the Act have the same meanings when used herein; and words importing the singular number include the plural and vice versa; words importing gender include the masculine, feminine and neuter genders; and words importing persons include individuals, bodies corporate, partnerships, trusts and unincorporated organizations. SECTION TWO BUSINESS OF THE CORPORATION 2.01 REGISTERED OFFICE - Until changed in accordance with the Act, the registered office of the Corporation shall be in the Montreal Urban Community, in the Province of Quebec, and at such location therein as the board may from time to time determine. 2.02 CORPORATE SEAL - Until changed by the board, the corporate seal of the Corporation shall be in the form impressed hereon. 2.03 FINANCIAL YEAR - Until changed by the board, the financial year of the Corporation shall end on the last day of March in each year. 2.04 EXECUTION OF INSTRUMENTS - Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by two persons, one of whom holds the office of chairman of the board, president, vice-president or director and the other - 4 - of whom holds one of the said offices or the office of secretary, treasurer, comptroller, assistant secretary or assistant treasurer or any other office created by by-law or by resolution of the board. In addition, the board may from time to time direct the manner in which the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same. 2.05 BANKING ARRANGEMENTS - The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefor, shall be transacted with such banks, trust companies or other bodies corporate or organizations as may from time to time be designated by or under the authority of the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time prescribe or authorize. 2.06 VOTING RIGHTS IN OTHER BODIES CORPORATE - The signing officers of the Corporation may execute and deliver proxies and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights attaching to any securities held by the Corporation. Such instruments, certificates or other evidence shall be in favour of such person or persons as may be determined by the officers executing such proxies or arranging for the issuance of voting certificates or such other evidence of the right to exercise such voting rights. In addition, the board may from time to time direct the manner in which and the person or persons by whom any particular voting rights or class of voting rights may or shall be exercised. 2.07 WITHHOLDING INFORMATION FROM SHAREHOLDERS - Subject to the provisions of the Act, no shareholder shall be entitled to discovery of any information respecting any details or conduct of the Corporation's business which, in the opinion of the board, it would be inexpedient in the interests of the shareholders or the Corporation to communicate to the public. The board may from time to time determine whether and to what extent and at what time and place and under what conditions or regulations the accounts, records and documents of the Corporation or any of them shall be open to the inspection of shareholders and no shareholder shall have any right of inspecting any account, record or document of the Corporation except as conferred by the Act or authorized by the board or by resolution passed at a general meeting of shareholders. - 5 - SECTION THREE BORROWING AND SECURITIES 3.01 BORROWING POWER - Without limiting the borrowing powers of the Corporation as set forth in the Act, the board may from time to time: (a) borrow money upon the credit of the Corporation; (b) issue, reissue, sell or pledge bonds, debentures, notes or other evidence of indebtedness or guarantee of the Corporation, whether secured or unsecured; and (c) mortgage, hypothecate, pledge or otherwise create an interest in or charge upon all or any property (including the undertaking and rights) of the Corporation, owned or subsequently acquired, by way of mortgage, hypothec, pledge or otherwise, to secure payment of any such evidence of indebtedness or guarantee of the Corporation. Nothing in this section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation. 3.02 DELEGATION - The board may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board all or any of the powers conferred on the board by section 3.01 or by the Act to such extent and in such manner as the board shall determine at the time of each such delegation. SECTION FOUR DIRECTORS 4.01 NUMBER OF DIRECTORS AND QUORUM - The Board shall consist of 12 directors until the directors adopt a resolution calling for a different number of directors within the minimum and maximum specified in the articles. Subject to section 4.08, the quorum for the transaction of business at any meeting of the board shall consist of a majority of the minimum number of directors specified in the articles or such greater number of directors as the board may from time to time determine. - 6 - 4.02 QUALIFICATION - No person shall be qualified for election as a director if he is less than 18 years of age; if he is of unsound mind and has been so found by a court in Canada or elsewhere; if he is not an individual; or if he has the status of a bankrupt. A director need not be a shareholder. A majority of the directors shall be resident Canadians. 4.03 ELECTION AND TERM - The election of directors shall take place at the first meeting of shareholders and at each annual meeting of shareholders and all the directors then in office shall retire but, if qualified, shall be eligible for re-election. The number of directors to be elected at any such meeting shall be the number of directors then in office unless the directors otherwise determine. The election shall be by resolution. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected. 4.04 REMOVAL OF DIRECTORS - Subject to the provisions of the Act, the shareholders may by resolution passed at a special meeting remove any director from office and the vacancy created by such removal may he filled at the same meeting failing which it may be filled by the directors. 4.05 VACATION OF OFFICE - A director ceases to hold office when he dies; he is removed from office by the shareholders; he ceases to be qualified for election as a director; or his written resignation is sent or delivered to the Corporation, or if a time is specified in such resignation, at the time so specified, whichever is later. 4.06 VACANCIES - Subject to the Act, a quorum of the board may fill a vacancy in the board, except a vacancy resulting from an increase in the minimum number of directors or from a failure of the shareholders to elect the minimum number of directors required by the articles. In the absence of a quorum of the board, or if the vacancy has arisen from a failure of the shareholders to elect the minimum number of directors, the directors then in office shall forthwith call a special meeting of the shareholders to fill the vacancy. If such directors fail to call such meeting or if there are no directors then in office, any shareholder may call the meeting. 4.07 ACTION BY THE BOARD - Subject to any unanimous shareholder agreement, the board shall manage the business and affairs of the Corporation. Subject to sections 4.08 and 4.09, the powers of the board may be exercised by resolution passed at a meeting at which a quorum is present or by - 7 - resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. Where there is a vacancy in the board, the remaining directors may exercise all the powers of the board so long as a quorum remains in office. Where the Corporation has only one director, that director may constitute the meeting. 4.08 CANADIAN MAJORITY - The board shall not transact business at a meeting, other than filling a vacancy in the board, unless a majority of the directors present are resident Canadians, except where: (a) a resident Canadian director who is unable to be present approves in writing or by telephone or other communications facilities the business transacted at the meeting; and (b) a majority of resident Canadians would have been present had that director been present at the meeting. 4.09 MEETINGS BY TELEPHONE - If all the directors consent, a director may participate in a meeting of the board or of a committee of the board by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at the meeting. Any such consent shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the board and of committees of the board held while a director holds office. 4.10 PLACE OF MEETING - Meetings of the board may be held at any place in or outside Canada. 4.11 CALLING OF MEETINGS - Meetings of the board shall be held from time to time and at such place as the board, the chairman of the board, the president or any two directors may determine. 4.12 NOTICE OF MEETING - Notice of the time and place of each meeting of the board shall be given in the manner provided in section 12.01 to each director not less than 48 hours before the time when the meeting is to be held. A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting, except where the Act requires such purpose or business to be specified, including, without limitation, any proposal to: - 8 - (a) submit to the shareholders any question or matter requiring approval of the shareholders; (b) fill a vacancy among the directors or in the office of auditor; (c) issue securities; (d) declare dividends; (e) purchase, redeem or otherwise acquire shares of the Corporation; (f) pay a commission for the sale of shares; (g) approve a management proxy circular; (h) approve a take-over bid circular or directors' circular; (i) approve any annual financial statements; or (j) adopt, amend or repeal by-laws. A director may in any manner waive notice of or otherwise consent to a meeting of the board. 4.13 FIRST MEETING OF NEW BOARD - Provided a quorum of directors is present, each newly elected board may without notice hold its first meeting immediately following the meeting of shareholders at which such board is elected. 4.14 ADJOURNED MEETING - Notice of an adjourned meeting of the board is not required if the time and place of the adjourned meeting is announced at the original meeting. 4.15 REGULAR MEETINGS - The board may appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meetings shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meeting except where the Act requires the purpose thereof or the business to be transacted thereat to be specified. - 9 - 4.16 CHAIRMAN - The Chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairman of the board, president, or a vice-president who is a director. If no such officer is present, the directors present shall choose one of their number to be chairman. 4.17 VOTES TO GOVERN - At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote. 4.18 CONFLICT OF INTEREST - A director or officer who is a party to, or who is a director or officer of or has a material interest in any person who is a party to, a material contract or proposed material contract with the Corporation shall disclose the nature and extent of his interest at the time and in the manner provided by the Act. Any such contract or proposed contract shall be referred to the board or shareholders for approval even if such contract is one that in the ordinary course of the Corporation's business would not require approval by the board or shareholders, and a director interested in a contract so referred to the board shall not vote on any resolution to approve the same except as provided by the Act. 4.19 REMUNERATION AND EXPENSES - Subject to any unanimous shareholder agreement, the directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the board or any committee thereof. Except as provided in section 4.02, nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving the remuneration therefor. SECTION FIVE COMMITTEES 5.01 EXECUTIVE COMMITTEE - The Board may at their meeting held immediately after the annual meeting of shareholders and from time to time as vacancies occur, elect three or more of their body, two of whom shall be the Chairman and the Committee President, and two or more others as alternates as a committee of directors (the "Executive Committee") and the following provisions shall apply thereto: - 10 - (a) The president shall be ex officio chairman of the Executive Committee and in his absence the Executive Committee shall choose one of its body to be chairman. The chairman shall preside at all meetings and shall have a casting vote in case of a tie. (b) A majority of the members of the Executive Committee shall be resident Canadians. (c) The Executive Committee shall meet at the office of the Corporation in the City of Toronto at such times as they shall by resolution appoint, and shall also meet at any other time or place at the call of the president on two hours' notice to be given orally or by telephone or in any of the manners provided in section 12.01. (d) Subject to the provisions of the Act, the number of members of the Executive Committee may be increased or decreased from time to time and their remuneration fixed by resolution of the board. (e) During the intervals between the meetings of the board, the Executive Committee shall possess and may exercise (subject to any regulations which the board may from time to time impose) all the powers of the board in the management and direction of the operations of the Corporation, save and except only those acts which, under the Act, a committee of directors has no authority to exercise. The Executive Committee shall have no authority to: (a) submit to the shareholders any question or matter requiring the approval of the shareholders; (b) fill a vacancy among the directors or in the office of auditor; (c) issue securities except in the manner and on the terms authorized by the directors; (d) declare dividends; (e) purchase, redeem or otherwise acquire shares issued by the Corporation; (f) pay a commission referred to in section 89; (g) approve a management proxy circular referred to in Part XII; (h) approve a take-over bid circular or directors' circular referred to in Part XVI; (i) approve any financial statements referred to in section 149; - 11 - (j) adopt, amend or repeal by-laws. The Executive Committee shall exercise its powers as it shall deem best for the interests of the Corporation in all cases in which specific directions shall not have been given by the board. All action by the Executive Committee shall be reported to the board at its meeting next succeeding such action and shall be subject to revision or alteration by the board; provided that no acts or rights of third parties shall be affected or invalidated by any such revision or alteration. 5.02 TRANSACTION OF BUSINESS - Subject to the provisions of section 4.09, the powers of the Executive Committee may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all the members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of such committee may be held at any place in or outside Canada. 5.03 AUDIT COMMITTEE - The board shall elect annually from among its number an audit committee to be composed of not fewer than 3 directors of whom a majority shall neither be officers nor employees of the Corporation or its affiliates. The audit committee shall have the power and duties provided in the Act. 5.04 RETIREMENT COMMITTEE - the board may appoint a retirement committee made up of at least 3 persons, each of whom is a director or an officer and a majority of whom shall be directors. The retirement committee shall administer the Corporation's retirement plan, instruct the trustee of such plan in connection with the nature and extent of the investments to be made, authorize all disbursements to be made by such trustee, and generally advise the board in connection with matters of policy as they relate to interpretation and application of the plan and any insuring and re-insuring of benefits provided by the plan. 5.05 ADVISORY COMMITTEES - The board may from time to time appoint such other committees as it may deem advisable, but the functions of any such other committees shall be advisory only. 5.06 PROCEDURE - Unless otherwise determined by the board or the by-laws, each committee shall have the power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure. - 12 - SECTION SIX OFFICERS 6.01 APPOINTMENT - Subject to any unanimous shareholder agreement, the board may from time to time appoint a president, one or more vice-presidents (to which title may be added words indicating seniority or function), a secretary, a treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. The board may specify the duties of and, in accordance with this by-law and subject to the provisions of the Act, delegate to such officers powers to manage the business and affairs of the Corporation. Subject to sections 6.02 and 6.03, an officer may but need not be a director and one person may hold more than one office. 6.02 CHAIRMAN OF THE BOARD - The board may from time to time also appoint a chairman of the board who shall be a director. If appointed, the board may assign to him any of the powers and duties that are by any provisions of this by-law assigned to the president; and he shall, subject to the provisions of the Act, have such other powers and duties as the board may specify. During the absence or disability of the chairman of the board, his duties shall be performed and his powers exercised by the president. 6.03 PRESIDENT - If appointed, the president shall be the chief executive officer and the chief operating officer and, subject to the authority of the board, shall have general supervision of the business and affairs of the Corporation; and he shall, subject to the provisions of the Act, have such other powers and duties as the board may specify. 6.04 VICE-PRESIDENT - A vice-president shall have such powers and duties as the board or, subject to the approval of the board, the chief executive officer may specify. 6.05 SECRETARY - The secretary shall attend and be the secretary of all meetings of the board, shareholders and committees of the board and shall enter or cause to be entered in records kept for that purpose minutes of all proceedings thereat; he shall give or cause to be given, as and when instructed, all notices of shareholders, directors, officers, auditors and members of committees of the board; he shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and of all books, papers, records, documents and instruments belonging to the Corporation, except when some other - 13 - officer or agent has been appointed for that purpose; and he shall have such other powers and duties as the board or the chief executive officer may specify. 6.06 TREASURER - The treasurer shall keep proper accounting records in compliance with the Act and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; he shall render to the board whenever required an account of all his transactions as treasurer and of the financial position of the Corporation; and he shall have such other powers and duties as the board or the chief executive officer may specify. 6.07 COMPTROLLER - The comptroller shall have charge of the accounts of the Corporation, shall supervise the bookkeeping and accounting procedures and advise the Corporation on matters of financial planning and budgeting and have such other powers and duties as the board may specify. During the absence or disability of the treasurer, or if no treasurer has been appointed, the comptroller shall also have the powers and duties of that office. 6.08 POWERS AND DUTIES OF OTHER OFFICERS - The powers and duties of all other officers shall be such as the terms of their engagement call for or as the board or, subject to the approval of the board, the chief executive officer may specify. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board or the chief executive officer otherwise directs. 6.09 VARIATION OF POWERS AND DUTIES - The board may from time to time and subject to the provisions of the Act, vary, add to or limit the powers and duties of any officer. 6.10 TERM OF OFFICE - The board, in its discretion, may remove any officer of the Corporation, without prejudice to such officer's rights under any employment contract. Otherwise each officer appointed by the board shall hold office until his successor is appointed. 6.11 TERMS OF EMPLOYMENT AND REMUNERATION - The terms of employment and the remuneration of officers appointed by the board shall be settled by it from time to time. 6.12 CONFLICT OF INTEREST - An officer shall disclose his interest in any material contract or proposed material contract with the Corporation in accordance with section 4.18. - 14 - 6.13 AGENTS AND ATTORNEYS - The board shall have power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers of management or otherwise (including the power to sub-delegate) as may be thought fit. 6.14 FIDELITY BONDS - The board may require such officers, employees and agents of the Corporation as the board deems advisable to furnish bonds for the faithful discharge of their powers and duties, in such form and with such surety as the board may from time to time determine. SECTION SEVEN PROTECTION OF DIRECTORS, OFFICERS AND OTHERS 7.01 LIMITATION OF LIABILITY - No director or officer shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee, or for joining in any receipt or other act for conformity, or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation, or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Corporation shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the moneys, securities or effects of the Corporation shall be deposited, or for any loss occasioned by any error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto, unless the same are occasioned by his own wilful neglect or default; provided that nothing herein shall relieve any director or officer from the duty to act in accordance with the Act and the regulations thereunder or from liability for any breach thereof. 7.02 INDEMNITY - Subject to the limitations contained in the Act, the Corporation shall indemnify a director or officer, a former director or officer, or a person who acts or acted at the Corporation's request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor (or a person who undertakes or has undertaken any liability on behalf of the Corporation or any such body corporate) and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgement, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a - 15 - party by reason of being or having been a director or officer of the Corporation or such body corporate, if (a) he acted honestly and in good faith with a view to the best interests of the Corporation; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. 7.03 INSURANCE - Subject to-the limitations contained in the Act, the Corporation may purchase and maintain such insurance for the benefit of its directors and officers as such, as the board may from time to time determine. SECTION EIGHT SHARES 8.01 ALLOTMENT - The board may from time to time allot or grant options to purchase shares of the Corporation at such times and to such persons and for such consideration as the board shall determine, provided that no share shall be issued until it is fully paid as prescribed by the Act. 8.02 COMMISSIONS - The board may from time to time authorize the Corporation to pay a commission to any person in consideration of his purchasing or agreeing to purchase shares of the Corporation, whether from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares. 8.03 REGISTRATION OF TRANSFER - Subject to the provisions of the Act, no transfer of shares shall be registered in a securities register except upon presentation of the certificate representing such shares with a transfer endorsed thereon or delivered therewith duly executed by the registered holder or by his attorney or successor duly appointed, together with such reasonable assurance or evidence of signature, identification and authority to transfer as the board may from time to time prescribe, upon payment of all applicable taxes and any fees prescribed by the board, upon compliance with such restrictions on transfer as are authorized by the articles and upon satisfaction of any lien referred to in section 8.05. 8.04 TRANSFER AGENTS AND REGISTRARS - The board may from time to time appoint a registrar to maintain the securities - 16 - register and a transfer agent to maintain the register of transfers and may also appoint one or more branch registrars to maintain branch securities registers and one or more branch transfer agents to maintain branch registers of transfers, but one person may be appointed both registrar and transfer agent. The board may at any time terminate any such appointment. 8.05 NON-RECOGNITION OF TRUSTS - Subject to the provisions of the Act, the Corporation shall treat as absolute owner of any share the person in whose name the share is registered in the securities register as if that person had full legal capacity and authority to exercise all rights of ownership, irrespective of any indication to the contrary through knowledge or notice or description in the Corporation's records or on the share certificate. 8.06 SHARE CERTIFICATE - Every holder of one or more shares of the Corporation shall be entitled, at his option, to a share certificate, or to a non-transferable written acknowledgement of his right to obtain a share certificate, stating the number and class or series of shares held by him as shown on the securities register. Share certificates and acknowledgements of a shareholder's right to a share certificate, respectively, shall be in such form as the board shall from time to time approve. Any share certificate shall be signed in accordance with section 2.04 and need not be under the corporate seal; provided that, unless the board otherwise determines, certificates representing shares in respect of which a transfer agent and/or registrar has been appointed shall not be valid unless countersigned by or on behalf of such transfer agent and/or registrar. The signature of one of the signing officers or, in the case of share certificates which are not valid unless countersigned by or on behalf of a transfer agent and/or registrar, the signatures of both signing officers, may be printed or mechanically reproduced in facsimile upon share certificates and every such facsimile signature shall for all purposes be deemed to be the signature of the officer whose signature it reproduces and shall be binding upon the Corporation. A share certificate executed as aforesaid shall be valid notwithstanding that one or both of the officers whose facsimile signature appears thereon no longer holds office at the date of issue of the certificate. 8.07 REPLACEMENT OF SHARE CERTIFICATES - The board or any officer or agent designated by the board may in its or his discretion direct the issue of a new share certificate in lieu of and upon cancellation of a share certificate that has been mutilated or in substitution for a share certificate - 17 - claimed to have been lost, destroyed or wrongfully taken on payment of such reasonable fee, and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case. 8.08 JOINT SHAREHOLDERS - If two or more persons are registered as joint holders of any share, the Corporation shall not be bound to issue more than one certificate in respect thereof, and delivery of such certificate to one of such persons shall be sufficient delivery to all of them. Any one of such persons may give effectual receipts for the certificate issued in respect thereof or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of such share. 8.09 DECEASED SHAREHOLDERS - In the event of the death of a holder, or of one of the joint holders, of any share, the Corporation shall not be required to make any entry in the securities register in respect thereof or to make payment of any dividends thereon except upon production of all such documents as may be required by law and upon compliance with the reasonable requirements of the Corporation and its transfer agents. SECTION NINE DIVIDENDS AND RIGHTS 9.01 DIVIDENDS - Subject to the provisions of the Act, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the Corporation. 9.02 DIVIDEND CHEQUES - A dividend payable in cash shall be paid by cheque drawn on the Corporation's bankers or one of them to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at his recorded address, unless such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all of such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold. - 18 - 9.03 NON-RECEIPT OF CHEQUES - In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time, prescribe whether generally or in any particular case. 9.04 RECORD DATE FOR DIVIDENDS AND RIGHTS - The board may fix in advance a date, preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any warrant or other evidence of right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of such dividend or to exercise the right to subscribe for such securities, provided that notice of any such record date is given, not less than 14 days before such record date, by newspaper advertisement in the manner provided in the Act. Where no record date is fixed in advance as aforesaid, the record date for the determination of the persons entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to such dividend or right to subscribe is passed by the board. 