Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications (relief from prospectus requirements grantedin respect of certain trades in units of an employee savingsfund made pursuant to a classic offering and a leveraged offeringby French issuer, provided that all sales of such units pursuantto the leveraged offering be made through a registrant (relieffrom registration and prospectus requirements upon the redemptionof such units for shares of the issuer (relief from the registrationand prospectus requirements granted in respect of first tradeof such shares where such trade is made through the facilitiesof a stock exchange outside of Canada (relief granted to themanager of the Fund from the adviser registration requirement.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 53 and 74(1).

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015 as am.

Applicable Rules

Multilateral Instrument 45-102 - Resale ofSecurities.
OSC Rule 45-503 - Trades to Employees, Executivesand Consultants.
OSC Policy 4.8 - Non Resident Advisers.













WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker")in each of Ontario, Québec, and Nova Scotia (collectively,the "Jurisdictions") has received an applicationfrom Thales S.A. (the "Filer") for a decisionunder the securities legislation (the "Legislation")of the Jurisdictions that:

(i) the requirements contained in the Legislationto file and obtain a receipt for a preliminary prospectusand a prospectus (the "Prospectus Requirements")shall not apply to certain trades in units ("Units")of World Classic (the "Classic Compartment")and World Leveraged (the "Leveraged Compartment"and, together with the Classic Compartment, the "Compartments",each of which are compartments of a French company collectiveemployee shareholding vehicle, the Actionnariat SalariéThales or "FCPE") made pursuant to theEmployee Share Offering (as defined below) to or with QualifyingEmployees (as defined below) resident in the Jurisdictionswho elect to participate in the Employee Share Offering(the "Canadian Participants");

(ii) the requirements contained in the Legislationto be registered to trade in a security (the "RegistrationRequirements") shall not apply to trades in Unitsof the Classic Compartment made pursuant to the EmployeeShare Offering to or with Canadian Participants;

(iii) the Registration and Prospectus Requirementsshall not apply to the trades of ordinary shares of theFiler (the "Shares") by the Compartmentsto Canadian Participants upon the redemption of Units byCanadian Participants, nor to the issuance of Units of theClassic Compartment to holders of Leveraged CompartmentUnits upon the transfer of the assets of the Leveraged Compartmentto the Classic Compartment at the end of the Lock-Up Period(as defined below);

(iv) the Registration and Prospectus Requirementsshall not apply to the first trade in any Shares acquiredby Canadian Participants under the Employee Share Offeringwhere such trade is made through the facilities of a stockexchange outside of Canada; and

(v) the manager of the Compartments, CréditLyonnais Asset Management (the "Manager")is exempt from the requirements contained in the Legislationto be registered as an adviser (the "Adviser RegistrationRequirements") to the extent that its activitiesin relation to the Employee Share Offering require compliancewith the Adviser Registration Requirements.

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Commission des valeurs mobilières du Québecis the principal regulator for this application;

AND WHEREAS the Filer has representedto the Decision Makers that:

1. The Filer is a corporation formed underthe laws of France. It is not and has no intention of becominga reporting issuer (or equivalent) under the Legislation.The Shares are listed on Euronext Paris, the London StockExchange, and the Deutsche Börse.

2. The Filer carries on business in Canadathrough the following affiliated companies: Thales SystemsCanada Inc., Thales Optronique Canada Inc., Thales AvioniqueCanada Inc., Thales Geosolutions Canada Inc. and Thales NavalServices Canada Inc. (the "Canadian Affiliates"and, together with the Filer and other affiliates of the Filer,the "Thales Group"). Each of the CanadianAffiliates is a direct or indirect controlled subsidiary ofthe Filer and is not, and has no intention of becoming, areporting issuer under the Legislation.

3. The Filer has established a worldwide stockpurchase plan for employees of the Thales Group (the "EmployeeShare Offering") which is comprised of two subscriptionoptions: (i) an offering of Shares to be subscribed throughthe Classic Compartment (the "Classic Plan");and (ii) an offering of Shares to be subscribed through theLeveraged Compartment (the "Leveraged Plan").

4. Only persons who have been employees ofa member of the Thales Group for a minimum of three monthsprior to the close of the subscription period for the EmployeeShare Offering (the "Qualifying Employees"),will be invited to participate in the Employee Share Offering.

5. The Compartments were established for thepurpose of implementing the Employee Share Offering. The Compartmentsare not and have no intention of becoming reporting issuersunder the Legislation.

