Proceedings

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IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED  

- AND -  

IN THE MATTER OF KHALDOUN KADER STATEMENT OF ALLEGATIONS
OF STAFF OF THE ONTARIO SECURITIES COMMISSION
 

Further to a Notice of Hearing dated May 9, 2006, Staff of the Ontario Securities Commission make the following allegations:

The Undisclosed Material Information

1. On October 28, 2004, IMAX Corporation (“IMAX”) reported its third quarter 2004 financial results. IMAX reported net earnings from continued operations of USD $0.04 per diluted share. This was substantially ahead of management guidance for a breakeven quarter and analysts’ expectations and the First Call mean of USD $0.01. IMAX also reported significant gains in revenue as compared with the third quarter of 2003.

2. Prior to the release of the third quarter results, shares in IMAX closed on the NASDAQ Exchange on October 27, 2005 at USD $5.52. Following the announcement on October 28, 2005, shares in IMAX opened at USD $6.01 and rose to a high of USD $6.56 before closing at USD $6.43.

The Insider Trading

3. During October and November of 2004 (the “Material Time”) the Respondent, Khaldoun Kader (“Kader”), was employed at IMAX as a Director of Finance and Treasury. Accordingly, he was a “person in a special relationship” with IMAX as that term is defined in subsection 76(5) of the Securities Act, R.S.O. 1990, C. S.5, as amended (the “Act”).

4. Prior to October 18, 2004, Kader became aware, in his capacity as Director of Finance and Treasury, that the net earnings per share for the third quarter of 2004 were going to be materially higher than management guidance and analysts’ expectations (the “Material Fact”).

5. Between October 18 and 27, 2004, through an on-line internet access brokerage account in his mother’s name (the “Account”), Kader directed and financed the purchase of 110,000 shares of IMAX at a cost of USD $607,527.96, exclusive of commissions.

6. Between October 28 and November 1, 2004, Kader directed the sale of all of the IMAX shares for proceeds of USD $698,246.01, exclusive of commissions.

7. No other shares were traded in the Account during the Material Time.

False Statements to Staff

8. In April and May of 2005, Kader told Staff that he was unaware of the Account and the trading in it. He also told Staff that, at the time of the trading, he was not aware of any undisclosed material facts.

Conduct Contrary to Ontario Securities Law and the Public Interest

9. Staff allege that by purchasing shares in IMAX with knowledge of the undisclosed Material Fact, Kader contravened subsection 76(1) of the Act and acted contrary to the public interest.

10. Staff further allege that Kader made untrue statements to Staff contrary to subsection 122(1) of the Act and the public interest.

11. Staff reserve the right to make such further allegations as Staff may advise and the Commission may permit.

DATED AT TORONTO this 9 th day of May, 2006.