9.05 UNCLAIMED DIVIDENDS - Any dividend unclaimed after a period of 6 years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation. SECTION TEN MEETINGS OF SHAREHOLDERS 10.01 ANNUAL MEETINGS - The annual meeting of shareholders shall be held at such time in each year and, subject to section 10.03, at such place as the board, the chairman of the board, the managing director or the president may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors and for the transaction of such other business as may properly be brought before the meeting. 10.02 SPECIAL MEETINGS - The board, the chairman of the board or the president shall have power to call a special meeting of shareholders at any time. - 19 - 10.03 PLACE OF MEETINGS - Meetings of shareholders shall be held at the registered office of the Corporation or elsewhere in the municipality in which the registered office is situate or, if the board shall so determine, at some other place in Canada or, if all the shareholders entitled to vote at the meeting so agree, at some place outside Canada. 10.04 NOTICE OF MEETINGS - Notice of the time and place of each meeting of shareholders shall be given in the manner provided in section 12.01 not less than 21 nor more than 50 days before the date of the meeting to each director, to the auditor and to each shareholder whose name appears on the list of shareholders entitled to receive notice as provided in Section 10.15. Notice of a meeting of shareholders called for any purpose other than consideration of the financial statements and auditor's report, election of directors and reappointment of the incumbent auditor shall state the nature of such business in sufficient detail to permit the shareholders to form a reasoned judgment thereon and shall state the text of any special resolution to be submitted to the meeting. A shareholder may in any manner waive notice of or otherwise consent to a meeting of shareholders. 10.05 LIST OF SHAREHOLDERS ENTITLED TO VOTE - For every meeting of shareholders, the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares entitled to vote at the meeting held by each shareholder. If a record date for the meeting is fixed pursuant to section 10.06, the shareholders listed shall be those registered at the close of business on a day not later than 10 days after such record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business on the day immediately preceding the day on which notice of the meeting is given, or where no such notice is given, the day on which the meeting is held. The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the securities register is kept and at the place where the meeting is held. 10.06 RECORD DATE FOR NOTICE - The board may fix in advance a record date, preceding the date of any meeting of shareholders by not more than 50 days and not less than 21 days, for the determination of the shareholders entitled to notice of the meeting, provided that notice of any such record date is given, not less than 14 days before such record date, by newspaper advertisement in the manner provided - 20 - in the Act. If no record date is so fixed, the record date for the determination of the shareholders entitled to notice of the meeting shall be the close of business on the day immediately preceding the day on which the notice is given. 10.07 CHAIRMAN, SECRETARY AND SCRUTINEERS - The chairman of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and who is present at the meeting: president, managing director, chairman of the board, or a vice-president, who is a shareholder. If no such officer is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chairman. If the secretary of the Corporation is absent, the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting. 10.08 PERSONS ENTITLED TO BE PRESENT - The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and auditors of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting. 10.09 QUORUM - A quorum for the transaction of business at any meeting of shareholders shall be ten (10) persons present in person, each being a shareholder entitled to vote thereat or a duly appointed proxyholder for an absent shareholder so entitled, and each holding or representing by proxy not less than 1 outstanding share of the Corporation entitled to vote at the meeting. If a quorum is present at the opening of any meeting of shareholders, the shareholders present or represented by proxy may proceed with the business of the meeting notwithstanding that a quorum is not present throughout the meeting. If a quorum is not present at the opening of any meeting of shareholders, the shareholders present or represented by proxy may adjourn the meeting to a fixed time and place but not transact any other business. 10.10 RIGHT TO VOTE - Subject to the provisions of the Act as to authorized representatives of any other body corporate, at any meeting of shareholders in respect of which the Corporation has prepared the list referred to in - 21 - section 10.05, every person who is named in such list shall be entitled to vote the shares shown thereon opposite his name except, where the Corporation has fixed a record date in respect of such meeting pursuant to section 10.06, to the extent that such person has transferred any of his shares after such record date and the transferee, upon producing properly endorsed certificates evidencing such shares or otherwise establishing that he owns such shares, demands not later than 10 days before the meeting that his name be included to vote the transferred shares at the meeting. In the absence of a list prepared as aforesaid in respect of a meeting of shareholders, every person shall be entitled to vote at the meeting who at the time is entered in the securities register as the holder of one or more shares carrying the right to vote at such meeting. 10.11 PROXIES - Every shareholder entitled to vote at a meeting of shareholders may appoint a proxyholder, or one or more alternate proxyholders, who need not be shareholders, to attend and act at the meeting in the manner and to the extent authorized and with the authority conferred by the proxy. A proxy shall be in writing executed by the shareholder or his attorney and shall conform with the requirements of the Act. 10.12 TIME FOR DEPOSIT OF PROXIES - The board may specify in the notice calling a meeting of shareholders a time, preceding the time of such meeting by not more than 48 hours exclusive of non-business days, before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if, prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time is specified in such notice, unless it has been received by the secretary of the Corporation or by the chairman of the meeting or any adjournment thereof prior to the time of voting. 10.13 JOINT SHAREHOLDERS - If two or more persons hold shares jointly, any one of them present in person or represented by proxy at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present in person or represented by proxy and vote, they shall vote as one on the shares jointly held by them. 10.14 VOTES TO GOVERN - At any meeting of shareholders every question shall, unless otherwise required by the articles or by-laws or by law, be determined by the majority of the votes cast on the question. In case of an equality - 22 - of votes either upon a show of hands or upon a poll, the chairman of the meeting shall be entitled to a second or casting vote. 10.15 SHOW OF HANDS - Subject to the provisions of the Act, any question at a meeting of shareholders shall be decided by a show of hands unless a ballot thereon is required or demanded as hereinafter provided. Upon a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon is so required or demanded, a declaration by the chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the vote so taken shall be the decision of the shareholders upon the said question. 10.16 BALLOTS - On any question proposed for consideration at a meeting of shareholders, and whether or not a show of hands has been taken thereon, any shareholders or proxyholder entitled to vote at the meeting may require or demand a ballot. A ballot so required or demanded shall be taken in such manner as the chairman shall direct. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which he is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders upon the said question. 10.17 ADJOURNMENT - If a meeting of shareholders is adjourned for less than 30 days, it shall not be necessary to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting shall be given as for an original meeting. SECTION ELEVEN DIVISIONS AND DEPARTMENTS 11.01 CREATION AND CONSOLIDATION OF DIVISIONS - The board may cause the business and operations of the Corporation or any part thereof to be divided or to be segregated into - 23 - one or more divisions upon such basis, including without limitation, character or type of operation, geographical territory, product manufactured or service rendered, as the board may consider appropriate in each case. The board may also cause the business and operations of any such division to be further divided into sub-units and the business and operations of any such divisions or sub-units to be consolidated upon such basis as the board may consider appropriate in each case. 11.02 NAME OF DIVISION - Any division or its sub-units may be designated by such name as the board may from time to time determine and may transact business, enter into contracts, sign cheques and other documents of any kind and do all acts and things under such name. Any such contract, cheque or document shall be binding upon the Corporation as if it had been entered into or signed in the name of the Corporation. 11.03 OFFICERS OF DIVISIONS - From time to time the board or, if authorized by the board, the chief executive officer, may appoint one or more officers for any division, prescribe their powers and duties and settle their terms of employment and remuneration. The board or, if authorized by the board, the chief executive officer, may remove at its or his pleasure any officer so appointed, without prejudice to such officer's rights under any employment contract. Officers of divisions or their sub-units shall not, as such, be officers of the Corporation. SECTION TWELVE NOTICES 12.01 METHOD OF GIVING NOTICES - Any notice (which term includes any communication or document) to be given (which term includes sent, delivered or served) pursuant to the Act, the regulations thereunder, the articles, the by-laws or otherwise to a shareholder, director, officer, auditor or member of a committee of the board shall be sufficiently given if delivered personally to the person to whom it is to be given or if delivered to his recorded address or if mailed to him at his recorded address by prepaid ordinary or air mail or if sent to him at his recorded address by any means of prepaid transmitted or recorded communication. A notice so delivered shall be deemed to have been given when it is delivered personally or to the recorded address as aforesaid; a notice so mailed shall be deemed to have been given when deposited in a post office or - 24 - public letter box; and a notice so sent by any means of transmitted or recorded communication shall be deemed to have been given when dispatched or delivered to the appropriate communication company or agency or its representative for dispatch. The secretary may change or cause to be changed the recorded address of any shareholder, director, officer, auditor or member of a committee of the board in accordance with any information believed by him to be reliable. 12.02 NOTICE TO JOINT SHAREHOLDERS - If two or more persons are registered as joint holders of any share, any notice shall be addressed to all of such joint holders but notice to one of such persons shall be sufficient notice to all of them. 12.03 COMPUTATION OF TIME - In computing the date when notice must be given under any provision requiring a specified number of days' notice of any meeting or other event, the date of giving the notice shall be excluded and the date of the meeting or other event shall be included. 12.04 UNDELIVERED NOTICES - If any notice given to a shareholder pursuant to section 12.01 is returned on three consecutive occasions because he cannot be found, the Corporation shall not be required to give any further notices to such shareholder until he informs the Corporation in writing of his new address. 12.05 OMISSIONS AND ERRORS - The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon. 12.06 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW - Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholder from whom he derives his title to such share prior to his name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which he became so entitled) and prior to his furnishing to the Corporation the proof of authority or evidence of his entitlement prescribed by the Act. - 25 - 12.07 WAIVER OF NOTICE - Any shareholder (or his duly appointed proxyholder), director, officer, auditor or member of a committee of the board may at any time waive any notice, or waive or abridge the time for any notice, required to be given to him under any provision of the Act, the regulations thereunder, the articles, the by-laws or otherwise and such waiver or abridgement shall cure any default in the giving or in the time of such notice, as the case may be. Any such waiver or abridgement shall be in writing except a waiver of notice of a meeting of shareholders or of the board which may be given in any manner. SECTION THIRTEEN EFFECTIVE DATE AND REPEAL 13.01 EFFECTIVE DATE - This by-law shall come into force upon the date of the resolution of the board enacting this by-law. 13.02 REPEAL - All previous by-laws of the Corporation are repealed as of the coming into force of this by-law provided that such repeal shall not affect the previous operation of any by-law so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under or the validity of any contract or agreement made pursuant to any such by-law prior to its repeal. All officers and persons acting under any by-law so repealed shall continue to act as if appointed under the provisions of this by-law and all resolutions of the shareholders or board with continuing effect passed under any repealed by-law shall continue good and valid except to the extent inconsistent with this by-law and until amended or repealed. ENACTED and made by the board the 3rd day of August, 1977. President Secretary /s/ C.D. Reekie /s/ R.G. Small - ------------------------------- ------------------------------- CONFIRMED by the shareholders in accordance with the Act the day of , 19 . /s/ R.G. Small ------------------------------- Secretary CAE INDUSTRIES LTD. BY-LAW NO. 74 Being a by-law to amend Section 4 of By-law No. 73 WHEREAS the directors have deemed it to be in the best interests of the Corporation that the By-laws be amended to provide for the mandatory retirement of directors at the age of 70. AND WHEREAS it has been determined that such mandatory retirement provisions should be introduced gradually over a period of four years and that Mr. Henry Benson, a director of the Corporation since 1947, should be exempted from the mandatory retirement provision. NOW THEREFORE BE IT ENACTED, as By-law No. 74 of CAE Industries Ltd. (the "Corporation") that: 1. Paragraph 4.02 of By-law No. 73 be and it is hereby deleted and replaced with the following: "4.02. QUALIFICATIONS - A majority of the directors shall be resident Canadians. A director need not be a shareholder of the Corporation. No person shall be qualified for election as a director if: (a) he is not an individual; (b) he is of unsound mind and has been so found by a court in Canada or elsewhere; - 2 - (c) he is a bankrupt; (d) he is less than 18 years of age; or (e) he is 70 years of age or more at the time of such election." 2. Clause 4.02(e) shall not apply: (a) in 1980 to a person who is, at the time of his election, under the age of 73 years; (b) in 1981 to a person who is at the time of his election, under the age of 72 years; (c) in 1982 to a person who is, at the time of his election under the age of 71 years; and (d) to Henry Benson. 3. Paragraph 4.05 of By-law No. 73 be and it is hereby deleted and replaced with the following: "4.05. VACATION OF OFFICE - A director ceases to hold office when he dies; he is removed from office by the shareholders; he becomes bankrupt; he becomes of unsound mind and is so found by a court in Canada or elsewhere; or his resignation is sent or delivered to the Corporation, or if the time is specified in such resignation, at the time so specified, whichever is later." - 3 - 4. This by-law shall come into force upon the date of the resolution of board enacting this by-law. ENACTED and made by the board the 5th day of September, 1979. ------------------------------- President ------------------------------- Secretary Confirmed by the shareholders in accordance with the Act the day of June, 1980. ------------------------------- Secretary CAE INDUSTRIES LTD. BY-LAW 77 BEING A BY-LAW TO AMEND BY-LAW NO. 73 TO PERMIT R. FRASER ELLIOTT TO CONTINUE AS A DIRECTOR OF THE CORPORATION. BE IT ENACTED as By-law No. 77 of CAE Industries Ltd. that: Paragraph 4.02 of By-law No. 73, as amended by By-law No. 74, be and it is hereby amended by adding a new sentence to the end of such paragraph as follows: "Clause 4.02(e) shall not apply to R. Fraser Elliott." ENACTED and made by the Board the 4th day of September, 1991. - ------------------------------- ------------------------------- D. H. Race, President John E. Caldwell, Secretary CONFIRMED by the shareholders in accordance with the Act the 11th day of June, 1992. ------------------------------- John E. Caldwell, Secretary CAE INC. BY-LAW 78 CAE INC. BY-LAW 78 BEING A BY-LAW TO AMEND SECTION FIVE OF BY-LAW NO. 73 AND TO REPEAL BY-LAW NO. 75 AND BY-LAW NO. 76 BE IT ENACTED as By-law No. 78 of CAE Inc. that Section Five of By-law No. 73 be and it is hereby deleted and replaced with the following: "5.01 EXECUTIVE COMMITTEE - The board may at their meeting held immediately after the annual meeting of shareholders and from time to time as vacancies occur elect three or more of their body, one of whom shall be the Chairman of the Board, as a committee of directors (the "Executive Committee") and the following provisions shall apply thereto: (a) The Chairman of the Board shall be chairman of the Executive Committee and in his absence the Executive Committee shall choose one of its body to be chairman. The chairman shall preside at all meetings and shall have a casting vote in case of a tie. (b) The Executive Committee shall meet at the office of the Corporation in the City of Toronto at such times as they shall by resolution appoint, and shall also meet at any other time or place at the call of the Chairman and President and Chief Executive Officer on two hours' notice to be given orally or by telephone or in any of the manners provided in section 12.01. (c) Subject to the provisions of the Act, the number of members of the Executive Committee may be increased or decreased from time to time and their remuneration fixed by resolution of the board. CAE INC. BY-LAW 78 PAGE 2 (d) During the intervals between the meetings of the board, the Executive Committee shall possess and may exercise (subject to any regulations which the board may from time to time impose) all the powers of the board in the management and direction of the operations of the Corporation, save and except only those acts which, under the Act, a committee of directors has no authority to exercise. The Executive Committee shall exercise its powers as it shall deem best for the interests of the Corporation in all cases in which specific directions shall not have been given by the board. All action by the Executive Committee shall be reported to the board at its meeting next succeeding such action and shall be subject to revision or alteration by the board; provided that no acts or rights of third parties shall be affected or invalidated by any such revision. 5.02 AUDIT COMMITTEE - The board shall elect annually from among its number an audit committee to be composed of not fewer than four directors, and of whom a majority shall neither be officers nor employees of the Corporation or its affiliates. The audit committee shall have the power and duties provided in the Act and such other duties that may be assigned by the Board of Directors. 5.03 COMPENSATION COMMITTEE - The board shall elect annually from among its number a Compensation Committee to be composed of not fewer than four directors, one of whom shall be the Chairman of the Board, and of whom a majority shall neither be officers nor employees of the Corporation or its affiliates, and the following provisions shall apply thereto: (a) The chairman of the Compensation Committee shall be elected annually by the board and in his absence the Compensation Committee shall choose one of its body to be chairman. The chairman shall preside at all meetings and shall have a casting vote in the case of a tie. CAE INC. BY-LAW 78 PAGE 3 (b) The Compensation Committee shall meet at the office of the Corporation in the City of Toronto at such times as they shall by resolution appoint, and shall also meet at any time or place at the call of any of the Chairman of the Board, the President, the chairman or any two members of the Compensation Committee on two hour's notice to be given orally or by telephone or in any of the manners provided in section 12.01 of By-law No. 73 of the Corporation. (c) The Compensation Committee shall, in addition to any other powers of the board delegated to the Compensation Committee, administer any stock option or share purchase plan of the Corporation for employees of the Corporation and its subsidiaries and shall have full power to (i) construe and interpret such plans; (ii) establish and amend rules and regulations for their administration; (iii) grant options to purchase shares of the Corporation to employees of the Corporation and its subsidiaries under such plans; and (iv) perform all other acts relating to such plan, including the delegation of administrative responsibilities thereunder that it believes reasonable and proper. (d) All actions of the Compensation Committee shall be reported to the board at its meeting next succeeding such action. 5.04 COMMITTEES - The board may from time to time appoint such other committees as it may deem advisable. 5.05 PROCEDURE - Unless otherwise determined by the board or the by-laws, each committee shall have the power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure." CAE INC. BY-LAW 78 PAGE 4 Each of By-law No. 75 and By-law No. 76 is hereby repealed as of the coming into force of this By-law No. 78. Such repeal shall not affect the previous operation of the by-laws so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under, or the validity of any contract or agreement made pursuant to such by-laws prior to their repeal. ENACTED and made by the board the 2nd day of February, 1994. --- -------- /s/ John E. Caldwell /s/ Paul G. Renaud - ------------------------------- ------------------------------- President Secretary CONFIRMED by the shareholders in accordance with the Act the 7th day of July, 1994. /s/ Paul G. Renaud ------------------------------- Secretary EX-4.3 5 ex4-3_072202.txt EX-4.3 EXHIBIT 4.3 CAE INC. AND MONTREAL TRUST COMPANY OF CANADA AS RIGHTS AGENT ----------------------------------------------- AMENDED AND RESTATED SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT JUNE 14, 2000 ----------------------------------------------- STIKEMAN ELLIOTT TABLE OF CONTENTS ARTICLE 1 INTERPRETATION Section 1.1 Certain Definitions ..................................................... 1 Section 1.2 Currency ................................................................ 12 Section 1.3 Headings ................................................................ 12 Section 1.4 Number and Gender ....................................................... 12 Section 1.5 Acting Jointly or in Concert ............................................ 12 Section 1.6 Statutory References .................................................... 13 ARTICLE 2 THE RIGHTS Section 2.1 Legend on Common Share Certificates ..................................... 13 Section 2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights ........ 13 Section 2.3 Adjustments to Exercise Price; Number of Rights ......................... 16 Section 2.4 Date on Which Exercise is Effective ..................................... 21 Section 2.5 Execution, Authentication, Delivery and Dating of Rights Certificates ... 21 Section 2.6 Registration, Registration of Transfer and Exchange ..................... 22 Section 2.7 Mutilated, Destroyed, Lost and Stolen Right Certificates ................ 22 Section 2.8 Persons Deemed Owners ................................................... 23 Section 2.9 Delivery and Cancellation of Rights Certificates ........................ 23 Section 2.10 Agreement of Rights Holders ............................................ 23 Section 2.11 Rights Certificate Holder not Deemed a Shareholder ..................... 24 ARTICLE 3 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS Section 3.1 Flip-in Event ........................................................... 25 ARTICLE 4 THE RIGHTS AGENT Section 4.1 General ................................................................. 25 Section 4.2 Merger or Amalgamation or Change of Name of Rights Agent ................ 26 Section 4.3 Duties of Rights Agent .................................................. 27 Section 4.4 Change of Rights Agent .................................................. 29 ARTICLE 5 MISCELLANEOUS Section 5.1 Redemption and Waiver ................................................... 29 Section 5.2 Expiration .............................................................. 31 Section 5.3 Issuance of New Rights Certificates ..................................... 31 (i) Section 5.4 Supplements and Amendments .............................................. 31 Section 5.5 Fractional Rights and Fractional Shares ................................. 33 Section 5.6 Rights of Action ........................................................ 33 Section 5.7 Notice of Proposed Actions .............................................. 33 Section 5.8 Notices ................................................................. 34 Section 5.9 Successors .............................................................. 34 Section 5.10 Benefits of this Agreement ............................................. 34 Section 5.11 Governing Law .......................................................... 35 Section 5.12 Severability ........................................................... 35 Section 5.13 Effective Date ......................................................... 35 Section 5.14 Determinations and Actions by the Board of Directors ................... 35 Section 5.15 Rights of Board, Corporation and Offeror ............................... 35 Section 5.16 Regulatory Approvals ................................................... 35 Section 5.17 Declaration as to Non-Canadian Holders.................................. 35 Section 5.18 Time of the Essence .................................................... 36 Section 5.19 Execution in Counterparts .............................................. 36