6. The Compartments are compartments of theFCPE, a company collective employee shareholding vehicle ofa type commonly used in France for the conservation or custodianshipof shares held by employee investors. Only Qualifying Employeeswill be allowed to hold Units of the Compartments in an amountproportionate to their respective investments in the Compartments.

7. In addition to the Classic Compartmentand the Leveraged Compartment, the FCPE includes compartmentsreserved for other employee share offerings and share plansof the Filer. Each compartment in the FCPE issues its owncategory of units that represent, and are valued based on,the assets in that compartment only.

8. Under French law, all Units acquired inthe Employee Share Offering will be subject to a hold periodof approximately five years (the "Lock-Up Period"),subject to certain exceptions prescribed by French law (suchas a release on death or termination of employment). At theend of the Lock-Up Period, a Canadian Participant may:

(i) redeem Units: (a) in the Classic Compartmentin consideration for the underlying Shares or a cash paymentequal to the then market value of the Shares, or (b) inthe Leveraged Compartment according to the Redemption Formula(described below), to be settled by delivery of the numberof Shares equal to such amount or the cash equivalent, or

(ii) continue to hold Units in the ClassicCompartment and redeem those Units at a later date (as explainedbelow, at the end of the Lock-Up Period, holders of Unitsin the Leveraged Compartment who do not redeem their Unitswill receive Units in the Classic Compartment).

9. In the event of an early unwind resultingfrom the Canadian Participant satisfying one of the exceptionsto the Lock-Up Period, a Canadian Participant may redeem Units:(a) from the Classic Compartment in consideration for theunderlying Shares or a cash payment equal to the then marketvalue of the Shares, or (b) from the Leveraged Compartmentusing the Redemption Formula (described below), but usingthe market value of the Shares at the time of unwind to measurethe increase, if any, from the Reference Price (describedbelow).

10. Under the Classic Plan, Canadian Participantswill purchase Units in the Classic Compartment, which willsubscribe for Shares on behalf of the Canadian Participants,at a purchase price that is equal to the average of the openingprice of the Shares on 20 trading days prior to the date theprice is set (the "Reference Price"), lessa 20% discount. Dividends paid on the Shares held in the ClassicCompartment will be reinvested by the Classic Compartmentand increase the value of the Units held by Canadian Participants.

11. Under the Leveraged Plan, Canadian Participantswill purchase Units in the Leveraged Compartment, and theLeveraged Compartment will then subscribe for Shares usingthe Employee Contribution (as described below) and certainfinancing made available by a major European bank, DeutscheBank A.G. ("Deutsche Bank").

12. As with the Classic Plan, Canadian Participantsin the Leveraged Plan enjoy the benefit of a 20% discountin the Reference Price. Under the Leveraged Plan, the CanadianParticipants effectively receive a share appreciation entitlementin the increase in value, if any, of the Shares financed bythe Deutsche Bank Contribution (as described below).

13. Participation in the Leveraged Plan representsan opportunity for Qualifying Employees potentially to obtainsignificantly higher gains than would be available throughparticipation in the Classic Plan, by virtue of the QualifyingEmployee's indirect participation in a financing arrangementinvolving a swap agreement (the "Swap Agreement")between the Leveraged Compartment and Deutsche Bank. In economicterms, the Swap Agreement effectively involves the followingexchange of payments: for each Share which may be purchasedby the Qualifying Employee's contribution (the "EmployeeContribution") under the Leveraged Plan at the ReferencePrice less the 20% discount, Deutsche Bank will lend to theLeveraged Compartment (on behalf of the Canadian Participant)an amount sufficient to enable the Leveraged Compartment (onbehalf of the Canadian Participant) to purchase an additionalnine Shares (the "Deutsche Bank Contribution")at the Reference Price less the 20% discount.

14. Under the terms of the Swap Agreement,at the end of the Lock-Up Period (the "SettlementDate"), the Leveraged Compartment will owe to DeutscheBank an amount equal to the market value of the Shares heldin that Compartment, less

(i) 100% of the Employee Contributions;and

(ii) an amount equal to approximately 70%of the increase, if any, in the market value of the Sharesfrom the Reference Price (the "Appreciation Amount").The market value of the Shares on the Settlement Date willbe calculated as the average price of the Shares over asix month period prior to the Settlement Date.

15. If, at the Settlement Date, the marketvalue of the Shares held in the Leveraged Compartment is lessthan 100% of the Employee Contributions, Deutsche Bank willmake a contribution to the Leveraged Compartment to make upany shortfall.