SCHEDULE SCHEDULE 2.2(3) (ii) SHAREHOLDER PROTECTION RIGHTS PLAN AGREEMENT THIS AMENDED AND RESTATED AGREEMENT dated June 14, 2000 between CAE Inc. (the "CORPORATION"), a corporation incorporated under the laws of Canada, and Montreal Trust Company of Canada, a trust company incorporated under the laws of Canada, as Rights Agent (the "RIGHTS AGENT", which term shall include any successor Rights Agent hereunder). WITNESSES THAT: WHEREAS the Corporation and the Rights Agent entered into a shareholder protection rights plan agreement dated as of March 7, 1990, as amended; and WHEREAS the shareholders of the Corporation have determined to amend and restate the shareholder protection rights plan agreement dated as of March 7, 1990, as amended, as set out herein (the amended and restated shareholder protection rights plan agreement being referred to herein as the "RIGHTS PLAN"); NOW THEREFORE, in consideration of the foregoing premises and the respective covenants and agreements set forth herein, the parties hereby agree as follows: ARTICLE 1 INTERPRETATION SECTION 1.1 CERTAIN DEFINITIONS. For purposes of the Agreement, the following terms have the meanings indicated: (a) "ACQUIRING PERSON" means, any Person who is the Beneficial Owner of twenty percent (20%) or more of the outstanding Voting Shares of the Corporation; provided, however, that the term "ACQUIRING PERSON" shall not include: (i) the Corporation or any Subsidiary of the Corporation; (ii) any Person who becomes the Beneficial Owner of twenty percent (20%) or more of the outstanding Voting Shares of the Corporation as a result of (A) Corporate Acquisitions, (B) Permitted Bid Acquisitions, (C) Corporate Distributions, (D) Exempt Acquisitions, or (E) Convertible Security Acquisitions; provided, however, that if a Person shall become the Beneficial Owner of twenty percent (20%) or more of the Voting Shares of the Corporation then outstanding by reason of one or more or any combination of the operation of a Corporate Acquisition, Permitted Bid Acquisition, Corporate Distribution, Exempt Acquisition or Convertible Security Acquisition and, after such Corporate Acquisition, Permitted Bid Acquisition, Corporate Distribution, Exempt Acquisition or Convertible Security Acquisition, becomes the Beneficial Owner of an additional one percent (1%) or more of the outstanding Voting Shares of the Corporation other than pursuant to Corporate Acquisitions, Permitted Bid Acquisitions, Corporate Distributions, Exempt Acquisitions or Convertible Security Acquisitions, then as of the date of such acquisition, such Person shall become an Acquiring Person; -2- (iii)for a period of ten (10) days after the Disqualification Date (as hereinafter defined), any Person who becomes the Beneficial Owner of twenty percent (20%) or more of the outstanding Voting Shares of the Corporation as a result of such Person becoming disqualified from relying on Clause 1.1(e)(3) hereof solely because such Person makes or proposes to make a Take-over Bid in respect of securities of the Corporation alone or by acting jointly or in concert with any other Person (the first date of public announcement (which, for the purposes of this definition, shall include, without limitation, a report filed pursuant to section 101 of the SECURITIES ACT (Ontario)) by such Person or the Corporation of a current intent to commence such a Take-over Bid being herein referred to as the "DISQUALIFICATION DATE"); and (iv) an underwriter or member of a banking or selling group that acquires Voting Shares of the Corporation from the Corporation in connection with a distribution of securities. (b) "AFFILIATE" when used to indicate a relationship with a specified Person, means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. (c) "AGREEMENT" means this agreement as amended, modified or supplemented from time to time. (d) "ASSOCIATE" when used to indicate a relationship with a specified Person, means any relative of such specified Person who has the same home as such specified Person, or any Person to whom such specified Person is married or with whom such specified Person is living in a conjugal relationship outside marriage, or any relative of such spouse or other Person who has the same home as such specified Person. (e) A Person shall be deemed the "BENEFICIAL OWNER", and to have "BENEFICIAL OWNERSHIP" of, and to "BENEFICIALLY OWN": (i) any securities of which such Person or any Affiliate or Associate of such Person is the owner in law or equity; (ii) any securities as to which such Person or any of such Person's Affiliates or Associates has the right to acquire (A) upon the exercise of any Convertible Securities, or (B) pursuant to any agreement, arrangement or understanding, if such right is exercisable immediately or within a period of 60 days thereafter whether or not on condition or the happening of any contingency (other than customary agreements with and between underwriters and banking group or selling group members with respect to a distribution of securities or pursuant to a pledge of securities in the ordinary course of business); and (iii) any securities that are Beneficially Owned within the meaning of Sections 1.1(e)(i) or (ii) hereof by any other Person with whom such Person is acting jointly or in concert; -3- provided, however, that a Person shall not be deemed the "BENEFICIAL OWNER", or to have "BENEFICIAL OWNERSHIP" of, or to "BENEFICIALLY OWN", any security as a result of the existence of any one or more of the following circumstances: (1) such security has been deposited or tendered, pursuant to a Take-over Bid made by such Person or made by any Affiliate or Associate of such Person or made by any other Person acting jointly or in concert with such Person, unless such deposited or tendered security has been taken up or paid for, whichever shall first occur; (2) by reason of the holder of such security having agreed to deposit or tender such security to a Take-over Bid made by such Person or any of such Person's Affiliates or Associates or any other Person referred to in Clause (iii) of this definition pursuant to a Permitted Lock-Up Agreement; (3) such Person or any Affiliate or Associate of such Person or any other Person acting jointly or in concert with such Person, holds such security; provided that (i) the ordinary business of any such Person (the "FUND MANAGER") includes the management of investment funds for others (which others may include or be limited to one or more employee benefit plans or pension plans) or includes the acquisition or holding of securities for a non-discretionary account of of a Client (as defined below) by a dealer or broker registered under applicable securities laws to the extent required, and such security is held by the Fund Manager in the ordinary course of such business in the performance of such Fund Manager's duties for the account of any other Person (a "CLIENT"), (ii) such Person (the "TRUST COMPANY") is licensed to carry on the business of a trust company under applicable law and, as such, acts as trustee or administrator or in a similar capacity in relation to the estates of deceased or incompetent Persons or in relation to other accounts and holds such security in the ordinary course of such duties for the estate of any such deceased or incompetent Person (each an "ESTATE ACCOUNT") or for such other accounts (each an "OTHER ACCOUNT"), (iii) the Person (the "STATUTORY BODY") is an independent Person established by statute for purposes that include, and the ordinary business or activity of such person includes, the management of investment funds for employee benefit plans, pension plans, insurance plans of various public bodies and the Statutory Body holds such security for the purposes of its activities as such, (iv) the ordinary business of any such Person includes acting as an agent of the Crown in the management of public assets (the "CROWN AGENT"), or (v) the Person, any of such Person's Affiliates or Associates or any other Person acting jointly or in concert with such Person holds such security, provided that the Person is the administrator or the trustee of one or more pension funds or plans (each a "PENSION FUND") registered under the laws of Canada or any province thereof or the United States or any state thereof (the "INDEPENDENT PERSON"), or is a Pension Fund and holds such securities for the purposes of its activities as an Independent Person or as a Pension Fund, and further provided that such Person does not -4- hold more than thirty percent (30%) of the Voting Shares of the Corporation; provided, however, that in any of the foregoing cases no one of the Fund Manager, the Trust Company, the Statutory Body, the Crown Agent, the Independent Person or the Pension Fund makes or announces a current intention to make a Take-over Bid in respect of securities of the Corporation alone or by acting jointly or in concert with any other Person (other than pursuant to a distribution by the Corporation or by means of ordinary market transactions (including prearranged trades entered into the ordinary course of business of such Person) executed through the facilities of a stock exchange or organized over-the-counter market); (4) such Person is a Client of the same Fund Manager as another Person on whose account the Fund Manager holds such security, or such Person is an Estate Account or an Other Account of the same Trust Company as another Person on whose account the Trust Company holds such security, or such Person is a Pension Fund with the same Independent Person as another Pension Fund; (5) such Person is a Client of a Fund Manager and such security is owned at law or in equity by the Fund Manager, or such Person is an Estate Account or an Other Account of a Trust Company and such security is owned at law or in equity by the Trust Company, or such Person is a Pension Fund and such security is owned at law or in equity by the Independent Person; or (6) such Person is a registered holder of securities as a result of carrying on the business of, or acting as a nominee of, a securities depository. For purposes of this Agreement, the percentage of Voting Shares Beneficially Owned by any Person, shall be and be deemed to be the product of one hundred (100) and the number of which the numerator is the number of votes for the election of all directors generally attaching to the Voting Shares Beneficially Owned by such Person and the denominator of which is the number of votes for the election of all directors generally attaching to all outstanding Voting Shares. Where any Person is deemed to Beneficially Own unissued Voting Shares, such Voting Shares shall be deemed to be issued and outstanding for the purpose of calculating the percentage of Voting Shares Beneficially Owned by such Person. (f) "BOARD OF DIRECTORS" means, at any time, the duly constituted board of directors of the Corporation. (g) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on which banking institutions in Toronto are authorized or obligated by law to close. (h) "CBCA" means the CANADA BUSINESS CORPORATIONS ACT R.S.C. 1985, c. C-44, and the regulations thereunder, and any comparable or successor laws or regulations thereto. -5- (i) "CLOSE OF BUSINESS" on any given date means the time on such date (or, if such date is not a Business Day, the time on the next succeeding Business Day) at which the office of the transfer agent for the Common Shares in the City of Toronto (or, after the Separation Time, the office of the Rights Agent in the City of Toronto) is closed to the public. (j) "COMMON SHARES", when used with reference to the Corporation, means the common shares in the capital of the Corporation. (k) "COMPETING BID" means a Take-over Bid that: (i) is made while another Permitted Bid is in existence, and (ii) satisfies all the components of the definition of a Permitted Bid, except that the requirements set out in Clause (ii) of the definition of a Permitted Bid shall be satisfied if the Take-over Bid shall contain, and the take up and payment for securities tendered or deposited thereunder shall be subject to, an irrevocable and unqualified condition that no Voting Shares shall be taken up or paid for pursuant to the Competing Bid prior to the close of business on the date that is no earlier than the date which is the later of twenty-one (21) days (or such longer minimum period of days that a take-over bid must remain open for acceptance under the Securities Act (Ontario)) after the date the Competing Bid is made or 60 days after the earliest date on which a Permitted Bid or Competing Bid then in existence was made and only if at that date, more than fifty percent (50%) of the then outstanding Voting Shares held by Independent Shareholders have been deposited to the Competing Bid and not withdrawn. (l) "CONTROLLED": a corporation is "CONTROLLED" by another Person if: (i) securities entitled to vote in the election of directors carrying more than fifty percent (50%) of the votes for the election of directors are held, directly or indirectly, by or for the benefit of the other Person; and (ii) the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of such corporation; and "CONTROLS", "CONTROLLING" and "UNDER COMMON CONTROL WITH" shall be interpreted accordingly. (m) "CONVERTIBLE SECURITY" means at any time: (i) any right (regardless of whether such right constitutes a security) to acquire Voting Shares from the Corporation; and (ii) any securities issued by the Corporation from time to time (other than the Rights) carrying any exercise, conversion or exchange right; which is then exercisable or exercisable within a period of 60 days from that time pursuant to which the holder thereof may acquire Voting Shares or other securities which are convertible into or exercisable or exchangeable for Voting Shares (in each case, whether such right is then exercisable or exercisable within -6- a period of 60 days from that time and whether or not on condition or the happening of any contingency). (n) "CONVERTIBLE SECURITY ACQUISITION" means the acquisition of Voting Shares upon the exercise of Convertible Securities received by a Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or a Corporate Distribution. (o) "CORPORATE ACQUISITION" means an acquisition by the Corporation or the redemption by the Corporation of Voting Shares of the Corporation which by reducing the number of Voting Shares of the Corporation outstanding increases the proportionate number of Voting Shares Beneficially Owned by any Person. (p) "CORPORATE DISTRIBUTION" means an acquisition as a result of: (i) a stock dividend or a stock split or other event pursuant to which a Person receives or acquires Voting Shares on the same pro rata basis as all other holders of Voting Shares of the same class; or (ii) any other event pursuant to which all holders of Voting Shares of the Corporation are entitled to receive Voting Shares or Convertible Securities on a pro rata basis, including, without limiting the generality of the foregoing, pursuant to the receipt or exercise of rights issued by the Corporation and distributed to all the holders of a class of Voting Shares to subscribe for or purchase Voting Shares or Convertible Securities of the Corporation, provided that such rights are acquired directly from the Corporation and not from any other Person. (q) "DISQUALIFICATION DATE" has the meaning ascribed thereto in Section 1.1(a)(iii) hereof. (r) "EFFECTIVE DATE" has the meaning ascribed thereto in Section 5.13 hereof. (s) "ELECTION TO EXERCISE" has the meaning ascribed thereto in Section 2.2(4) hereof. (t) "EXEMPT ACQUISITION" means an acquisition: (i) in respect of which the Board of Directors has waived the application of Section 3.1 hereof pursuant to the provisions of Section 5.1(2), 5.1(3) or 5.1(4) hereof; (ii) which was made on or prior to the Record Time; (iii) which was made pursuant to a dividend reinvestment plan of the Corporation; (iv) pursuant to a distribution to the public by the Corporation of Voting Shares or Convertible Securities made pursuant to a prospectus provided that the Person in question does not thereby acquire a greater class percentage of Voting Shares, or Convertible Securities representing the right to acquire Voting Shares of such class, than the percentage of Voting -7- Shares of the class Beneficially Owned immediately prior to such acquisition; or (v) pursuant to a distribution by the Corporation of Voting Shares or Convertible Securities by way of a private placement by the Corporation, provided that (x) all necessary stock exchange approvals for such private placement have been obtained and such private placement complies with the terms and conditions of such approvals, and (y) the purchaser does not become the Beneficial Owner of more than 25% of the Voting Shares outstanding immediately prior to the private placement (and in making this determination, the securities to be issued to such purchaser on the private placement shall be deemed to be held by such purchaser but shall not be included in the aggregate number of outstanding Voting Shares immediately prior to the private placement). (u) "EXERCISE PRICE" means, as of any date, the price at which a holder may purchase the securities issuable upon exercise of one whole Right. Until adjustment thereof in accordance with the terms hereof, the Exercise Price shall be $100. (v) "EXPIRATION TIME" means the earlier of: (i) the Termination Time, and (ii) the close of business on the date immediately following the date of the Corporation's annual meeting of shareholders to be held in 2003. (w) "FLIP-IN EVENT" means a transaction in or pursuant to which any Person becomes an Acquiring Person. (x) "INDEPENDENT SHAREHOLDERS" means holders of Voting Shares of the Corporation, but shall not include any Acquiring Person or any Offeror (other than any Person who pursuant to Clause 1.1(e)(3) is not deemed to Beneficially Own the Voting Shares held by such Person), or any Affiliate or Associate of such Acquiring Person or such Offeror, or any Person acting jointly or in concert with such Acquiring Person or such Offeror, or any employee benefit plan, stock purchase plan, deferred profit sharing plan or any similar plan or trust for the benefit of employees of the Corporation or a Subsidiary of the Corporation, unless the beneficiaries of any such plan or trust direct the manner in which the Voting Shares are to be voted or direct whether the Voting Shares are to be tendered to a Take-over Bid. (y) "MARKET PRICE" per share of any securities on any date of determination means the average of the daily closing prices per share of such securities (determined as described below) on each of the twenty (20) consecutive Trading Days through and including the Trading Day immediately preceding such date; provided, however, that if an event of a type analogous to any of the events described in Section 2.3 hereof shall have caused the closing prices used to determine the Market Price on any Trading Days not to be fully comparable with the closing price on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day, each such closing price so used shall be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 hereof in order to make it fully -8- comparable with the closing price on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day. The closing price per share of any securities on any date shall be (i) the closing board lot sale price or, if such price is not available, the average of the closing bid and asked prices, for each share as reported by The Toronto Stock Exchange, or (ii) if for any reason none of such prices is available on such day or the securities are not listed or admitted to trading on The Toronto Stock Exchange, the closing board lot sale price or, if such price is not available, the average of the closing bid and asked prices, for each share as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the securities exchange on which the securities are primarily traded, or (iii) if not so listed, the last quoted price, or if not so quoted, the average of the high bid and low asked prices for each share of such securities in the over-the-counter market, or (iv) if on any such date the securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the securities selected in good faith by the Board of Directors; provided, however, that if on any such date the securities are not traded in the over-the-counter market, the closing price per share of such securities on such date shall mean the fair value per share of such securities on such date as determined in good faith by a nationally or internationally recognized investment dealer or investment banker. (z) "OFFER TO ACQUIRE" shall include: (i) an offer to purchase, a public announcement of an intention to make an offer to purchase, or a solicitation of an offer to sell, Voting Shares of the Corporation; and (ii) an acceptance of an offer to sell Voting Shares of the Corporation, whether or not such offer to sell has been solicited; or any combination thereof, and the Person accepting an offer to sell shall be deemed to be making an Offer to Acquire to the Person that made the offer to sell. (aa) "OFFEROR" means a Person who has announced a current intention to make, or who makes and has outstanding, a Take-over Bid. (bb) "OFFEROR'S SECURITIES" means Voting Shares of the Corporation Beneficially Owned by an Offeror, any Affiliate or Associate of such Offeror or any Person acting jointly or in concert with the Offeror. (cc) "PERMITTED BID" means a Take-over Bid that is made by means of a Take-over Bid circular and which also complies with the following additional provisions: (i) the Take-over Bid shall be made to all registered holders of Voting Shares (other than the Voting Shares held by the Offeror); (ii) the Take-over Bid shall contain, and the take up and payment for securities tendered or deposited thereunder shall be subject to, an -9- irrevocable and unqualified condition that no Voting Shares shall be taken up or paid for pursuant to the Take-over Bid prior to the close of business on the date which is not less than sixty (60) days following the date of the Take-over Bid and that no Voting Shares shall be taken up or paid for pursuant to the Take-over Bid unless, at such date, more than fifty percent (50%) of the then outstanding Voting Shares held by Independent Shareholders have been deposited to the Take-over Bid and not withdrawn; (iii) the Take-over Bid shall contain an irrevocable and unqualified provision that, unless the Take-over Bid is withdrawn, Voting Shares of the Corporation may be deposited pursuant to such Take-over Bid at any time during the period of time described in Clause (ii) of this Section 1.1(cc) and that any Voting Shares deposited pursuant to the Take-over Bid may be withdrawn at any time until taken up and paid for; and (iv) the Take-over Bid shall contain an irrevocable and unqualified provision that should the condition referred to in Clause (ii) of this Section 1.1(cc) be met: (A) the Offeror will make a public announcement of that fact on the date the Take-over Bid would otherwise expire; and (B) the Take-over Bid will be extended for a period of not less than ten (10) Business Days from the date it would otherwise expire. (dd) "PERMITTED BID ACQUISITIONS" means share acquisitions made pursuant to a Permitted Bid or a Competing Bid. (ee) "PERMITTED LOCK-UP AGREEMENT" means an agreement between a Person and one or more holders (each a "LOCKED-UP PERSON") of Voting Shares or Convertible Securities (the terms of which are publicly disclosed and a copy of which is made available to the public (including the Corporation) not later than the date the Lock-up Bid (as defined below) is publicly announced or, if the agreement was entered into after the date of the Lock-up Bid, not later than the date the agreement was entered into), pursuant to which such Locked-up Persons agree to deposit or tender Voting Shares or Convertible Securities to a Take-over Bid (the "LOCK-UP BID") made by the Person or any of such Person's Affiliates or Associates or any other Person referred to in Clause (iii) of the definition of Beneficial Owner and where the agreement: (i) (A) permits the Locked-up Person to withdraw Voting Shares or Convertible Securities in order to tender or deposit Voting Shares or Convertible Securities to another Take-over Bid or to support another transaction that contains an offering price for each Voting Share or Convertible Security that exceeds, or provides a value for each Voting Share or Convertible Security that is greater than, the offering price or value contained or proposed to be contained in the Lock-up Bid, provided that the other Take-over Bid is made for at least the same number of Voting Shares or Convertible Securities as the Lock-up Bid; or -10- (B) permits the Locked-up Person to withdraw Voting Shares or Convertible Securities in order to tender or deposit the Voting Shares or Convertible Securities to another Take-over Bid or to support another transaction that contains an offering price for each Voting Share or Convertible Security that exceeds, or provides a value for each Voting Share or Convertible Security that is greater than, the offering price contained in or proposed to be contained in, the Lock-up Bid by as much or more than a specified amount (the "SPECIFIED AMOUNT") and the Specified Amount is not greater than 7% of the offering price that is contained in the Lock-up Bid, provided that the other Take-over Bid is made for at least the same number of Voting Shares or Convertible Securities as the Lock-up Bid; and (ii) provides that no "BREAK-UP" fees, "TOP-UP" fees, penalties, expenses or other amounts that exceed in the aggregate the greater of: (A) the cash equivalent of 2.5% of the price or value payable under the Lock-up Bid to the Locked-up Person, and (B) 50% of the amount by which the price or value payable under another Take-over Bid to a Locked-up Person exceeds the price or value of the consideration that such Locked-up Person would have received under the Lock-up Bid, shall be payable by such Locked-up Person pursuant to the agreement in the event that the Lock-up Bid is not successfully concluded or if any Locked-up Person fails to tender Voting Shares or Convertible Securities pursuant thereto; and, for greater certainty, the agreement may contain a right of first refusal or require a period of delay to give the Offeror an opportunity to at least match a higher consideration in another Take-over Bid or transaction or contain other similar limitation on a Locked-up Person's right to withdraw Voting Shares or Convertible Securities from the agreement, so long as any such limitation does not preclude the exercise by the Locked-up Person of the right to withdraw Voting Shares or Convertible Securities in sufficient time to tender to the other Take-over Bid or transaction. (ff) "PERSON" means any individual, firm, partnership, association, trust, trustee, executor, administrator, legal or personal representative, government, governmental body, entity or authority, group, body corporate, corporation, unincorporated organization or association, syndicate, joint venture or any other entity, whether or not having legal personality, and any of the foregoing in any derivative, representative or fiduciary capacity and pronouns have a similar extended meaning. (gg) "RECORD TIME" means the close of business on March 7, 1990. (hh) "REDEMPTION PRICE" has the meaning ascribed thereto in Section 5.1(1) hereof. (ii) "REGULAR PERIODIC CASH DIVIDENDS" means cash dividends paid at regular intervals in any fiscal year of the Corporation to the extent that such cash dividends do not exceed, in the aggregate, the greatest of: -11- (i) two hundred percent (200%) of the aggregate amount of cash dividends declared payable by the Corporation on its Common Shares in its immediately preceding fiscal year; and (ii) one hundred percent (100%) of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year. (jj) "RIGHT" means a right issued pursuant to this Agreement. (kk) "RIGHTS CERTIFICATE" has the meaning ascribed thereto in Section 2.2(3) hereof. (ll) "RIGHTS REGISTER" has the meaning ascribed thereto in Section 2.6(1) hereof. (mm) "SECURITIES ACT (ONTARIO)" means the SECURITIES ACT, R.S.O. 1990, c. S.5, and the regulations, rules, policies, and notices thereunder, and any comparable or successor laws, regulations, rules, policies or notices thereto. (nn) "SEPARATION TIME" means the close of business on the tenth (10th) Trading Day after the earlier of (i) the Stock Acquisition Date, (ii) the date of the commencement of, or first public announcement of the intent of any person (other than the Corporation or any Subsidiary of the Corporation) to commence, a Take-over Bid (other than a Permitted Bid or Competing Bid) or such later date as may be determined by the Board of Directors and (iii) the date on which a Permitted Bid or Competing Bid ceases to qualify as such or such later date as may be determined by the Board of Directors provided that, if any Take-over Bid referred to in Clause (ii) of this Section 1.1(nn) or any Permitted Bid or Competing Bid referred to in Clause (iii) of this Section 1.1(nn) expires, is cancelled, terminated or otherwise withdrawn prior to the Separation Time, such Take-over Bid, Permitted Bid or Competing Bid, as the case may be, shall be deemed, for the purposes of this Section 1.1(nn), never to have been made and provided further that if the Board of Directors determines pursuant to Sections 5.1(2), (3) or (4) hereof to waive the application of Section 3.1 hereof to a Flip-in Event, the Separation Time in respect of such Flip-in Event shall be deemed never to have occurred. (oo) "STOCK ACQUISITION DATE" means the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to section 101 of the SECURITIES ACT (Ontario)) by the Corporation or an Offeror or Acquiring Person of facts indicating that a Person has become an Acquiring Person. (pp) "SUBSIDIARY": a corporation shall be deemed to be a Subsidiary of another corporation if: (i) it is controlled by: (A) that other; -12- (B) that other and one or more corporations each of which is controlled by that other, or (C) two or more corporations each of which is controlled by that other; and (ii) it is a Subsidiary of a corporation that is that other's Subsidiary. (qq) "TAKE-OVER BID" means an Offer to Acquire Voting Shares of the Corporation or securities convertible into or exchangeable for or carrying a right to purchase Voting Shares of the Corporation where the Voting Shares of the Corporation subject to the Offer to Acquire, together with the Voting Shares of the Corporation into which the securities subject to the Offer to Acquire are convertible, exchangeable or exercisable, and the Offeror's Securities, constitute in the aggregate twenty percent (20%) or more of the outstanding Voting Shares of the Corporation at the date of the Offer to Acquire. (rr) "TERMINATION TIME" means the time at which the right to exercise Rights shall terminate pursuant to Sections 5.1(1) or (5) hereof. (ss) "TRADING DAY", when used with respect to any securities, means a day on which the principal Canadian stock exchange or American stock exchange or market on which such securities are listed or admitted to trading is open for the transaction of business or, if the securities are not listed or admitted to trading on any Canadian stock exchange or American stock exchange or market, a Business Day. (tt) "VOTING SHARES" means the Common Shares and any other shares of capital stock or voting interests of the Corporation entitled to vote generally in the election of all directors. SECTION 1.2 CURRENCY. All sums of money which are referred to in this Agreement are expressed in lawful money of Canada, unless otherwise specified. SECTION 1.3 HEADINGS. The division of this Agreement into Articles, Sections and Clauses and the insertion of headings, subheadings and a table of contents are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. SECTION 1.4 NUMBER AND GENDER. Wherever the context so requires, terms used herein importing the singular number only shall include the plural and vice-versa and words importing only one gender shall include all others. SECTION 1.5 ACTING JOINTLY OR IN CONCERT. For the purposes of this Agreement, a Person is acting jointly or in concert with every Person who is a party to an agreement, commitment or understanding, whether formal or informal, with the first Person or any Associate or Affiliate of the second Person to acquire or to make an Offer to Acquire Voting Shares of the Corporation (other than customary agreements -13- with and between underwriters or banking group members or selling group members with respect to a distribution of securities or to a pledge of securities in the ordinary course of business). SECTION 1.6 STATUTORY REFERENCES. Unless the context otherwise requires or except as expressly provided herein, any reference herein to a specific part, section, clause or Rule of any statute or regulation shall be deemed to refer to the same as it may be amended, re-enacted or replaced or, if repealed and there shall be no replacement therefor, to the same as it is in effect on the date of this Agreement. ARTICLE 2 THE RIGHTS SECTION 2.1 LEGEND ON COMMON SHARE CERTIFICATES. (1) Certificates issued for Common Shares after the Record Time but prior to the close of business on the earlier of the Separation Time and the Expiration Time shall evidence one Right for each Common Share represented thereby and, commencing as soon as reasonably practicable after the effective date of this Agreement, shall have impressed on, printed on, written on or otherwise affixed to them, a legend in substantially the following form: Until the Separation Time (defined in the Rights Agreement referred to below), this certificate also evidences rights of the holder described in a Shareholder Protection Rights Plan Agreement, dated March 7, 1990, as amended (the "RIGHTS AGREEMENT"), between the Corporation and Montreal Trust Company of Canada, a copy of which is on file at the principal executive offices of the Corporation. Under certain circumstances set out in the Rights Agreement, the rights may be redeemed, may expire, may become null and void or may be evidenced by separate certificates and no longer evidenced by this certificate. (2) Until the earlier of the Separation Time and the Expiration Time, certificates representing Common Shares that are issued and outstanding at the Record Time shall evidence one Right for each Common Share evidenced thereby notwithstanding the absence of the foregoing legend. Following the Separation Time, Rights will be evidenced by Rights certificates issued pursuant to Section 2.2 hereof. SECTION 2.2 INITIAL EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS. (1) RIGHT TO ENTITLE HOLDER TO PURCHASE ONE COMMON SHARE PRIOR TO ADJUSTMENT. Subject to adjustment as herein set forth and subject to Section 3.1(1) hereof, each Right will entitle the holder thereof, from and after the Separation Time and prior to the Expiration Time, to purchase, for the Exercise Price as at the Business Day immediately preceding the date of exercise of the Right, one Common Share (which price and number of Common Shares are subject to adjustment as set forth below and are subject to Section 3.1(1) hereof). Notwithstanding any other provision of this Agreement, any Rights held by the Corporation and any of its Subsidiaries shall be void. -14- (2) RIGHTS NOT EXERCISABLE UNTIL SEPARATION TIME. Until the Separation Time, (i) the Rights shall not be exercisable and no Right may be exercised, and (ii) for administrative purposes each Right will be evidenced by the certificates for the associated Common Shares registered in the names of the holders thereof (which certificates shall also be deemed to be Rights Certificates) and will be transferable only together with, and will be transferred by a transfer of, such associated Common Shares. (3) DELIVERY OF RIGHTS CERTIFICATE AND DISCLOSURE STATEMENT. From and after the Separation Time and prior to the Expiration Time, (i) the Rights shall be exercisable, and (ii) the registration and transfer of the Rights shall be separate from, and independent of, Common Shares. Promptly following the Separation Time, the Corporation will prepare and the Rights Agent will mail to each holder of record of Rights as of the Separation Time (other than an Acquiring Person and, in respect of any Rights Beneficially Owned by such Acquiring Person which are not held of record by such Acquiring Person, the holder of record of such Rights (a "NOMINEE")) at such holder's address as shown by the records of the Corporation (the Corporation hereby agreeing to furnish copies of such records to the Rights Agent for this purpose), (A) a certificate (a "RIGHTS CERTIFICATE") in substantially the form of Schedule 2.2(3) hereto appropriately completed, representing the number of Rights held by such holder at the Separation Time, and having such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Corporation may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, rule, regulation or judicial or administrative order or with any rule or regulation made pursuant thereto or with any rule or regulation of any self-regulatory organization, stock exchange or quotation system on which the Rights may from time to time be listed or traded, or to conform to usage, and (B) a disclosure statement describing the Rights, provided that a Nominee shall be sent the materials provided for in (A) and (B) in respect of all Common Shares held of record by it which are not Beneficially Owned by an Acquiring Person. In order for the Corporation to determine whether any Person is holding Common Shares which are Beneficially Owned by another Person, the Corporation may require such first mentioned Person to furnish it with such information and documentation as the Corporation considers advisable. (4) EXERCISE OF RIGHTS. Rights may be exercised in whole or in part on any Business Day after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent (at the office of the Rights Agent in the City of Toronto or any other office of the Rights Agent in the cities designated from time to time for that purpose by the Corporation) the Rights Certificate evidencing such Rights together with an election to exercise such Rights (an "ELECTION TO EXERCISE") substantially in the form attached to the Rights Certificate duly completed, accompanied by payment by certified cheque, banker's draft or money order payable to the order of the Corporation, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for Common Shares in a name other than that of the holder of the Rights being exercised, all of the above to be received before the Expiration Time by the Rights Agent at its principal office in any of the cities listed on the Rights Certificate. -15- (5) DUTIES OF RIGHTS AGENT UPON RECEIPT OF ELECTION TO EXERCISE. Upon receipt of a Rights Certificate, which is accompanied by (i) a completed and duly executed Election to Exercise, and (ii) payment as set forth in Section 2.2(4) above, the Rights Agent (unless otherwise instructed by the Corporation) will thereupon promptly: (A) requisition from the transfer agent for the Common Shares certificates representing the number of Common Shares to be purchased (the Corporation hereby irrevocably authorizing its transfer agent to comply with all such requisitions); (B) when appropriate, requisition from the Corporation the amount of cash to be paid in lieu of issuing fractional Common Shares; (C) after receipt of such certificates, deliver the same to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such registered holder; (D) when appropriate, after receipt, deliver such cash (less any amounts required to be withheld) to or to the order of the registered holder of the Rights Certificate; and (E) tender to the Corporation all payments received on exercise of the Rights. (6) PARTIAL EXERCISE OF RIGHTS. In case the holder of any Rights shall exercise less than all of the Rights evidenced by such holder's Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holder's duly authorized assigns. (7) DUTIES OF THE CORPORATION. The Corporation covenants and agrees that it will: (a) take all such action as may be necessary and within its power to ensure that all Common Shares or other securities delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Exercise Price), be duly and validly authorized, executed, issued and delivered and fully paid and non-assessable; (b) take all such action as may be necessary and within its power to ensure compliance with the provisions of Section 3.1 hereof including, without limitation, all such action to comply with any applicable requirements of the CBCA, the SECURITIES ACT (Ontario) and any applicable comparable securities legislation of each of the provinces of Canada and any other applicable law, rule or regulation, in connection with the issuance and delivery of the Rights Certificates and the issuance of any Common Shares or other securities upon exercise of Rights; (c) use reasonable efforts to cause, from and after such time as the Rights become exercisable, all Common Shares issued upon exercise of Rights to be listed upon issuance on the principal stock exchange on which the Common Shares were traded prior to the Stock Acquisition Date; -16- (d) cause to be reserved and kept available out of its authorized and unissued Common Shares, the number of Common Shares that, as provided in this Agreement, will from time to time be sufficient to permit the exercise in full of all outstanding Rights; (e) pay when due and payable any and all Canadian federal and provincial transfer taxes and charges (not including any income or capital taxes of the holder or exercising holder or any liability of the Corporation to withhold tax) which may be payable in respect of the original issuance or delivery of the Rights Certificates, provided that the Corporation shall not be required to pay any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for shares or other securities in a name other than that of the registered holder of the Rights being transferred or exercised; and (f) after the Separation Time, except as permitted by Sections 5.1 or 5.4 hereof, not take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. SECTION 2.3 ADJUSTMENTS TO EXERCISE PRICE, NUMBER OF RIGHTS. The Exercise Price, the number and kind of Common Shares or other securities subject to purchase upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 2.3: (a) ADJUSTMENT TO EXERCISE PRICE UPON CHANGES TO SHARE CAPITAL. In the event the Corporation shall at any time after the Record Time: (i) declare or pay a dividend on the Common Shares payable in Common Shares (or other securities exchangeable for or convertible into or giving a right to acquire Common Shares or other securities) other than the issue of Common Shares or such exchangeable or convertible securities to holders of Common Shares in lieu of but not in an amount which exceeds the value of regular periodic cash dividends; (ii) subdivide or change the outstanding Common Shares into a greater number of Common Shares; (iii) combine or change the outstanding Common Shares into a smaller number of Common Shares; or (iv) issue any Common Shares (or other securities exchangeable for or convertible into or giving a right to acquire Common Shares or other securities) in respect of, in lieu of or in exchange for existing Common Shares, except as otherwise provided in this Section 2.3; the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of Common Shares, or other securities, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any -17- Right exercised after such time shall be entitled to receive, upon payment of the Exercise Price then in effect, the aggregate number and kind of Common Shares or other securities, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Common Share transfer books of the Corporation were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 2.3 and Section 3.1 hereof, the adjustment provided for in this Section 2.3 shall be in addition to and, shall be made prior to, any adjustment required pursuant to Section 3.1 hereof. (b) ADJUSTMENT TO EXERCISE PRICE UPON ISSUE OF RIGHTS, OPTIONS AND WARRANTS. In case the Corporation shall at any time after the Record Time fix a record date for the issuance of rights, options or warrants to all holders of Common Shares entitling them (for a period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase Common Shares (or shares having the same rights, privileges and preferences as Common Shares ("EQUIVALENT COMMON SHARES")) or securities convertible into or exchangeable for or carrying a right to purchase Common Shares or equivalent common shares at a price per Common Share or per equivalent common share (or having a conversion price or exchange price or exercise price per share, if a security convertible into or exchangeable for or carrying a right to purchase Common Shares or equivalent common shares) less than ninety percent (90%) of the Market Price per Common Share on such record date, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on Such record date, plus the number of Common Shares that the aggregate offering price of the total number of Common Shares and/or equivalent common shares so to be offered (and/or the aggregate initial conversion, exchange or exercise price of the convertible or exchangeable securities or rights so to be offered, including the price required to be paid to purchase such convertible or exchangeable securities or rights so to be offered) would purchase at such Market Price per Common Share, and the denominator of which shall be the number of Common Shares outstanding on such record date, plus the number of additional Common Shares and/or equivalent common shares to be offered for subscription or purchase (or into which the convertible or exchangeable securities are initially convertible, exchangeable or exercisable). In case such subscription price may be paid by delivery of consideration, part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a certificate filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Such adjustment shall be made successively whenever such a record date is fixed and, in the event that such rights or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed. For purposes of this Agreement, the granting of the right to purchase Common Shares (or equivalent common shares) (whether from treasury shares or -18- otherwise) pursuant to any dividend or interest reinvestment plan and/or any Common Share purchase plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and/or the investment of periodic optional payments and/or employee benefit, stock option or similar plans (so long as such right to purchase is in no case evidenced by the delivery of rights or warrants) shall not be deemed to constitute an issue of rights, options or warrants by the Corporation; provided, however, that, in the case of any dividend or interest reinvestment plan, the right to purchase Common Shares (or equivalent common shares) is at a price per share of not less than ninety percent (90%) of the current market price per share (determined as provided in such plans) of the Common Shares. (c) ADJUSTMENT TO EXERCISE PRICE UPON CORPORATE DISTRIBUTIONS. In case the Corporation shall at anytime after the Record Time fix a record date for a distribution to all holders of Common Shares (including any such distribution made in connection with a merger, amalgamation, arrangement, plan, compromise or reorganization in which the Corporation is the continuing or successor corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend or a regular periodic cash dividend paid in Common Shares, but including any dividend payable in securities other than Common Shares), assets or subscription rights, options or warrants (excluding those referred to in Section 2.3(b) above), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Market Price per Common Share on such record date, less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights, options or warrants applicable to a Common Share and the denominator of which shall be such Market Price per Common Share. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been in effect if such record date had not been fixed. (d) DE MINIMIS THRESHOLD FOR ADJUSTMENT TO EXERCISE PRICE. Notwithstanding anything herein to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Exercise Price; provided, however, that any adjustments which by reason of this Section 2.3(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 2.3 shall be made to the nearest cent or to the nearest one-hundredth of a Common Share or other share, as the case may be. Notwithstanding the first sentence of this Section 2.3(d), any adjustment required by this Section 2.3 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment or (ii) the Expiration Time. -19- (e) CORPORATION MAY PROVIDE FOR ALTERNATE MEANS OF ADJUSTMENT. Subject to the prior consent of the holders of Voting Shares or Rights obtained as set forth in Section 5.4(2) or (3) hereof, as applicable, in the event the Corporation shall at any time after the Record Time issue any shares of capital stock (other than Common Shares), or rights or warrants to subscribe for or purchase any such capital stock, or securities convertible into or exchangeable for any such capital stock, in a transaction referred to in Sections 2.3(a)(i) or (iv) or 2.3(b) or (c) above, if the Board of Directors acting in good faith determines that the adjustments contemplated by Sections 2.3(a), (b) and (c) above in connection with such transaction will not appropriately protect the interests of the holders of Rights, the Corporation shall be entitled to determine what other adjustments to the Exercise Price, number of Rights and/or securities purchasable upon exercise of Rights would be appropriate and, notwithstanding Sections 2.3(a), (b) and (c) above, such adjustments, rather than the adjustments contemplated by Sections 2.3(a), (b) and (c) above, shall be made. The Corporation and the Rights Agent shall amend this Agreement as appropriate to provide for such adjustments. (f) ADJUSTMENT TO RIGHTS EXERCISABLE INTO SHARES OTHER THAN COMMON SHARES. If as a result of an adjustment made pursuant to Section 3.1 hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares other than Common Shares, thereafter the number of such other shares so receivable upon exercise of any Right and the Exercise Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in Sections 2.3(a), (b), (c), (d), (e), (g), (h), (i), (j), (k) and (l) above and below, as the case may be, and the provisions of this Agreement with respect to the Common Shares shall apply on like terms to any such other shares. (g) RIGHTS TO EVIDENCE RIGHT TO PURCHASE COMMON SHARES AT ADJUSTED EXERCISE PRICE. Each Right originally issued by the Corporation subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of Common Shares purchasable from time to time hereunder upon exercise of such Right, all subject to further adjustment as provided herein. (h) ADJUSTMENT TO NUMBER OF COMMON SHARES PURCHASABLE UPON ADJUSTMENT TO EXERCISE PRICE. Unless the Corporation shall have exercised its election as provided in Section 2.3(i) below, upon each adjustment of the Exercise Price as a result of the calculations made in Sections 2.3(b) and (c) above, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares (calculated to the nearest one ten-thousandth) obtained by (A) multiplying (x) the number of shares purchasable upon exercise of a Right immediately prior to this adjustment by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (B) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. -20- (i) ELECTION TO ADJUST NUMBER OF RIGHTS UPON ADJUSTMENT TO EXERCISE PRICE. The Corporation shall be entitled to elect on or after the date of any adjustment of the Exercise Price to adjust the number of Rights, in lieu of any adjustment in the number of Common Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of Common Shares for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Corporation shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter but, if Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment, of the number of Rights pursuant to this Section 2.3(i), the Corporation shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 5.5 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Corporation, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and may bear, at the option of the Corporation, the adjusted Exercise Price and shall be registered in the names of the holders of record of Rights Certificates on the record date for the adjustment specified in the public announcement. (j) RIGHTS CERTIFICATES MAY CONTAIN EXERCISE PRICE BEFORE ADJUSTMENT. Irrespective of any adjustment or change in the Exercise Price or the number of Common Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Exercise Price per share and the number of shares which were expressed in the initial Rights Certificates issued hereunder. (k) CORPORATION MAY IN CERTAIN CASES DEFER ISSUES OF SECURITIES. In any case in which this Section 2.3 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Corporation may elect to defer until the the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of Common Shares and other securities of the Corporation, if any, issuable upon such exercise over and above the number of Common Shares and other securities of the Corporation, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such -21- additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. (l) CORPORATION HAS DISCRETION TO REDUCE EXERCISE PRICE FOR TAX REASONS. Notwithstanding anything in this Section 2.3 to the contrary, the Corporation shall be entitled to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section 2.3, as and to the extent that in their good faith judgment, the Board of Directors shall determine to be advisable in order that any (A) consolidation or subdivision of the Common Shares, (B) issuance of any Common Shares at less than the Market Price, (C) issuance of securities convertible into or exchangeable for Common Shares, (D) stock dividends or (E) issuance of rights, options or warrants, referred to in this Section 2.3 hereafter made by the Corporation to holders of its Common Shares, shall not be taxable to such shareholders. SECTION 2.4 DATE ON WHICH EXERCISE IS EFFECTIVE. Each person in whose name any certificate for Common Shares is issued upon the exercise of Rights, shall for all purposes be deemed to have become the holder of record of the Common Shares represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered (together with a duly completed Election to Exercise) and payment of the Exercise Price for such Rights (and any applicable transfer taxes and other governmental charges payable by the exercising holder hereunder) was made; provided, however, that if the date of such surrender and payment is a date upon which the Common Share transfer books of the Corporation are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Common Share transfer books of the Corporation are open. SECTION 2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES. (1) The Rights Certificates shall be executed on behalf of the Corporation by its Chairman, President or any of its Vice-Presidents under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Rights Certificates may be manual or facsimile. Rights Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and delivery of such Rights Certificates. (2) Promptly after the Corporation learns of the Separation Time, the Corporation will notify the Rights Agent of such Separation Time and will deliver Rights Certificates executed by the Corporation to the Rights Agent for countersignature and a disclosure statement as described in Section 2.2(3), and the Rights Agent shall manually or by facsimile signature countersign and mail such Rights Certificates and disclosure statement to the holders of the Rights pursuant to Section 2.2(3) hereof. No Rights Certificate shall be valid for any purpose until countersigned by the Rights Agent as aforesaid. (3) Each Rights Certificate shall be dated the date of countersignature thereof. -22- SECTION 2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (1) The Corporation will cause to be kept a register (the "RIGHTS REGISTER") in which, subject to such reasonable regulations as it may prescribe, the Corporation will provide for the registration and transfer of Rights. The Rights Agent is hereby appointed "RIGHTS REGISTRAR" for the purpose of maintaining the Rights Register for the Corporation and registering Rights and transfers of Rights as herein provided, in the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times. After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate and subject to the provisions of Section 2.6(3) below and the other provisions of this Agreement, the Corporation will execute and the Rights Agent will countersign, register and deliver, in the name of the holder or the designated transferee or transferees as required pursuant to the holder's instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificates so surrendered. (2) All Rights issued upon any registration of transfer or exchange of Rights Certificates shall be the valid obligations of the Corporation, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such registration of transfer or exchange. (3) Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Corporation or the Rights Agent, as the case may be, duly executed by the registered holder thereof or such holder's attorney duly authorized in writing. As a condition to the issuance of any new Rights Certificate under this Section 2.6, the Corporation or the Rights Agent may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and the Corporation may require payment of a sum sufficient to cover any other expenses (including the fees and expenses of the Rights Agent) in connection therewith. SECTION 2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES. (1) If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, the Corporation shall execute and the Rights Agent shall manually countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so surrendered. (2) If there shall be delivered to the Corporation and the Rights Agent prior to the Expiration Time (i) evidence to their reasonable satisfaction of the destruction, loss or theft of any Rights Certificate, and (ii) such indemnity or other security as may be required by them to save each of them and any of their agents harmless then, in the absence of notice to the Corporation or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Corporation shall execute and upon its request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen. -23- (3) As a condition to the issuance of any new Rights Certificate under this Section 2.7, the Corporation or the Rights Agent may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and the Corporation may require payment of a sum sufficient to cover any other expenses (including the fees and expenses of the Rights Agent) in connection therewith. (4) Every new Rights Certificate issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence an original additional contractual obligation of the Corporation, whether or not the destroyed lost or stolen Rights Certificate shall be at any time enforceable by anyone, and the holder thereof shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other holders of Rights duly issued by the Corporation. SECTION 2.8 PERSONS DEEMED OWNERS. Prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) for registration of transfer, the Corporation, the Rights Agent and any agent of the Corporation or the Rights Agent shall be entitled to deem and treat the person in whose name a Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever. As used in this Agreement, unless the context otherwise requires, the term "HOLDER" of any Rights shall mean the registered holder of such Rights (or, prior to the Separation Time, the associated Common Shares). SECTION 2.9 DELIVERY AND CANCELLATION OF RIGHTS CERTIFICATES. All Rights Certificates surrendered upon exercise or for redemption, registration of transfer or exchange shall, if surrendered to any person other than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent. The Corporation may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned and delivered hereunder which the Corporation may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall be promptly cancelled by the Rights Agent. No Rights Certificate shall be countersigned in lieu of or in exchange for any Rights Certificates cancelled as provided in this Section 2.9 except as expressly permitted by this Agreement. The Rights Agent shall, subject to applicable laws, destroy all cancelled Rights Certificates and deliver a certificate of destruction to the Corporation. SECTION 2.10 AGREEMENT OF RIGHTS HOLDERS. Every holder of Rights, by accepting the same, consents and agrees with the Corporation and the Rights Agent and with every other holder of Rights: (a) to be bound by and subject to the provisions of this Agreement, as amended or supplemented from time to time in accordance with the terms hereof, in respect of all Rights held; (b) that prior to the Separation Time each Right will be transferable only together with, and will be transferred by a transfer of, the Common Share certificate representing such Right; -24- (c) that after the Separation Time, the Rights Certificates will be transferable only on the Rights Register as provided herein; (d) that prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) for registration of transfer, the Corporation, the Rights Agent and any agent of the Corporation or the Rights Agent shall be entitled to deem and treat the person in whose name the Rights Certificate (or prior to the Separation Time, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on such Rights Certificate or the associated Common Share certificate made by anyone other than the Corporation or the Rights Agent) for all purposes whatsoever, and neither the Corporation nor the Rights Agent shall be affected by any notice to the contrary; (e) that such holder of Rights has waived his right to receive any fractional Rights or any fractional shares upon exercise of Right; (f) that without the approval of any holder of Rights and upon the sole authority of the Board of Directors acting in good faith this Agreement may be supplemented or amended from time to time pursuant to and as provided herein; and (g) that notwithstanding anything in this Agreement to the contrary, neither the Corporation nor the Rights Agent shall have any liability to any holder of a Right or any other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation, or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation. SECTION 2.11 RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder, as such, of any Rights or Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose whatsoever the holder of any Common Share or any other share or security of the Corporation which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed or deemed to confer upon the holder of any Right or Rights Certificate, as such, any of the rights, titles, benefits or privileges of a holder of Common Shares or any other shares or securities of the Corporation or any right to vote at any meeting of shareholders of the Corporation whether for the election of directors or otherwise or upon any matter submitted to holders of shares of the Corporation at any meeting thereof, or to give or withhold consent to any action of the Corporation, or to receive notice of any meeting or other action affecting any holder of Common Shares or any other shares or securities of the Corporation except as expressly provided herein, or to receive dividends, distributions or subscription rights, or otherwise, until the Right or Rights evidenced by Rights Certificates shall have been duly exercised in accordance with the terms and provisions hereof. -25- ARTICLE 3 ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS SECTION 3.1 FLIP-IN EVENT. (1) Subject to Section 3.1(2) below, and Sections 5.1(2), (3) and (4) hereof, in the event that prior to the Expiration Time a Flip-in Event shall occur, the Corporation shall take such action as may be necessary to ensure and provide within eight (8) Business Days of such occurrence, or such longer period as may be required to satisfy all applicable requirements of the SECURITIES ACT (Ontario), and the securities legislation of each other province of Canada that, except as provided below, each Right shall thereafter constitute the right to purchase from the Corporation upon exercise thereof in accordance with the terms hereof that number of Common Shares of the Corporation having an aggregate Market Price on the date of the occurrence of such Flip-in Event equal to twice the Exercise Price for an amount in cash equal to the Exercise Price (such Right to be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 hereof in the event that after such date of occurrence an event of a type analogous to any of the events described in Section 2.3 hereof shall have occurred with respect to such Common Shares). (2) Notwithstanding anything in this Agreement to the contrary, upon the occurrence of any Flip-in Event, any Rights that are Beneficially Owned by (i) an Acquiring Person, or any Affiliate or Associate of an Acquiring Person, or any Person acting jointly or in concert with an Acquiring Person or any Affiliate or Associate of such Acquiring Person, or any Affiliate or Associate of such Person so acting jointly or in concert, or (ii) a transferee or other successor in title of Rights, directly or indirectly, of an Acquiring Person (or of any Affiliate or Associate of an Acquiring Person) or of any Person acting jointly or in concert with an Acquiring Person or any Associate or Affiliate of an Acquiring Person (or of any Affiliate or Associate of such Person so acting jointly or in concert) who becomes a transferee or successor in title concurrently with or subsequent to the Acquiring Person becoming such, shall become null and void without any further action, and any holder of such Rights (including transferees or successors in title) shall not have any rights whatsoever to exercise such Rights under any provision of this Agreement and shall not have thereafter any other rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. ARTICLE 4 THE RIGHTS AGENT SECTION 4.1 GENERAL. (1) The Corporation hereby appoints the Rights Agent to act as agent for the Corporation in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Corporation may from time to time appoint such co-Rights Agents as it may deem necessary or desirable, subject to the prior approval of the Rights Agent. In the event the Corporation appoints one or more co-Rights Agents, the respective duties of the Rights Agents and co-Rights Agents shall be as the Corporation may determine, with the approval of the Rights Agent. The Corporation agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and -26- other disbursements incurred in the administration and execution of this Agreement (including the reasonable fees and disbursements of counsel for the Rights Agent) and the exercise and performance of its duties hereunder. The Corporation also agrees to indemnify the Rights Agent, its officers, directors and employees for, and to hold such persons harmless against, any loss, liability, cost, claim, action, suit, damage, or expense incurred (that is not the result of negligence, bad faith or wilful misconduct on the part of any one or all of the Rights Agent, its officers, directors or employees) for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability, which right to indemnification will survive the termination of this Agreement or the resignation or removal of the Rights Agent. (2) The Rights Agent shall be protected from and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any certificate for Common Shares or any Rights Certificate or certificate for other securities of the Corporation, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. (3) The Corporation shall inform the Rights Agent in a reasonably timely manner of events which may materially affect the administration of this Agreement by the Rights Agent and at any time, upon request, shall provide to the Rights Agent an incumbency certificate certifying the then current officers of the Corporation. SECTION 4.2 MERGER OR AMALGAMATION OR CHANGE OF NAME OF RIGHTS AGENT. (1) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or amalgamated or with which it may be consolidated, or any corporation resulting from any merger, amalgamation, statutory arrangement or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to the shareholder or stockholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 4.4 hereof. In case at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates have not been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will have the full force provided in the Rights Certificates and in this Agreement. (2) In case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so -27- countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. SECTION 4.3 DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, to all of which the Corporation and the holders of Rights Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may retain and consult with legal counsel (who may be legal counsel for the Corporation) and the opinion of such counsel will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted to be taken by it in good faith and in accordance with such opinion. Subject to the prior written consent of the Corporation, which consent shall not be unreasonably withheld, the Rights Agent may also consult with such other experts as the Rights Agent shall consider necessary or appropriate to properly carry out the duties and obligations imposed under this Agreement (at the expense of the Corporation) and the Rights Agent shall be entitled to act and rely in good faith on the advice of any such expert. (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Corporation prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proven and established by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board, the President or any Vice-President, Treasurer or the Controller of the Corporation and delivered to the Rights Agent; and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent will be liable hereunder only for events which are the result of its own negligence, bad faith or wilful misconduct and that of its officers, directors and employees. (d) The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the certificates for Common Shares or the Rights Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Corporation only. (e) The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Common Share certificate or Rights Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Corporation of any covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible for any change in the -28- exercisability of the Rights (including the Rights becoming void pursuant to Section 3.1(2) hereof) or any adjustment required under the provisions of Section 2.3 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt of the certificate contemplated by Section 2.3 hereof describing any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization of any Common Shares to be issued pursuant to this Agreement or any Rights or as to whether any Common Shares will, when issued, be duly and validly authorized, executed, issued and delivered or fully paid and non-assessable. (f) The Corporation agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person believed by the Rights Agent to be the Chairman of the Board, President, any Vice-President or the Treasurer or Controller of the Corporation and to apply to such persons for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such person. It is understood that instructions to the Rights Agent shall, except where circumstances make it impracticable or the Rights Agent otherwise agrees, be given in writing and, where not in writing, such instructions shall be confirmed in writing as soon as reasonably possible after the giving of such instructions. (h) The Rights Agent and any shareholder or stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in Common Shares, Rights or other securities of the Corporation or become pecuniarily interested in any transaction in which the Corporation may be interested or contract with or lend money to the Corporation or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Corporation or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or, with the prior written consent of the Corporation, by or through its attorneys or agents. The Rights Agent will not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Corporation resulting from any such act, omission, default, neglect or misconduct, provided the prior written consent of the Corporation was obtained and reasonable care was exercised in the selection and continued employment thereof. -29- SECTION 4.4 CHANGE OF RIGHTS AGENT. The Rights Agent may resign and be discharged from its duties under this Agreement upon sixty (60) days' notice (or such lesser notice as is acceptable to the Corporation) in writing mailed to the Corporation and to each transfer agent of Voting Shares of the Corporation by registered or certified mail, and to the holders of the Rights in accordance with Section 5.8 hereof (all of which shall be at the expense of the Corporation). The Corporation may remove the Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent and to each transfer agent of the Voting Shares of the Corporation by registered or certified mail and to the holders of the Rights in accordance with Section 5.8 hereof. If the Rights Agent should resign or be removed or otherwise become incapable of acting, the Corporation will appoint a successor to the Rights Agent. If the Corporation fails to make such appointment within a period of sixty (60) days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of any Rights (which holder shall, with such notice, submit such holder's Rights Certificate for inspection by the Corporation), then the Rights Agent or the holder of any Rights may apply to any court of competent jurisdiction for the appointment of a new Rights Agent at the Corporation's expense. Any successor Rights Agent, whether appointed by the Corporation or by such a court, shall be a corporation incorporated under the laws of Canada or a province thereof authorized to carry on the business of a trust company in Canada. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent, upon receiving from the Corporation payment in full of all amounts outstanding under this Agreement, shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Corporation will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Voting Shares of the Corporation, and mail a notice thereof in writing to the holders of the Rights. The cost of giving any notice required under this Section 4.4 shall be borne solely by the Corporation. Failure to give any notice provided for in this Section 4.4 however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. ARTICLE 5 MISCELLANEOUS SECTION 5.1 REDEMPTION AND WAIVER. (1) Subject to the prior consent of the holders of Voting Shares or Rights obtained as set forth in Section 5.4(2) or Section 5.4(3) hereof, as applicable, the Board of Directors acting in good faith may, at any time prior to the occurrence of a Flip-in Event, elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.00001 per Right appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section 2.3 hereof in the event that an event of the type described in Section 2.3 hereof shall have occurred (such redemption price being herein referred to as the "REDEMPTION PRICE"). (2) Subject to the prior consent of the holders of Voting Shares obtained as set forth in Section 5.4(2) hereof, the Board of Directors may, at any time prior to the occurrence of a -30- Flip-in Event as to which the application of Section 3.1 hereof has not been waived pursuant to this Section 5.1, if such Flip-in Event would occur by reason of an acquisition of Voting Shares otherwise than pursuant to a Take-over Bid made by means of a Take-over Bid circular to all registered holders of Voting Shares and otherwise than in the circumstances set forth in Section 5.1(4) hereof, waive the application of Section 3.1 hereof to such Flip-in Event. In such event, the Board of Directors shall extend the Separation Time to a date at least ten (10) Business Days subsequent to the meeting of shareholders called to approve such waiver. (3) The Board of Directors acting in good faith, may, prior to the occurrence of a Flip-in Event, and upon prior written notice delivered to the Rights Agent, determine to waive the application of Section 3.1 hereof to a Flip-in Event that may occur by reason of a Take-over Bid made by means of a Take-over Bid circular to all registered holders of Voting Shares; provided that if the Board of Directors waives the application of Section 3.1 hereof to a particular Flip-in Event pursuant to this Section 5.1(3), the Board of Directors shall be deemed to have waived the application of Section 3.1 hereof to any other Flip-in Event occurring by reason of any Take-over Bid made by means of a Take-over Bid circular to all registered holders of Voting Shares prior to the expiry of any Take-over Bid in respect of which a waiver is, or is deemed to have been granted, pursuant to this Section 5.1(3). (4) The Board of Directors may, prior to the close of business on the tenth (10th) day following the Stock Acquisition Date, determine, upon prior written notice delivered to the Rights Agent, to waive or to agree to waive the application of Section 3.1 hereof to a Flip-in Event, provided that both of the following conditions are satisfied: (a) the Board of Directors has determined that a Person became an Acquiring Person by inadvertence and without any intention to become, or knowledge that Person would become, an Acquiring Person; and (b) such Acquiring Person has reduced its Beneficial Ownership of Voting Shares (or has entered into a contractual arrangement with the Corporation, acceptable to the Board of Directors, to do so within thirty (30) days of the date on which such contractual arrangement is entered into) such that at the time the waiver becomes effective pursuant to this Section 5.1(4) it is no longer an Acquiring Person; and in the event of such a waiver, for the purposes of this Agreement, the Flip-in Event shall be deemed never to have occurred. (5) Where a Person acquires pursuant to a Permitted Bid, a Competing Bid or an Exempt Acquisition under Section 5.1(3) above, outstanding Voting Shares, then the Corporation shall immediately upon the consummation of such acquisition redeem the Rights at the Redemption Price. (6) If the Corporation is obligated under Section 5.1(5) above to redeem the Rights, or if the Board of Directors elects under Section 5.1(1) above or Section 5.1(8) below to redeem the Rights, the right to exercise the Rights will thereupon, without further action and without notice, terminate and each Right will after redemption be null and void and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. -31- (7) Within ten (10) days after the Corporation is obligated under Section 5.1(5) above to redeem the Rights, or the Board of Directors elects under Section 5.1(1) above or Section 5.1(8) below to redeem the Rights, the Corporation shall give notice of redemption to the holders of the then outstanding Rights by mailing such notice to all such holders at their last address as they appear upon the Rights Register or, prior to the Separation Time, on the registry books of the Transfer Agent for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. The Corporation may not redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 5.1 and other than in connection with the purchase of Common Shares prior to the Separation Time. (8) Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn or otherwise terminated after the Separation Time has occurred and prior to the occurrence of a Flip-in Event, the Board of Directors may elect to redeem all the outstanding Rights at the Redemption Price. (9) Upon the Rights being redeemed pursuant to Section 5.1(8) above, all the provisions of this Agreement shall continue to apply as if the Separation Time had not occurred and Rights Certificates representing the number of Rights held by each holder of record of Common Shares as of the Separation Time had not been mailed to each such holder and for all purposes of this Agreement the Separation Time shall be deemed not to have occurred. SECTION 5.2 EXPIRATION. No person shall have any rights whatsoever pursuant to or arising out of this Agreement or in respect of any Right after the Expiration Time, except the Rights Agent as specified in Section 4.1(1) hereof. SECTION 5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Corporation may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the number or kind or class of shares purchasable upon exercise of Rights made in accordance with the provisions of this Agreement. SECTION 5.4 SUPPLEMENTS AND AMENDMENTS. (1) The Corporation may, prior to any shareholders' meeting called to approve this Agreement, supplement or amend this Agreement without the approval of any holder of Rights or Voting Shares. Thereafter, the Corporation may from time to time supplement or amend this Agreement without the approval of any holders of Rights or Voting Shares to correct any clerical or typographical error or to maintain the validity of the Agreement as a result of a change in any applicable legislation or regulations or rules thereunder. Notwithstanding anything in this Section 5.4 to the contrary, no supplement or amendment shall be made to the provisions of Article 4 hereof except with the written concurrence of the Rights Agent to such supplement or amendment. -32- (2) Subject to Section 5.4(1) above, the Corporation may, with the prior consent of the holders of the Voting Shares obtained as set forth below, at any time prior to the Separation Time amend, vary or rescind any of the provisions of this Agreement and the Rights (whether or not such action would materially adversely affect the interests of the holders of Rights generally). Such consent shall be deemed to have been given if provided by the holders of Voting Shares at a meeting of the holders of Voting Shares, which meeting shall be called and held in compliance with applicable laws and regulatory requirements and the requirements in the articles and by-laws of the Corporation. Subject to compliance with any requirements imposed by the foregoing, consent shall be deemed to have been given if the proposed amendment, variation or revision is approved by the affirmative vote of a majority of the votes cast by all holders of Voting Shares (other than any holder of Voting Shares who is an Offeror pursuant to a Take-over Bid that is not a Permitted Bid or Competing Bid with respect to all Voting Shares Beneficially Owned by such Person), represented in person or by proxy at the meeting. (3) The Corporation may, with the prior consent of the holders of Rights, at any time after the Separation Time and before the Expiration Time, amend, vary or rescind any of the provisions of this Agreement and the Rights (whether or not such action would materially adversely affect the interests of the holders of Rights generally). (4) Any approval of the holders of Rights shall be deemed to have been given if the action requiring such approval is authorized by the affirmative votes of the holders of Rights present or represented at and entitled to be voted at a meeting of the holders of Rights and representing a majority of the votes cast in respect thereof. For the purposes hereof, each outstanding Right (other than Rights which are void pursuant to the provisions hereof) shall be entitled to one vote, and the procedures for the calling, holding and conduct of the meeting shall be those, as nearly as may be, which are provided in the Corporation's by-laws and the CBCA with respect to a meeting of shareholders of the Corporation. (5) The Corporation shall be required to provide the Rights Agent with notice in writing of any such amendment, variation or deletion to this Agreement as referred to in this Section 5.4 within 5 days of effecting such amendment, variation or deletion. (6) Any supplements or amendments made by the Corporation to this Agreement pursuant to Section 5.4(1) above which are required to maintain the validity of this Agreement as a result of any change in any applicable legislation or regulations or rules thereunder shall: (a) if made before the Separation Time, be submitted to the shareholders of the Corporation at the next meeting of shareholders and the shareholders may, by the majority referred to in Section 5.4(2) above confirm or reject such amendment; and (b) if made after the Separation Time, be submitted to the holders of Rights at a meeting to be called for on a date not later than immediately following the next meeting of shareholders of the Corporation and the holders of Right may, by -33- resolution passed by the majority referred to in Section 5.4(4) above, confirm or reject such amendment. A supplement or amendment of the nature referred to in this Section 5.4(6) shall be effective from the date of the resolution of the Board of Directors adopting such supplement or amendment until it is confirmed or rejected or until it ceases to be effective (as described in the next sentence) and, where such supplement or amendment is confirmed, it continues in effect in the form so confirmed. If such supplement or amendment is rejected by the shareholders or the holders of Rights or is not submitted to the shareholders or holders of Rights as required, then such supplement or amendment shall cease to be effective from and after the termination of the meeting at which it was rejected or to which it should have been but was not submitted or from and after the date of the meeting of holders of Rights that should have been but was not held, and no subsequent resolution of the Board of Directors to amend, vary or delete any provision of this Agreement to substantially the same effect shall be effective until confirmed by the shareholders or holders of Rights, as the case may be. SECTION 5.5 FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (1) The Corporation shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights. Any such fractional Right shall be null and void and the Corporation will not have any obligation or liability in respect thereof. (2) The Corporation shall not be required to issue fractions of Common Shares or other securities upon exercise of the Rights or to distribute certificates which evidence fractional Common Shares or other securities. In lieu of issuing fractional Common Shares or other securities, the Corporation shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided, an amount in cash equal to the same fraction of the Market Price of one Common Share. The Rights Agent shall have no obligation to make any payments in lieu of fractional Common Shares unless the Corporation shall have provided the Rights Agent with the necessary funds to pay in full all amounts payable in accordance with Section 2.2(5). SECTION 5.6 RIGHTS OF ACTION. Subject to the terms of this Agreement, all rights of action in respect of this Agreement, other than rights of action vested solely in the Rights Agent, are vested in the respective registered holders of the Rights; and any registered holder of any Rights, without the consent of the Rights Agent or of the registered holder of any other Rights, may, on such holder's own behalf and for such holder's own benefit and the benefit of other holders of Rights enforce, and may institute and maintain any suit, action or proceeding against the Corporation to enforce such holder's right to exercise such holder's Rights in the manner provided in such holder's Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Agreement. SECTION 5.7 NOTICE OF PROPOSED ACTIONS. In case the Corporation shall propose after the Separation Time and prior to the Expiration Time to effect the liquidation, dissolution or winding-up of the Corporation or the -34- sale of all or substantially all of the Corporation's assets, then, in each such case, the Corporation shall give to each holder of a Right, in accordance with Section 5.8 hereof, a notice of such proposed action, which shall specify the date on which such liquidation, dissolution, winding up, or sale is to take place, and such notice shall be so given at least twenty (20) Business Days prior to the date of taking of such proposed action. SECTION 5.8 NOTICES. (1) Notices or demands authorized or required by this Agreement to be given or made by the Rights Agent or by the holder of any Rights to or on the Corporation shall be sufficiently given or made if delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: CAE Inc. P.O. Box 30, Suite 3060 Royal Bank Plaza Toronto, Ontario M5J 2J1 Attention: President and Chief Executive Officer Facsimile No.: (416) 865-0337 (2) Any notice or demand authorized or required by this Agreement to be given or made by the Corporation or by the holder of any Rights to or on the Rights Agent shall be sufficiently given or made if delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Corporation) as follows: Montreal Trust Company of Canada 151 Front Street West, 8th Floor Toronto, Ontario, M5J 2N1 Attention: Senior Manager, Client Services Facsimile No.: (416) 981-9800 (3) Notices or demands authorized or required by this Agreement to be given or made by the Corporation or the Rights Agent to or on the holder of any Rights shall be sufficiently given or made if delivered or sent by first-class mail, postage paid, addressed to such holder at the address of such holder as it appears upon the Rights Register or, prior to the Separation Time, on the registry books of the transfer agent for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. SECTION 5.9 SUCCESSORS. All the covenants and provisions of this Agreement by or for the benefit of the Corporation or the Rights Agent shall bind and enure to the benefit of their respective successors and assigns hereunder. SECTION 5.10 BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be construed to give to any Person other than the Corporation, the Rights Agent and the holders of the Rights any legal or equitable right, remedy -35- or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Corporation, the Rights Agent and the holders of the Rights. SECTION 5.11 GOVERNING LAW. This Agreement and each Right issued hereunder shall be deemed to be a contract made under the laws of the Province of Ontario and for all purposes shall be governed by and construed in accordance with the laws of such province. SECTION 5.12 SEVERABILITY. If any Section, Clause, term or provision hereof or the application thereof to any circumstances or any right hereunder shall, in any jurisdiction and to any extent, be invalid or unenforceable, such Section, Clause, term or provision or such right shall be ineffective only in such jurisdiction and to the extent of such invalidity or unenforceability in such jurisdiction without invalidating or rendering unenforceable or ineffective the remaining Sections, Clauses, terms and provisions hereof or rights hereunder in such jurisdiction or the application of such Section, Clause, term or provision or rights hereunder in any other jurisdiction or to circumstances other than those as to which it is specifically held invalid or unenforceable. SECTION 5.13 EFFECTIVE DATE. This Agreement is effective and in full force and effect in accordance with its terms and conditions as of and from March 7, 1990 (the "EFFECTIVE DATE"). SECTION 5.14 DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. All actions, calculations and determinations (including all omissions with respect to the foregoing) which are done or made by the Board of Directors, in good faith, in relation to or in connection with this Agreement, shall not subject the Board of Directors or any director of the Corporation to any liability to the holders of the Rights. SECTION 5.15 RIGHTS OF BOARD, CORPORATION AND OFFEROR. Without limiting the generality of the foregoing, nothing contained herein shall be construed to suggest or imply that the Board of Directors shall not be entitled to recommend that holders of Voting Shares reject or accept any Take-over Bid or take any other action (including, without limitation, the commencement, prosecution, defence or settlement of any litigation and the submission of additional or alternative Take-over Bids or other proposals to the Shareholders of the Corporation) with respect to any Take-over Bid or otherwise that the Board of Directors believes is necessary or appropriate in the exercise of its fiduciary duties. SECTION 5.16 REGULATORY APPROVALS. Any obligation of the Corporation or action or event contemplated by this Agreement shall be subject in any jurisdiction to the prior receipt of any required approval or consent from any governmental or regulatory authority in such jurisdiction including, without limiting the generality of the foregoing, any necessary approval of any securities regulatory authority or stock exchange. SECTION 5.17 DECLARATION AS TO NON-CANADIAN HOLDERS. If in the opinion of the Board of Directors (who may rely upon the advice of counsel) any action or event contemplated by this Agreement would require compliance with the securities laws or comparable legislation of a jurisdiction outside Canada, the Board of Directors -36- acting in good faith may take such actions as it may deem appropriate to ensure such compliance. In no event shall the Corporation or the Rights Agent be required to issue or deliver Rights or securities issuable on exercise of Rights to Persons who are citizens, residents or nationals of any jurisdiction other than Canada or the United States in which such issue or delivery would be unlawful without registration of the relevant Persons or securities for such purposes. SECTION 5.18 TIME OF THE ESSENCE. Time shall be of the essence in this Agreement. SECTION 5.19 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement. CAE INC By: /s/ Paul G. Renaud __________________________ Authorized Signing Officer MONTREAL TRUST COMPANY OF CANADA By: /s/ Pierre Tellis __________________________ Authorized Signing Officer Pierre Tellis Senior Account Manager Montreal Trust Company of Canada By: /s/ J.P. Gagnon __________________________ Authorized Signing Officer SCHEDULE 2.2(3) FORM OF RIGHTS CERTIFICATE CERTIFICATE NO. ___________ ___________ RIGHTS THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 3.1(2) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, ANY PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING PERSON OR THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES SHALL BECOME VOID WITHOUT ANY FURTHER ACTION. RIGHTS CERTIFICATE This certifies that ______________________ or registered assigns, is the registered holder of the number of Rights set forth above each of which entitles the registered holder thereof, subject to the terms, provisions and conditions of the Amended and Restated Shareholder Protection Rights Plan Agreement dated June 14, 2000, as amended and restated from time to time (the "RIGHTS AGREEMENT"), between CAE Inc., a corporation incorporated under the laws of Canada (the "CORPORATION"), and Montreal Trust Company of Canada, a trust company incorporated under the laws of Canada, as rights agent (the "RIGHTS AGENT", which term shall include any successor Rights Agent under the Rights Agreement) to purchase from the Corporation at any time after the Separation Time (as such term is defined the Rights Agreement) and prior to the Expiration Time (as such term is defined in the Rights Agreement) (or such earlier expiration time as is provided in the Rights Agreement) one fully paid and non-assessable Common Share of the Corporation (a "COMMON SHARE") at the Exercise Price referred to below, upon presentation and surrender of this Rights Certificate together with the Form of Election to Exercise duly executed and submitted to the Rights Agent at its principal offices in any of the City of Toronto. The Exercise Price shall initially be $100 (Canadian) per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement. In certain circumstances described in the Rights Agreement, each Right evidenced hereby may entitle the registered holder thereof to purchase or receive assets, debt securities or other equity securities of the Corporation (or a combination thereof) all as provided in the Rights Agreement. This Rights Certificate is subject to all the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Rights Agent, the Corporation and the holders of the Rights. Copies of the Rights Agreement are on file at the registered head office of the Corporation and are available upon written request. This Rights Certificate, with or without other Rights Certificates, upon surrender at any of the offices of the Rights Agent designated for such purpose, may be exchanged for another -2- Rights Certificate or Rights Certificates of like tenor and date evidencing an aggregate number of Rights entitling the holder to purchase a like aggregate number of Common Shares as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered. If this Rights Certificate shall be exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights Certificate may be, and under certain circumstances are required to be, redeemed by the Corporation at a redemption price of $0.00001 per Right. No fractional Common Shares will be issued upon the exercise of any Right or Rights evidenced hereby. No holder of this Rights Certificate, as such, shall be entitled to vote, receive dividends or be deemed for any purpose the holder of Common Shares or of any other securities of the Corporation which may at any time be issuable upon the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof any of the rights of a shareholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to shareholders of the Corporation at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders of the Corporation (except as expressly provided in the Rights Agreement), or to receive dividends, distributions or subscription rights, or otherwise until the Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been manually countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Corporation. Dated -- CAE INC. By:__________________________ Authorized Signing Officer By:__________________________ Authorized Signing Officer -3- MONTREAL TRUST COMPANY OF CANADA By:__________________________ Authorized Signing Officer By:__________________________ Authorized Signing Officer NOTICE In the event the certification set forth in the Form of Election to Exercise is not completed, the Corporation will deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and accordingly such Rights shall be null and void. FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the Rights Certificate) FOR VALUE RECEIVED ________________________________________ hereby sells, assigns and transfers unto ________________________________ ____________________________________________ (Please print name and address of transferee) the Rights represented by this Rights Certificate, together with all right, title and interest therein and does hereby irrevocably constitute and appoint ___________________________________________________________ as attorney to transfer the within Rights on the books of the Corporation, with full power of substitution. Dated ___________________ Signature Guaranteed ________________________________________________________ Signature (Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever) Signature must be guaranteed by a Canadian chartered bank, or Medallion guaranteed by a Canadian trust company or a member of a recognized stock exchange or a member of the Transfer Association Medallion (Stamp) Program. TO BE COMPLETED IF TRUE The undersigned hereby represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not and, to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person acting jointly or in consent with any of the foregoing (as defined in the Rights Agreement). ________________________________________________________ Signature -2- NOTICE In the event the certification set forth in the Form of Assignment is not completed, the Corporation will deem the Beneficial Owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and accordingly such Rights shall be null and void. (To be attached to each Rights Certificate) FORM OF ELECTION TO EXERCISE TO: CAE INC. The undersigned hereby irrevocably elects to exercise ________ whole Rights represented by the attached Rights Certificate to purchase the Common Shares issuable upon the exercise of such Rights and requests that certificates for such Shares be issued to: ____________________________ (NAME) ____________________________ (ADDRESS) ____________________________ (CITY AND STATE OR PROVINCE) If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: ____________________________ (NAME) ____________________________ (ADDRESS) ____________________________ (CITY AND STATE OR PROVINCE) __________________________________________________________ SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER Dated ___________________ Signature Guaranteed ________________________________________________ Signature (Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever) Signature must be guaranteed by a Canadian chartered bank, a Canadian trust company or a member of a recognized stock exchange or a member of the Securities Transfer Association Medallion Program (Stamp). -2- TO BE COMPLETED IF TRUE The undersigned hereby represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or any Person acting jointly or in consent with any of the foregoing or any Affiliate or Associate of such Person (as defined in the Rights Agreement). __________________________________ Signature ASSIGNMENT OF AGENCIES AGREEMENT THIS AGREEMENT made as of the 15th day of January, 2001 BETWEEN: CAE INC., a company incorporated under the laws of C.B.C.A (hereinafter called the "Company") PARTY OF THE FIRST PART AND: MONTREAL TRUST COMPANY, a trust company existing under the laws of Canada PARTY OF THE SECOND PART AND: MONTREAL TRUST COMPANY OF CANADA, a trust company existing under the laws of Canada (Montreal Trust Company and Montreal Trust Company of Canada being hereinafter referred to, either individually or collectively as the context may require, as "Montreal Trust") PARTY OF THE THIRD PART AND: COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company existing under the laws of Canada with an office in the City of Toronto, in the Province of Ontario (hereinafter called "Computershare") PARTY OF THE FOURTH PART WHEREAS Montreal Trust is currently under contract to act as the Company's duly appointed Transfer Agent and Registrar, and provides various ancillary services to the Company in connection therewith; AND WHEREAS Montreal Trust may currently be under contract to provide certain additional agency and administrative services to the Company, under agreements or arrangements entered into through its former Stock Transfer operations; AND WHEREAS the aforementioned agencies and services (hereinafter called "the Agencies") are provided principally under the agreement(s) set forth on Schedule "A" hereto (the "Contracts"); AND WHEREAS Computershare and Montreal Trust represent that Computershare acquired the Stock Transfer business of Montreal Trust pursuant to an Asset Purchase Agreement dated as of June 30, 2000; AND WHEREAS both the Company and Montreal Trust are desirous of having the rights, powers, duties and obligations of the Agencies transferred and assigned to, and assumed by, Computershare, and Computershare is desirous of accepting same, all with effect from the close of business on March 16, 2001, (hereinafter, the "Transfer Date"); AND WHEREAS to give effect to the foregoing, Montreal Trust desires to transfer and assign, and to formally resign from, the Agencies; and the Company is prepared to accept such resignations and to appoint Computershare as the successor to the Agencies under the terms of the applicable Contracts, all with effect upon the Transfer Date; NOW, THEREFORE, THIS AGREEMENT WITNESSES THAT IN CONSIDERATION OF THE PREMISES AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED BY THE PARTIES HERETO, THE PARTIES COVENANT AND AGREE AS FOLLOWS: 1. Montreal Trust hereby transfers and assigns to Computershare all of its rights, powers, duties and obligations under the Agencies and the Contracts, and immediately thereafter resigns therefrom, all with effect upon the Transfer Date. 2. The Company hereby consents to such transfers and assignments from Montreal Trust to Computershare, accepts such resignations, waiving any periods of notice that may be set forth in the Contracts, and appoints Computershare as its Transfer Agent and Registrar and as its agent and/or administrator under the other Agencies, if any, all with effect upon the Transfer Date. The Company further releases Montreal Trust from any duties and liabilities that may arise pursuant to Computershare's administration of the Agencies, from and after the Transfer Date. 3. Computershare hereby accepts such appointments, transfers and assignments, effective upon the Transfer Date and upon such terms as are set forth in the Contracts, and agrees to perform all of the obligations of Montreal Trust under the Agencies and the Contracts which are required to be performed from and after the Transfer Date. 4. Montreal Trust shall transfer and deliver to Computershare, and Computershare shall accept, any and all records, documents, property, monies and other holdings as may be held by Montreal Trust in connection with the Agencies. Such transfers, deliveries and acceptances shall be made as soon as practicable upon, after, or in anticipation of, the Transfer Date as may be agreed between such parties. 5. Each party hereto agrees to execute and deliver all such documents and instruments and to do such other acts as may be necessary or advisable to give effect to the assignments, transfers, and deliveries referred to herein. 6. For greater certainty, the parties acknowledge and agree that any Agencies currently performed by Montreal Trust, or in its name by Computershare, which are ancillary to and/or related to those set forth in the Contracts but which may not be expressly provided for in the Contracts, are intended to be transferred to Computershare along with the Agencies expressly created by the Contracts, and they shall transfer to Computershare upon the Transfer Date. 7. Notwithstanding any other provision hereof, to the extent that any of the Contracts expressly require the consent of any third party or parties, the parties hereto agree that the transfer and assignments of such Contract(s) shall not be effective until such consent(s) are provided. 8. The parties hereto acknowledge that Computershare, having been continued as a federal trust company on January 9, 2001, expects to obtain all registrations, licenses and approvals required for it to carry on its business in all jurisdictions in Canada (the "required approvals") on or before the Transfer Date. If, however, the receipt of the required approvals has not occurred by the Transfer Date, then notwithstanding any other provision of this Agreement, Computershare may elect by written notice to the other parties hereto that all resignations, releases, appointments, transfers and assignments contemplated hereunder shall not occur on the Transfer Date but shall occur on such later date as Computershare shall determine and communicate to the other parties, provided that if Computershare's determination and communication of such later date have not occurred by December 31, 2001, this Agreement shall be null and void in its entirety. This Agreement shall ensure to the benefit of and be binding upon the parties hereto and their successors and permitted assigns. 9. This Agreement shall be governed by the laws of the Province of Ontario and the laws of Canada applicable therein. IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN DULY EXECUTED BY THE PARTIES HERETO AS OF THE DATE FIRST ABOVE WRITTEN. CAE INC. Per: /s/ Robert Hedges ________________________ Per: /s/ Paul G. Renaud ________________________ MONTREAL TRUST COMPANY Per: /s/ Shirley Yuen ________________________ Per: /s/ Christine Lawton ________________________ MONTREAL TRUST COMPANY OF CANADA Per: /s/ Shirley Yuen ________________________ Per: /s/ Christine Lawton ________________________ COMPUTERSHARE TRUST COMPANY OF CANADA Per: /s/ Sandra Palma ________________________ Per: /s/ Rita De Sousa-Lopes ________________________ SCHEDULE "A" TO ASSIGNMENT OF AGENCIES AGREEMENT BETWEEN CAE INC., MONTREAL TRUST COMPANY, MONTREAL TRUST COMPANY OF CANADA AND COMPUTERSHARE TRUST COMPANY OF CANADA TITLE AND DATE OF AGREEMENT ADDITIONAL IDENTIFIERS (e.g.. Capacity. Type of Agreement etc., as may be required to identify Agreement) Transfer Agent, Registrar & Dividend 1996 Disbursing Agent Shareholder Protection 14-Jun-00 Rights Plan Agreement (Amended and Restated) Sedar Solutions Agreement 01-Apr-97 EX-4.4 6 ex4_4-071802.txt EMPLOYMENT STOCK PURCHASE PLAN CAE INC. EMPLOYEE STOCK PURCHASE PLAN Effective as of April 1, 2000 CAE INC. EMPLOYEE STOCK PURCHASE PLAN 1. PURPOSE The purpose of the Plan is to provide Employees with an opportunity to participate in the ownership of the Company on an ongoing basis through purchases of Shares. The Plan is established effective April 1, 2000 and shall operate as an employees profit sharing plan as defined in section 144 of the Income Tax Act (Canada) or any successor provision. 2. DEFINITIONS As used in the Plan: "Affiliate" means an affiliated body corporate of the Company within the meaning of subsection 2(2) of the Canada Business Corporations Act. Notwithstanding any other provision of the Plan, the Committee may determine whether and as of what date employees of any particular Affiliate may participate herein. "Board" means the Board of Directors of the Company. "Business Day" means any day of the year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in Toronto, Ontario. "Company" means CAE Inc. or a successor. "Committee" means the Compensation Committee of the Board or such other committee as may be designated by the Board. "Effective Date" means April 1, 2000. "Employee" means a permanent full-time or permanent part-time employee of the Company or of an Affiliate. For purposes of the Plan, a transfer from the Company to an Affiliate, from an Affiliate to the Company, or between Affiliates shall be deemed not to constitute a resignation or termination of employment. "Employer Contributions" means contributions made to the Plan by the Company or an Affiliate pursuant to section 6. "Enrollment/Modification Form" means the Enrollment/Modification Form in the form determined by the Committee. "Group RRSP" means any group registered retirement savings plan administered by the Trustee or an affiliate thereof for the benefit of Employees that is designated by the Committee for purposes of the Plan. -3- "Initial Participant Contribution" means a one-time contribution made by a Participant in the amount of Cdn.$500, the election for which contribution must be indicated on an Enrollment/Modification Form filed within two (2) months after the later of the Effective Date and the first enrollment date after the Participant qualifies as an Employee. "Ordinary Participant Contributions" means periodic contributions made by a Participant computed as a percentage of Salary. "Participant" means an Employee who has enrolled in the Plan. "Participant Contributions" means Initial Participant Contributions and/or Ordinary Participant Contributions, as the context requires. "Pay Period" means the Participant's pay period. "Plan" means this Employee Stock Purchase Plan, as it may be amended from time to time, and which is intended to constitute an employees profit sharing plan as defined in section 144 of the Income Tax Act (Canada) or any successor provision. "Plan Year" means any calendar year during which the Plan is in force. "Profits" means current profits, retained earnings, and any other amount of or in respect of the Company or an Affiliate considered by the Canada Customs and Revenue Agency to constitute profits for purposes of subsection 144(10) of the Income Tax Act (Canada) or any successor provision. "Retirement" means a cessation of employment entitling the Participant to receive an immediate pension benefit under a Company or Affiliate pension plan, except in the case of a termination for cause (other than mental or physical incapacity). "Salary" means the base salary of the Employee for the relevant period, excluding overtime, bonuses, and other special or one-time payments received in that period. "Shares" means common shares in the capital stock of the Company. "Trust Fund" means the assets of the Plan held by the Trustee, consisting of the Participant Contributions, the Employer Contributions, the Shares purchased therewith and the income derived therefrom, the whole as more fully set out at paragraph 7.1. "Trustee" means such trustee as may from time to time be appointed by the Company. "Unvested Shares" means Shares in a Participant's account purchased with the Employer Contributions in the current and two previous Plan Years. "Vested Shares" means Shares in a Participant's account which are not Unvested Shares. "Withdrawal/Termination Form" means the Withdrawal/Termination Form in the form determined by the Committee. -4- Unless the context otherwise requires, references to the masculine shall be deemed to include references to the feminine, and vice versa, and references to the singular shall be deemed to include references to the plural, and vice versa. 3. REGULATORY APPROVAL This Plan is subject to all necessary regulatory approvals. 4. ELIGIBILITY 4.1 Eligible Employees - Each Employee shall be eligible to participate in the Plan. 4.2 No Effect on Employment - The terms of employment of an Employee by the Company or an Affiliate shall not be affected by his participation in the Plan. Nothing contained in the Plan or in any documentation pertaining thereto shall confer upon any Participant any right with respect to continuance of employment by the Company or any Affiliate or interfere in any way with the right of the Company or any Affiliate to terminate the employment of any Participant. Under no circumstances shall any person who is or has at any time been a Participant be able to claim from the Company or an Affiliate or any related person any sum or other benefit to compensate him for loss of any rights or benefits under or in connection with this Plan or by reason of his participation herein. 4.3 Enrollment Modification Form - Each Employee may elect to participate in the Plan as of the Effective Date or any subsequent July 1, October 1, January 1, or April 1, by completing and delivering to the Company the Enrollment/Modification Form. Delivery of a duly completed and executed Enrollment/Modification Form shall constitute acceptance by the Employee of all the terms and conditions of the Plan and of any regulations adopted or to be adopted pursuant to paragraph 13.1. 5. PARTICIPANT CONTRIBUTIONS 5.1 Amount of Contributions - The Employee shall indicate in the Enrollment/Modification Form whether he wishes to make an Initial Participant Contribution and/or the amount of any Ordinary Participant Contributions he wishes to make. Such amount of Ordinary Participant Contributions must be equal to any whole percentage of the Participant's Salary from 1 percent to 10 percent. In the event that the Salary of a Participant varies at any time in the course of a Plan Year, the Ordinary Participant Contributions of such Participant shall be automatically adjusted accordingly in order to remain equal to the selected percentage of the Participant's Salary. 5.2 Manner of Payment - Each Participant shall make Participant Contributions to the Plan by regular scheduled payroll deductions at the end of each Pay Period. Each payroll deduction in respect of Ordinary Participant Contributions shall be in an amount equal to the percentage of such Participant's Salary for such Pay Period selected by the Participant on his Enrollment/Modification Form. Each payroll deduction in respect of the Initial -5- Participant Contribution shall be in the same percentage, provided, however, that such Participant may instead make such Initial Participant Contribution by way of cheque payable to the Trustee no later than two months after the later of the Effective Date and the first enrollment date after he qualifies as an Employee. The Participant Contributions in any given Plan Year shall be made on the basis of the year of receipt of the Salary from which such Participant Contributions are deducted. Participant Contributions shall commence as soon as practicable but in no event later than the first Pay Period following the Pay Period in which the Enrollment/Modification form is received. 5.3 Modification of Contributions - A Participant may modify the amount of his Ordinary Participant Contributions to the Plan up to twice in any Plan Year, by completing and delivering to the Company an Enrollment/Modification Form. Such modification shall take effect as soon as practicable but in no event later than the first Pay Period following the Pay Period in which the Enrollment/Modification Form is received, at which time the Ordinary Participant Contributions shall be adjusted accordingly, provided such adjustment conforms with paragraph 5.1. 5.4 No Retroactive Contributions - A Participant may not make retroactive Participant Contributions to the Plan, unless the Committee determines otherwise. 5.5 No Lump Sum Contributions - Subject to paragraph 5.2, a Participant may not make lump sum Participant Contributions to the Plan, unless the Committee determines otherwise. 5.6 Paid Leave of Absence - A Participant on authorized Company-paid or Affiliate-paid leave of absence shall continue to make Participant Contributions through payroll deduction, as provided for in paragraph 5.2, unless such Participant has completed and delivered to the Company an Enrollment/Modification form stating that he wishes that his Participant Contributions be suspended during the period of such absence, in which event paragraph 5.8 shall become applicable with such modifications as the context requires. 5.7 Maternity Leave - A Participant on maternity leave shall continue to make Participant Contributions by way of post-dated cheques, unless such Participant has completed and delivered to the Trustee an Enrollment/Modification Form stating that she wishes that her Participant Contributions be suspended during the period of such absence, in which event paragraph 5.8 shall become applicable with such modifications as the context requires. 5.8 Lay-off, Unpaid Leave of Absence - In the case of lay-off or authorized unpaid leave of absence, and subject to paragraph 5.10, the Participant Contributions of the Participant shall be automatically suspended. Such suspension shall apply until the Participant returns to work, in which case the Participant may resume his Participant Contributions by completing and delivering to the Company an Enrollment/Modification Form. Participant Contributions shall resume as soon as practicable but in no event later than the first Pay Period following the Pay Period in which the Enrollment/Modification Form is received. -6- During any suspension of Participant Contributions by a Participant on lay-off or unpaid leave of absence, the Participant shall remain eligible for Company Contributions earned prior to such suspension, subject to section 6. 5.9 Long-Term Disability - In the event that a Participant becomes disabled and entitled to benefits under a recognized long-term disability program, and subject to paragraph 5.10, the Participant Contributions of the Participant shall be automatically suspended. Such suspension shall apply until the Participant returns to work, in which case the Participant may resume his Participant Contributions by completing and delivering to the Company an Enrollment/Modification Form. Participant Contributions shall resume as soon as practicable but in no event later than the first Pay Period following the Pay Period in which the Enrollment/Modification Form is received. During any suspension of Participant Contributions by a Participant on long-term disability, the Participant shall remain eligible for Employer Contributions earned prior to such suspension, subject to section 6. 5.10 Continuing Contributions - A Participant to whom paragraph 5.8 or 5.9 applies may continue to contribute to the Plan by way of post-dated cheques until the earlier of his return to work or the end of the Plan Year in which the event described in such applicable paragraph occurs. 5.11 Voluntary Suspension of Contributions - A Participant may at any time, by completing and delivering to the Company an Enrollment/Modification Form, request that his Ordinary Participant Contributions be suspended. The Participant will have the option of resuming his Ordinary Participant Contributions at any time by completing and delivering to the Company a new Enrollment/Modification Form. Ordinary Participant Contributions shall resume as soon as practicable but in no event later than the first Pay Period following the Pay Period in which the new Enrollment/Modification Form is received. However, in the event of a second such suspension in the same Plan Year, the Participant shall not be allowed to resume making Participant Contributions until the next enrollment date. During any suspension of Participant Contributions, the Participant shall remain eligible for Employer Contributions earned prior to such suspension, subject to section 6, and shall be considered a Participant in the Plan for all purposes other than the making of Participant Contributions. 5.12 Remittance of Contributions - Participant Contributions withheld through payroll deduction by the Company and each Affiliate in each Pay Period shall be remitted by the Company and each Affiliate to the Trustee as soon as practicable but not later than the fifth Business Day following the date such withholding is effected. Participant Contributions described in paragraph 5.7 or 5.10 shall be remitted by the Participant directly to the Trustee by way of post-dated cheque. -7- 6. EMPLOYER CONTRIBUTIONS Simultaneous with the relevant Participant Contribution or as soon as practicable thereafter, the Company or the relevant Affiliate, as the case may be, shall remit to the Trustee for the benefit of each Participant an Employer Contribution out of Profits. Such Employer Contribution shall be equal to: (a) 100 percent of the amount of the Participant's Initial Participant Contribution, if any, and (b) 33.3 percent of the amount of the relevant Ordinary Participant Contributions up to (i) 6 percent of Salary less (ii) any amount described in (a); provided, however, that if there are insufficient Profits to make an Employer Contribution computed according to the preceding formula in a particular Plan Year, the Employer Contribution for that Plan Year shall be reduced to Cdn.$100 per Participant. For the avoidance of doubt, the Employer Contribution described in (b) for the benefit of any Participant in respect of a Plan Year shall not exceed 2 percent of his Salary in that Plan Year. 7. TRUST FUND; ALLOCATIONS TO PARTICIPANTS 7.1 Assets of the Trust Fund - The Trustee shall receive from the Company and the Affiliates the Participant Contributions of all the Participants made in accordance with section 5 and the Employer Contributions made to the Plan in accordance with section 6. Such contributions, the Shares acquired therewith and the income thereon from the date of receipt by the Trustee shall constitute the Trust Fund of the Plan and shall be held, invested, managed, administered and dealt with by the Trustee pursuant to the terms of the Plan. The Trustee shall, as soon as reasonably practicable, convert into Canadian dollars any Participant Contributions and Employer Contributions paid in another currency. 7.2 Allocations to Participants - The Trustee shall maintain a separate account for each Participant. The Trustee shall credit to the account of a Participant all Employer Contributions made for the benefit of the said Participant, all Participant Contributions made by such Participant, and all Shares acquired therewith. The Trustee shall allocate either absolutely or contingently to each Participant all income received, capital gains realized, and capital losses sustained by the Trust Fund on his account at such time or times as the Trustee may determine but in any event, at least annually. The Trustee shall credit to the Plan reserve all Unvested Shares forfeited by Participants in accordance with paragraph 8.4. 8. SALE, WITHDRAWAL, TRANSFER, OR FORFEITURE OF SHARES 8.1 Right to Sell, Withdraw or Transfer - Upon completion and delivery to the Company of a Withdrawal/Termination Form, a Participant may direct the Trustee to sell, withdraw, or transfer some or all of the Vested Shares in his account. In the first case, the Trustee shall pay to the Participant an amount equal to the net proceeds of sale of those Shares which have been sold at the Participant's direction. In the second case, the Trustee shall transfer title and deliver to the Participant those Shares which have been -8- withdrawn at the Participant's direction. In the third case, the Trustee shall proceed in accordance with paragraph 8.3. 8.2 Exception for Unvested Shares - A Participant may not direct the Trustee to sell or withdraw any Unvested Shares in his account. For purposes of this paragraph 8.2, the Trustee shall track each Participant's Unvested Shares separately from his Vested Shares. 8.3 Group RRSP Transfer - Beginning on such date as the Committee determines, a Participant may direct the Trustee to transfer some or all of the Vested Shares in his account into the Group RRSP. A Participant may not request Share transfers to the Group RRSP more than once in any Plan Year. It is the responsibility of the Participant to ensure that the aggregate of such Group RRSP contributions and any contributions he makes to other registered retirement savings plans does not exceed the allowable limit under the Income Tax Act (Canada). 8.4 Termination for Cause; Resignation - In the event that the employment of a Participant is terminated for cause or the Participant resigns, the Participant's participation in the Plan shall be terminated. The Trustee shall either transfer and deliver to the Participant or sell all of the Vested Shares in the Participant's account, at the option of the Participant. The transfer and delivery of the Shares or payment of the net proceeds of sale, as the case may be, shall be effected as soon as practicable but in no event later than five (5) days from the date the Trustee receives notification of such termination. The Participant shall not be entitled to acquire title to or receive proceeds from the sale of his Unvested Shares. Such Shares shall be forfeited and credited to the Plan reserve and may be utilized to satisfy future Employer Contribution obligations. 8.5 Termination in Other Circumstances - In the event of the death, Retirement, or involuntary termination without cause of a Participant, the Trustee shall transfer and deliver or sell all of the Vested Shares and Unvested Shares in the Participant's account to the Participant or the legal representatives of the deceased Participant's estate, as the case may be. The transfer and delivery or payment of the net proceeds of sale, as the case may be, shall be effected as soon as practicable but in no event later than five (5) days from the date the Trustee receives notification of such termination. 9. INVESTMENTS 9.1 Contributions to Be Invested Solely in Shares - All Participant Contributions and all Employer Contributions, as well as all income thereon, shall be invested solely in the acquisition of Shares. Notwithstanding the foregoing, all Participant Contributions and Employer Contributions remitted to the Trustee shall, prior to the acquisition of Shares therewith pursuant to paragraph 9.2, earn interest for the account of the Participants. 9.2 Acquisition of Shares by Trustee - In the case of Participant Contributions, Shares shall be purchased by the Trustee as soon as reasonably practicable following receipt of the Participant Contributions by the Trustee, as determined by the Trustee. In the case of Employer Contributions, Shares shall be purchased by the Trustee as soon as reasonably -9- practicable following receipt of such Contributions from the Company or any such longer period required by securities legislation, stock exchange rules, or other relevant rules. 9.3 Source of Shares - The Trustee shall use the Participant Contributions and the Employer Contributions to purchase Shares only on the open market, through the facilities of The Toronto Stock Exchange or such other stock exchange on which the Shares are listed as the Board shall from time to time prescribe. 9.4 Registration of Shares - All the Shares purchased by the Trustee on behalf of a Participant pursuant to the provisions hereof shall be registered in the name of the Trustee, on behalf of such Participant. As long as such Shares have not been forfeited pursuant to paragraph 8.4 and are governed by the provisions of the Plan, they shall be held by the Trustee on behalf of the Participant. However, all rights and privileges with respect to the Shares, including voting rights, shall be exercised by the Participant through the Trustee, and any dividends shall be credited to the Participant's account. 9.5 Dividends - All dividends paid on Shares held by the Trustee on a Participant's behalf shall be reinvested by the Trustee in the acquisition of additional Shares as soon as practicable but in no event later than ten (10) days following payment of the dividends, which Shares shall be credited to the account of the Participant. 9.6 Shareholder Information; Right to Vote - The Trustee shall forward to each Participant all the shareholder information, documentation and reports sent by the Company to its shareholders. Prior to all meetings of the Company's shareholders, the Trustee shall provide to the Participant a voting instruction card so that the Participant may indicate thereon his directions to the Trustee as to how he wishes the Trustee to vote on his behalf and the Participant shall return such voting instruction card to the Trustee. Should the Participant fail to provide the Trustee with the voting instruction card, the Trustee shall refrain from voting the Shares credited to the account of the Participant. 9.7 Discretion of Trustee - Notwithstanding paragraph 9.2, the Trustee, in its discretion, may limit the daily volume of its purchases and sales of Shares or make such purchases and sales over several trading days to the extent that such action is deemed by it to be in the best interests of the Participants. Should the purchase or sale of Shares by the Trustee in any given month pursuant hereto be at various prices, the Trustee shall establish an average purchase or sale price, as the case may be, applicable for each Share in the relevant month. 9.8 Fractions of Shares - A Participant shall not be allowed in any circumstances to withdraw or transfer a fraction of a Share pursuant to any provision of the Plan. The value of any such fraction will be paid in cash. 9.9 No Share Value Guarantee - Neither the Company nor any Affiliate makes any representation or warranty as to the future market value of any Shares acquired in accordance with the provisions of the Plan. -10- 10. STATEMENTS OF ACCOUNT 10.1 Quarterly Statements - The Trustee will provide, on a quarterly basis, a statement of account to each Participant setting out the activity relating to the Participant's account for those periods ending at the end of March, June, September and December of each Plan Year. 10.2 Up-to-Date Statements - Should a Participant request an up-to-date statement of account, such statement may be made available at such other time as may be agreed upon between the Company and the Trustee. 11. THE TRUSTEE 11.1 Change of Trustee - The Company as agent for each Participant may at any time or times after providing ninety (90) days' written notice remove the Trustee and appoint a successor or successors to fill any vacancy arising for any reason whatever. 11.2 Delegation by Trustee - The Trustee may delegate to the Company or to any corporation authorized to carry on the business of a trust company in Canada the duty to maintain records and to furnish statements in connection with all aspects of the Plan. 11.3 Indemnification - The Trustee shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability or expense resulting from any claim, action, suit or proceeding to which it may be a party or in which it may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by it in settlement thereof (with the Company's written approval) or paid by it in satisfaction of a judgment in any such action, suit or proceeding, except a judgment in favor of the Company based upon a finding of the Trustee's wilful misconduct, negligence, or bad faith; subject, however, to the condition that, upon the assertion or institution of any such claim, action, suit or proceeding against it, the Trustee shall in writing give the Company a reasonable opportunity, at the latter's expense, to handle and defend the same within a time frame to be specified by the Trustee, before the Trustee undertakes to handle and defend such claim, action, suit or proceeding on its own behalf. The Company and the Participants shall be indemnified and held harmless by the Trustee against and from any and all loss, cost, liability or expense resulting from the wilful misconduct, negligence or bad faith of the Trustee or of any person (other than the Company) to which the Trustee has delegated any of its duties hereunder. 11.4 Certificates, Reports, Opinions - The Trustee shall be entitled to rely on all certificates, reports, opinions and other documents furnished by any broker, accountant, auditor or counsel to the Company and shall be fully protected and indemnified by the Company in respect of any acts done in good faith and in reliance on such certificates, reports, opinions or documents. 11.5 Resignation of Trustee - The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder upon ninety (90) days' written notice to the Company and each Participant or such shorter notice as may be agreed upon. -11- 12. PARTICIPANT'S RIGHTS NOT TRANSFERABLE Except as provided herein, the rights of a Participant pursuant to the provisions of the Plan are non-assignable and non-transferable, in whole or in part. No attempted assignment or transfer thereof, otherwise than in accordance with the provisions hereof, shall be effective. 13. INTERPRETATION, REGULATIONS, AMENDMENT AND TERMINATION 13.1 Regulation and Delegation - The Committee may make, amend and repeal at any time and from time to time such regulations not inconsistent herewith, as it may deem necessary or advisable generally for the proper administration and operation of the Plan. In particular, the Committee may delegate to any person, group of persons or corporation such administrative duties and powers as it sees fit, and the Committee may take such actions as are necessary not to penalize a Participant moving to or from Canada at the Company's request. 13.2 Interpretation - The Committee shall have the power to interpret the provisions of the Plan from time to time. All decisions and interpretations of the Committee respecting the Plan and all rules and regulations made from time to time pursuant hereto shall be binding and conclusive on the Company, the Affiliates, and all Participants and their respective legal representatives and on all Employees eligible under the Plan to participate herein. 13.3 Amendment - The Committee may amend at any time the provisions of the Plan at its sole and complete discretion, except that no such amendment shall operate so as to deprive a Participant of any rights acquired prior to the date thereof or to relieve the Company of the obligation to make such unremitted Employer Contributions as it would have been obliged to make in respect of that Participant pursuant to section 6. Notwithstanding the foregoing, if any provision of the Plan contravenes any applicable laws or regulations or any rules, regulations, by-laws or policies of any regulatory authority or stock exchange having jurisdiction or authority over the Company, an Affiliate or the Plan, then the Committee may amend such provision to the extent required to bring such provision into compliance therewith. 13.4 Termination - The Company hopes and expects to maintain the Plan indefinitely. However, the Committee reserves the right to terminate the Plan at any time, in which event the Participants' rights will be governed by paragraph 8.5 as if the Participants' Retirements had all occurred on the date of the termination of the Plan. 14. COSTS Except as otherwise provided for in this section 14, the Company shall pay all costs of administering the Plan, including without limitation all the fees and expenses of the Trustee. All brokerage fees relating to the acquisition of Shares shall be borne by the Company. All brokerage and other fees relating to the sale, transfer to the Group RRSP -12- or withdrawal of Shares shall be paid by the relevant Participants, except that the Company shall pay the said fees in respect of one (1) such transaction per Participant in each Plan Year. 15. APPLICABLE LAW The laws of the Province of Ontario and the laws of Canada applicable therein shall apply to the Plan, any amendments thereto, and the administration thereof, and all rights and obligations thereunder shall be governed, construed and determined in accordance with such laws. 16. NON-CANADIAN EMPLOYEES The Plan shall apply to Employees outside Canada as of the times and to the extent determined by the Committee. The terms and conditions offered to non-Canadian Employees may vary and be more limited than those set forth above, depending on local regulations and restrictions. For greater certainty, the application to non-Canadian Employees of the foregoing Plan provisions shall be determined: (a) in accordance with any schedules added to the Plan at the Committee's discretion; and (b) as the context requires. EX-4.5 7 ex4_5-071802.txt EMPLOYMENT STOCK OPTION PLAN CAE INC. EMPLOYEE STOCK OPTION PLAN (Amended and Restated as of May 9, 2001) CAE Inc., a corporation incorporated under the laws of Canada, hereby adopts an Employee Stock Option Plan, as amended, for key employees of CAE Inc. and its subsidiaries, as follows: ARTICLE I PURPOSE 1.01 Purpose. The purpose of the CAE Inc. Employee Stock Option Plan, as amended, is to provide key employees of CAE Inc. and its subsidiaries with an opportunity to purchase common shares of CAE Inc. and to benefit from the appreciation thereof, thus providing an increased incentive for these employees to contribute to the future success and prosperity of CAE Inc., enhancing the value of the common shares for the benefit of the shareholders and increasing the ability of CAE Inc. and its subsidiaries to attract and retain individuals of exceptional skill. ARTICLE II INTERPRETATION 2.01 Definitions. In this Plan, unless the context otherwise requires, the following words and expressions shall have the respective meanings ascribed to them below: "Approval Date" means the later of the date of approval of the Plan by the shareholders of the Corporation and by the applicable regulatory authorities and stock exchanges, each as contemplated by Article XII hereof. "Base Price" means, with respect to a Share subject to Option, the latest closing price of the Shares on The Toronto Stock Exchange (or such other stock exchange on which the Shares are listed as the Board shall from time to time prescribe) on the trading day immediately preceding the day on which the Option is granted. If no Shares have been traded on such exchange on such day, the Base Price shall be established on the same basis on the last previous day for which a trade was reported by such exchange. "Board" means the board of directors of the Corporation. "Code" means the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Committee" means the Compensation Committee of the Board. "Corporation" means CAE Inc. 2 "Incentive Stock Option" means an Option (i) which is intended to meet the requirements of Section 422A of the Code, including, without limitation, the requirement under the Code that such Option be issued at an Option Price which is not less than the fair market value of a Share on the date of grant and (ii), in connection with the exercise of which, an Optionee will not recognize income for United States federal income tax purposes if the Shares acquired upon exercise of such Option are held for two years from the date of the grant of the Option and one year from the date of exercise thereof. "Non-qualified Stock Option" means an Option which is not intended to meet the requirements of Section 422A of the Code, and which does not entitle the Optionee to receive the United States federal income tax treatment described in paragraph (ii) of the definition of Incentive Stock Option contained herein. "Options" means options granted under the terms of the Plan and includes both Incentive Stock Options and Non-qualified Stock Options. "Option Price" means the purchase price of a Share under an Option. "Optionee" shall mean an employee of the Corporation or its subsidiaries to whom an Option has been granted under the terms of the Plan. "Plan" means the CAE Inc. Employee Stock Option Plan, as amended and as the same may from time to time be amended. "Shares" means the common shares in the capital of the Corporation or, in the event of any reclassification of such common shares, the shares in the capital of the Corporation resulting from such reclassification. "Subsidiary" has the meaning ascribed thereto in the Securities Act (Ontario) on the date on which the Plan is adopted by the Board. "Termination Date" means, with respect to any Option, such date as is fixed by the Committee at the time of the grant of the Option but is not later than the day preceding the tenth anniversary of the date on which the Option is granted. "United States" means the United States of America, its territories and possessions, any State of the United States and the District of Columbia. "U.S. Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 2.02 Gender, etc. The masculine gender shall include the feminine and neuter genders and vice versa and the singular shall include the plural and vice versa. 3 ARTICLE III ADMINISTRATION 3.01 Administration. Except as otherwise provided in the Plan, the Committee shall administer the Plan and shall have full power to grant Options, construe and interpret the Plan, establish, amend and rescind rules and regulations for its administration and perform all other acts relating to the Plan, including the delegation of administrative responsibilities, that it believes reasonable and proper. 3.02 Granting of Options. Subject to the terms and conditions of the Plan, the Committee shall, in its discretion, determine which employees of the Corporation or its subsidiaries shall be granted Options, the number of Shares subject to option under any such Options, the dates after which Options may be exercised (which shall not be earlier than the Approval Date nor later than the Termination Date) in whole or in part, the Option Price, any restrictions imposed on Shares received upon the exercise of Options, the terms and conditions of the Options and, in respect of Options granted to United States persons, whether the Options shall be Incentive Stock Options. 3.03 Determinations Final and Conclusive. Any decision or determination made or action taken by the Committee or the Board arising out of or in connection with the interpretation and administration of the Plan including, without limitation, the granting of Options, shall be final and conclusive. ARTICLE IV SHARES SUBJECT TO PLAN 4.01 Number of Shares. The total number of Shares available for grants of Options under the Plan shall be 10,000,000 subject to adjustment in accordance with Article VIII of the Plan. The Shares which may be issued and sold upon the exercise of Options granted pursuant to the Plan will be authorized but unissued Shares. The aggregate number of Shares so reserved for issuance to any one person shall not exceed 5% of the issued and outstanding Shares (on an non-diluted basis) from time to time. 4.02 Lapsed Options. If Options or any part thereof are surrendered, terminate or expire without having been exercised in full, new Options may be granted covering the Shares not purchased under such lapsed Options, but Options once issued cannot be rescinded by mutual consent or agreement for the purpose of making optioned Shares available for reallocation pursuant to a new Option in favour of the same Optionee at a lower Option Price under the Plan. ARTICLE V ELIGIBILITY 5.01 Eligibility. Options may be granted to selected key employees of the Corporation or its subsidiaries, provided that Incentive Stock Options shall only be granted to employees of a subsidiary of the Corporation if such subsidiary constitutes a "subsidiary" of the Corporation within the meaning ascribed to such term in the Code. 4 ARTICLE VI TERMS OF OPTIONS 6.01 Option Agreement. All Options shall be evidenced by written agreements executed by the Corporation and the Optionee. Such Options shall be subject to the applicable provisions of the Plan, and shall contain such provisions as are required by the Plan and such other terms and conditions as may be prescribed by the Committee (which terms and conditions need not be the same in each case and may be changed from time to time). All agreements evidencing Options shall specify the total number of Shares subject to each grant, the Option Price and the Termination Date. Each agreement evidencing an Option granted to a United States person shall specify whether the Option evidenced thereby is an Incentive Stock Option or a Non-qualified Stock Option. 6.02 Option Price. The Option Price per Share shall not be less than the Base Price calculated in accordance with the Plan on the date of the grant or less than that permitted by applicable laws or regulations or the rules, regulations, by-laws or policies of regulatory authorities having jurisdiction or the stock exchanges on which any securities of the Corporation are listed. 6.03 Period of Exercise. (1) Subject to the provisions of the Plan, the Committee shall determine the date after which Options may be exercised in whole or in part. (2) Except as set forth in Section 6.05, no Option may be exercised unless the Optionee is at the time of such exercise an employee of the Corporation or one of its subsidiaries and shall have served continuously in such capacity since the date of the grant of his Option. Absence on leave, having approval of the Corporation or one of its subsidiaries, shall not be considered an interruption of service for any purpose of the Plan. 6.04 Nontransferability of Options. Each Option shall, during the Optionee's lifetime, be exercisable only by the Optionee, and neither it nor any right hereunder shall be transferable otherwise than by will or the laws of descent and distribution or be subject to attachment, execution or other similar process. In the event of any attempt by the Optionee to alienate, assign, pledge, hypothecate, grant a security interest in or otherwise dispose of an Option or of any right hereunder, except as provided for herein, or in the event of any levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Corporation may terminate the Option by notice to the Optionee and the Option shall thereupon become null and void. 6.05 Effect of Death, etc. (1) If an Optionee shall die while an employee of the Corporation or one of its subsidiaries, any Option held by him may be exercised, to the extent that the Optionee was entitled to do so at the time of his death, by the person to whom the Optionee's rights under the Option shall pass by the Optionee's will or the applicable laws of descent and distribution. Any person to whom an Optionee's rights under an Option have passed by will or by applicable laws of descent or distribution (i) shall be entitled to exercise the Option only during the period expiring on the day that is earlier of (x) six months following the date of death; and (y) the 5 Termination Date of the Option; and (ii) shall be subject to all terms and conditions of the Plan and the Option applicable to the Optionee. (2) If an Optionee ceases to serve the Corporation as an employee of the Corporation or one of its subsidiaries otherwise than by reason of death, each Option held by the Optionee together with all rights hereunder or thereunder, shall terminate on the date on which such Optionee ceases to serve the Corporation in such capacity. (3) The Committee may, with respect to any Option, in its discretion, waive, amend or vary the requirements of Section 6.03(2) or this Section 6.05. 6.06 Manner of Exercise and Payments. (1) An Option, or part thereof, shall be exercised by delivery of a written notice of exercise to the Corporation and payment, in cash or by cheque, bank draft or money order payable to the order of the Corporation, of the full purchase price of the Shares then being purchased pursuant to the Option. An Optionee may exercise an Option with respect to less than the full number of Shares for which the Option may then be exercised, but an Optionee must exercise the Option in full Shares. (2) An Optionee shall be entitled to the rights appertaining to share ownership only with respect to Shares that have been fully paid for and issued to him. 6.07 Withholding Taxes. The Corporation may, in its discretion, require an Optionee to pay to the Corporation or its subsidiaries the amount, or make such other arrangements (including the withholding of Shares which would otherwise be delivered upon exercise), at the time of the exercise in whole or in part of any Option or thereafter, that the Corporation deems necessary to satisfy any obligation of the Corporation or its subsidiaries to withhold federal, provincial, state or local income or other taxes incurred by reason of the exercise. 6.08 Effect of Takeover Bid. If an offer (the "Offer") is made to the Optionee or to shareholders generally or to a class of shareholders which includes the Optionee (or would include the Optionee in the event that the Shares that are subject to the Optionee's Option had previously been purchased and retained by him) for Shares, which Offer, if accepted in whole or in part, would result in the offeror exercising control over the Corporation within the meaning of subsection 1(3) of the Securities Act (Ontario) (as amended from time to time), then the Board shall determine by resolution, within ten days of the receipt of notice of the Offer by the Corporation, if such Offer is bona fide. In the event that the Board so determines that the Offer is bona fide, the Corporation shall, immediately upon such determination by the Board notify each Optionee currently holding an Option of the Offer, with full particulars thereof, and of such determination by the Board, whereupon, subject to Section 7.02 with respect to Options granted to United States residents, such Option shall become immediately exercisable by the Optionee and, subject to the terms and provisions of the Plan, may be exercised by the Optionee in whole or in part at any time or from time to time prior to its Termination Date. 6 6.09 Amendments. (1) The Committee may at any time and from time to time after the grant of an Option, with the consent of the Optionee, amend the terms and conditions of the Option or the agreement evidencing the Option. (2) Without limiting the generality of Section 6.09(1), the Committee may at any time and from time to time amend an Option to accelerate the date after which the Option may be exercised in whole or in part including, without limitation, in the event that the Corporation shall sell, lease or otherwise dispose of all or substantially all of its assets and undertaking, shall enter into an arrangement with, be merged or amalgamated with or absorbed by or into any other company under any circumstances which involve or may involve or require the liquidation of the Corporation, a distribution of its assets among its shareholders or the termination of its corporate existence or in the event that any person or combination of persons successfully solicits proxies for the election of a slate of directors of the Corporation (other than the slate proposed by the management of the Corporation in its management proxy circular) which in the opinion of the Board may well result in such slate being elected as directors of the Corporation. (3) No amendment to any Option or agreement evidencing an Option shall be made unless the Option or agreement, as amended, will comply with the provisions of the Plan and with applicable laws and regulations and the rules, regulations, by-laws or policies of regulatory authorities having jurisdiction and the stock exchanges on which any securities of the Corporation are listed. ARTICLE VII OPTIONS GRANTED TO PERSONS RESIDENT IN THE UNITED STATES 7.01 Special Rules Applicable to Options Granted to Persons Resident in the United States. The provisions of this Article VII shall apply to Option grants made to each employee of the Corporation or its subsidiaries who is resident in the United States unless the Committee, in its discretion, determines otherwise. 7.02 Restriction on Exercise. (1) Anything in this Plan to the contrary notwithstanding, an Option shall not be exercisable, no transfer of Shares shall be made to any Optionee, and any attempt to exercise an Option or to transfer any such Shares shall be void and of no effect, unless and until; (i) a registration statement under the U.S. Securities Act has been duly filed and declared effective pertaining to the Shares subject to such Option and the Shares subject to such Option have been duly qualified under applicable United States federal or state securities or blue sky laws; or (ii) the Committee, in its sole discretion, determines, or the Optionee, upon the request of the Committee, provides an opinion of counsel satisfactory to the Committee, that such registration or qualification is not required as a result of the availability of an exemption from registration or qualification under such laws. (2) Without limiting the generality of Sections 7.02(1) or 10.01, if at any time the Committee shall determine, in its sole discretion, that the listing, registration or qualification of 7 the Shares under any United States federal or state law or on any stock exchange or the consent and approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, delivery or purchase of such Shares pursuant to the exercise of an Option, such Option shall not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. (3) Each certificate for Shares acquired upon the exercise of an Option by an employee who is resident in the United States shall bear the legend set out in Attachment 1 which legend may be removed in connection with a sale of such Shares that meets the requirements of Section 7.03; provided, however, that such legend shall be placed on any certificates for Shares returned to the Optionee as a result of the failure to complete any such sale. 7.03 Restrictions on Resale. Unless the Committee determines otherwise, in its sole discretion, employees of the Corporation or its subsidiaries who are resident in the United States shall covenant and agree that resales of the Shares acquired upon the exercise of an Option shall be subject to the following restrictions: (i) the Shares shall at no time be offered by the Optionee to any person in the United States; (ii) the sale of the Shares may be made by the Optionee or a person acting on his behalf only (A) through the trading facilities of The Toronto Stock Exchange or the Montreal Exchange, provided that neither the Optionee nor any person acting on his behalf knows that a sale or other transaction involving the Shares has been pre-arranged with a buyer in the United States or (B) to a buyer who, at the time the buy order is originated, is either outside the United States or whom the Optionee and any person acting on his behalf reasonably believes to be outside the United States; and (iii) at the time of any sale described in Section 7.03(ii) above, no "directed selling efforts", within the meaning of Rule 902(b) of Regulation S under the U.S. Securities Act, have been made or are being made by the Optionee, any affiliate, or any person acting on their behalf. 7.04 Restrictions Binding on Other Persons. The covenants and restrictions set forth in this Article VII shall be binding on any person who (i) in accordance with the provisions of Section 6.05 acquires any rights of the Optionee with respect to the Option or (ii) as a result of the death of the Optionee or by gift acquires any of the Shares acquired upon exercise of the Option. ARTICLE VIII ADJUSTMENTS 8.01 Subdivisions. In the event of any subdivision of the Shares, at any time prior to termination of the Plan, into a greater number of Shares, the total number of Shares available for the grant of Options under the Plan after such subdivision shall be increased to such greater number of Shares as equals the number of Shares that would have been received on such subdivision, were all of the Shares allotted to the Plan and available for the grant of Options immediately prior to such subdivision issued as fully-paid and non-assessable Shares before such subdivision. 8 8.02 Consolidations. In the event of any consolidation of the Shares, at any time prior to termination of the Plan, the total number of Shares available for the grant of Options under the Plan after such consolidation shall be decreased to such lesser number of Shares as equals the number of Shares that would have been received on such consolidation, were all of the Shares allotted to the Plan and available for the grant of Options immediately prior to such consolidation issued and outstanding as fully-paid and non-assessable Shares before such consolidation. 8.03 Reclassifications. In the event of any reclassification of the Shares, at any time prior to termination of the Plan, the number of shares of each class of shares in the capital of the Corporation available for the grant of Options under the Plan after such reclassification shall be amended to the number of shares of each such class as equals the number of shares of each class that would have been received on such reclassification, were all of the Shares allotted to the Plan and available for the grant of Options immediately prior to such reclassification issued and outstanding as fully-paid and non-assessable Shares prior to such reclassification. 8.04 Adjustment to Outstanding Options. (1) (If the Corporation shall declare a dividend payable in or shall subdivide, consolidate or reclassify the Shares, or any other event shall occur which in the judgment of the Committee necessitates action by way of adjusting the terms of the outstanding Options, the Committee may take any such action as in its judgment shall be necessary to preserve the Optionee's rights substantially proportionate to the rights existing prior to such event (including adjusting the number of Shares subject to Options or the Option Price thereof). Any adjustment to the number of Shares that are subject to outstanding Options pursuant to this Section 8.04 in consequence of a subdivision, consolidation or reclassification of the Shares shall not affect the number of Shares that remain available for the grant of Options under Article IV at the time of such adjustment. (2) If at any time the Corporation issues rights to its shareholders to subscribe for Shares, each Optionee may, if the Committee so decides in its discretion, be granted a further option, exercisable during the time within which such rights may be exercised, to purchase, at the same price as the Shares subject to such rights, a number of Shares equal to those for which rights would have been issued to the Optionee on the Shares that are subject to his Option if such Shares bad previously been purchased by the Optionee and retained by him. (3) The judgment of the Committee with respect to any matters referred to in this Section 8.04 shall be conclusive and binding upon each Optionee. Any exercise by the Committee of its authority under this Section 8.04 is subject to the approval of the Board if required by applicable laws and regulations or the rules, regulations, by-laws or policies of any regulatory authority or stock exchange having jurisdiction. ARTICLE IX AMENDMENTS 9.01 Required Amendments. If any provision of the Plan or any Option contravenes any applicable laws or regulations or any rules, regulations, by-laws or policies of any regulatory authority or stock exchange having jurisdiction or authority over the Corporation or the Plan, 9 then the Board may amend such provision to the extent required to bring such provision into compliance therewith. 9.02 Other Amendments. (1) The Board may, at any time or from time to time, suspend or terminate the Plan in whole or in part or amend it in such respects as the Board may deem appropriate. No amendment of the Plan shall be made without the approval of the shareholders which would: (i) materially increase the benefits under the Plan; (ii) materially modify the requirements as to eligibility for participation in the Plan; (iii) increase the total number of Shares which may be issued pursuant to Options, except as is provided for in accordance with Article VIII; or (iv) extend the period of granting Incentive Stock Options. (2) Subject to Section 9.01, no amendment, suspension or termination of the Plan shall, without the Optionee's consent, impair any of the rights or obligations under any Option theretofore granted to an Optionee under the Plan 9.03 Approvals. No amendment shall be effective until all applicable approvals, if any, of regulatory authorities and stock exchanges have been obtained. ARTICLE X GOVERNMENT APPROVALS 10.01 Necessary Approvals. The obligation of the Corporation to issue, transfer and deliver Shares on the exercise of Options under the Plan is subject to the approval of any regulatory authorities or stock exchanges on which the Shares are listed for trading which may be required in connection with the authorization, issuance, transfer or delivery of such Shares by the Corporation. If any Shares cannot be issued to any Optionee for any reason including, without limitation, the failure to obtain such approval, then the obligation of the Corporation to issue such Shares shall terminate and any Option Price paid to the Corporation shall be returned to the Optionee. ARTICLE XI MISCELLANEOUS PROVISIONS 11.01 No Rights to Employment. Nothing contained in the Plan or in any agreement evidencing Options granted under the Plan shall confer upon any Optionee any right with respect to continuance of employment by Corporation or any subsidiary thereof or interfere in any way with the right of the Corporation or any subsidiary to terminate the employment of any Optionee. 11.02 No Representations or Warranty. The Corporation makes no representation or warranty as to the future market value of any Shares issued in accordance with the provisions of the Plan. 10 11.03 Use of Proceeds. Payments received from Optionees upon the exercise of Options shall be used for the general corporate purposes of the Corporation. 11.04 Plan Expenses. Any expenses of administering the Plan shall be borne by the Corporation. 11.05 Interpretation. The Plan will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. ARTICLE XII EFFECTIVE DATE 12.01 Effective Date. (1) The Plan shall become effective when it is adopted by the Board. However, if (a) the Plan is not approved by the shareholders of the Corporation, by a majority of the votes cast on the question, at the next annual meeting of shareholders of the Corporation or any adjournment thereof or (b) the necessary regulatory and stock exchange approvals are not obtained prior to March 7, 1991 (being one year after the date on which the CAE Inc. Employee Stock Option was adopted by the Board), the Plan and all Options shall terminate. (2) No Incentive Stock Option may be granted after the tenth anniversary of the earlier of (a) the date the Plan is adopted (or the date any amendment is adopted to increase the aggregate number of Shares issuable under the Plan or to change the employees eligible to receive Options, which amendment is described and considered a new plan under Proposed Treas. Reg. ss. 1.422A-2(b)(3)(iv) of the U.S. Department of Treasury) by the Board, or (b) the date such Plan (or such amendment) is approved by the shareholders. ORIGINALLY adopted by the Board of Directors of CAE Inc. on the 9th day of May, 1990 and as amended February 4, 1994, June 17, 1998 and May 9, 2001. ATTACHMENT 1 TO CAE INC. EMPLOYEE STOCK OPTION PLAN LEGEND Each certificate for Shares acquired upon the exercise of an Option by a United States resident shall bear the following legend: The Securities evidenced by this certificate have not been registered under the United States Securities Act of 1933, as amended (the "Act"). These securities may not be sold to a United States person (within the meaning of Regulation S under the Act), except in compliance with the registration requirements of the Act or an exemption therefrom. These Securities are subject to manner of sale restrictions which are set forth in the Issuer's Employee Stock Option Plan, the relevant provisions of which are available for inspection during business hours at the Issuer's principal business office. The securities represented by this certificate are listed on The Toronto Stock Exchange and the Montreal Exchange; however the said securities cannot be traded through the facilities of such Exchanges since they are not freely transferable, and consequently any certificate representing such securities is not "good delivery" in settlement of transactions on such Exchanges. EX-5 8 ex5_1-072502.txt EX-5.1, REGISTRATION STATEMENT ON FORM S-8 STIKEMAN ELLIOTT Barristers & Solicitors 5300 Commerce Court West, 199 Bay Street, Toronto, Canada M5L 1B9 Tel: (416) 869-5500 Fax: (416) 947-0866 www.stikeman.com July 26, 2002 CAE Inc. Royal Bank Plaza, South Tower Suite 3060 Toronto, Ontario M5J 2J1 Canada Re: CAE Inc. Registration Statement on Form S-8 Ladies and Gentlemen: We have acted as Canadian counsel for CAE Inc. (the "Company") in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), of an aggregate of 814,750 Common Shares, no par value, in the capital of the Company (the "Shares") proposed to be issued pursuant to a Form S-8 (the "Registration Statement") to be filed today with the Securities and Exchange Commission under the Securities Act relating to the CAE Inc. Employee Stock Option Plan (as amended and restated as of May 9, 2001) (the "Plan"). We have examined and are familiar with the Registration Statement. We have also examined and relied on such corporate records and documents of the Company and such matters of law as we have considered necessary or appropriate to enable us to give this opinion, including, without limitation to the foregoing, the minutes of the meeting of the board of directors of the Company held on May 6, 1998 and the annual and special meeting of shareholders of the Company held on June 17, 1998. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents, certificates and instruments submitted to us as originals and the conformity with originals of all documents submitted to us as copies. The opinion expressed below is limited to the laws of the Province of Ontario and the federal laws of Canada applicable therein as the same are in force at the date hereof, and we do not express any opinion herein concerning the laws of any other jurisdiction. Based upon the foregoing, it is our opinion that, upon the allotment of the Shares by the board of directors of the Company and due registration of the issue of such Shares in the register of shareholders of the Company and subject to receipt by the Company in full of the exercise price therefor, the Shares issuable upon exercise of stock options in accordance with the terms of the Plan (i) have been duly authorised by the Company and (ii) when issued in accordance with the terms of the Plan, will be validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. Yours faithfully, /s/ Stikeman Elliott EX-23.1 9 ex23-1_072202.txt CONSENT OF INDEPENDENT ACCOUNTANTS [PricewaterhouseCoopers LLP Letterhead] CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our following reports and comments, all of which appear in CAE Inc.'s Registration Statement on Form 40-F dated July 25, 2002: o Our Auditors' Report addressed to the Board of Directors dated May 8, 2002 except for Note 21 D which is as at July 3, 2002 and our Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Difference dated May 8, 2002 except for Note 21 D which is as at July 3, 2002 relating to the consolidated financial statements of CAE Inc.; o our Auditors' Report addressed to the Shareholders dated May 8, 2002 relating to the consolidated financial statements of CAE Inc.; and o our Auditors' Report addressed to the Shareholders dated Apri1 30, 2001 relating to the consolidated financial statements of CAE Inc. /s/ PricewaterhouseCoopers LLP Chartered Accountants Montreal, Quebec July 25, 2002 PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization. EX-24 10 ex24_1-071802.txt EXHIBIT 24.1 EXHIBIT 24.1 POWERS OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of D.H. Burney and Paul G. Renaud his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign and to file a Registration Statement on Form S-8 (or such other Form as may be appropriate) in connection with the registration of Common Shares of the Registrant and any and all amendments (including post-effective amendments) to any such Registration Statement on Form S-8 with the Securities and Exchange Commission, granting to said attorney-in-fact and agent full power and authority to perform any other act on behalf of the undersigned required to be done in the premises. This power of attorney may be executed in counterparts. Signature Title Date - --------- ----- ---- /s/ D.H. Burney - -------------------------------- President and Chief 7/26/02 D.H. Burney Executive Officer and Director (Principal Executive Officer) /s/ John A. Craig - -------------------------------- Director 7/26/02 John A. (Ian) Craig /s/ Richard J. Currie - -------------------------------- Director 7/26/02 Richard (Dick) J. Currie, C.M. /s/ R. Fraser Elliott - -------------------------------- Director 7/26/02 R. Fraser Elliott, C.M., Q.C /s/ H. Garfield Emerson - -------------------------------- Director 7/26/02 H. Garfield Emerson, Q.C. /s/ Anthony S. Fell - -------------------------------- Director 7/26/02 Anthony S. Fell /s/ James A. Grant - -------------------------------- Director 7/26/02 The Honourable James A. Grant, P.C., Q.C. - -------------------------------- Director James F. Hankinson /s/ E. Randolph Jayne II - -------------------------------- Director 7/26/02 E. Randolph (Randy) Jayne II /s/ James W. McCutcheon - -------------------------------- Director 7/26/02 James W. McCutcheon, Q.C. - -------------------------------- Director George K. Petty /s/ Paul G. Renaud 7/26/02 - -------------------------------- Executive Vice President, Chief Paul G. Renaud Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer) - -------------------------------- Director Lawrence N. Stevenson /s/ Lynton R. Wilson 7/26/02 - -------------------------------- Chairman of the Board of Directors Lynton R. Wilson -----END PRIVACY-ENHANCED MESSAGE-----