16. At the end of the Lock-Up Period, theSwap Agreement will terminate after the making of final swappayments and a Canadian Participant may redeem his or herLeveraged Compartment Units in consideration for a paymentof an amount equal to the value of the Canadian Participant'sEmployee Contribution and the Canadian Participant's portionof the Appreciation Amount, if any, (the "RedemptionFormula") to be settled by delivery of such numberof Shares equal to such amount or the cash equivalent. Followingthese redemptions, all assets (including Shares) remainingin the Leveraged Compartment will be transferred to the ClassicCompartment. New Units of the Classic Compartment will beissued to the applicable Canadian Participants in recognitionof the assets transferred to the Classic Compartment. TheCanadian Participants may redeem the new Units whenever theywish.

17. Under French law, an FCPE is a limitedliability entity. The risk statement provided to CanadianParticipants will confirm that, under no circumstances, willa Canadian Participant in the Leveraged Plan be liable toany of the Leveraged Compartment, Deutsche Bank or the Filerfor any amounts in excess of his or her Employee Contributionunder the Leveraged Plan.

18. During the term of the Swap Agreement,dividends paid on the Shares held in the Leveraged Compartmentwill be remitted to the Leveraged Compartment, and the LeveragedCompartment will remit an equivalent amount to Deutsche Bankas partial consideration for the obligations assumed by DeutscheBank under the Swap Agreement.

19. For Canadian federal income tax purposes,the Canadian Participants in the Leveraged Compartment willbe deemed to receive all dividends paid on the Shares financedby either the Employee Contribution or the Deutsche Bank Contribution,at the time such dividends are paid to the Leveraged Compartment,notwithstanding the actual non-receipt of the dividends bythe Canadian Participants by virtue of the terms of the SwapAgreement. Consequently, Canadian Participants will be requiredto fund the tax liabilities associated with the dividendsfrom their own resources.

20. The declaration of dividends on the Sharesremains at the sole discretion of the board of directors ofthe Filer. The Filer has not made any commitment to DeutscheBank as to any minimum payment in respect of dividends.

21. To respond to the fact that, at the timeof the initial investment decision relating to participationin the Leveraged Plan, Canadian Participants will be unableto quantify their potential income tax liability resultingfrom such participation, the Filer will indemnify each CanadianParticipant in the Leveraged Plan for certain tax costs tothe Canadian Participants associated with the payment of dividendsin excess of a specified amount of euros per Share duringthe Lock-Up Period such that, in all cases, a Canadian Participantwill, at the time of the original investment decision, beable to quantify, with certainty, his or her maximum tax liabilityin connection with dividends received by the Leveraged Compartmenton his or her behalf under the Leveraged Plan.

22. At the time the Canadian Participant'sobligations under the Swap Agreement are settled, the CanadianParticipant will realize a capital gain (or capital loss)by virtue of having participated in the Swap Agreement tothe extent that amounts received by the Leveraged Compartment,on behalf of the Canadian Participant, from Deutsche Bankexceed (or are less than) amounts paid by the Leveraged Compartment,on behalf of the Canadian Participant, to Deutsche Bank. Capitallosses (gains) realized by a Canadian Participant under theSwap Agreement may be offset against (reduced by) any capitalgains (losses) realized by the Canadian Participant on a dispositionof the Shares, in accordance with the rules and conditionsunder the Income Tax Act (Canada) or comparable provinciallegislation (as applicable).

23. The Manager is a portfolio managementcompany governed by the laws of France. The Manager is registeredwith the French Commission des Opérations de Bourse(the "COB") to manage French investment funds,employee plans and other investment products, and complieswith the rules of the COB. The Manager is not and has no intentionof becoming a reporting issuer under the Legislation.

24. The Manager may, for a Compartment's account,acquire, sell or exchange all securities in the portfolioof each Compartment (the "Portfolios"). TheClassic Compartment Portfolio will consist of Shares and,from time to time, cash in respect of dividends paid on theShares. The Leveraged Compartment's Portfolio will consistof Shares and the Swap Agreement. Either portfolio may includecash equivalents which the Compartments may hold pending investmentsin Shares and for purposes of Unit redemptions. The Manager'sportfolio management activities in connection with the EmployeeShare Offering and the Compartments are limited to purchasingShares from the Filer, selling such Shares as necessary inorder to fund redemption requests, and such activities asmay be necessary to give effect to the Swap Agreement.

25. The Manager is also responsible for preparingaccounting documents and publishing periodic informationaldocuments as provided by the rules of the FCPE. The Manager'sactivities in no way affect the underlying value of the Shares.

26. Shares issued in the Employee Share Offeringwill be deposited in the relevant Compartment through CréditLyonnais (the "Depositary"), a large Frenchcommercial bank subject to French banking legislation.

27. Under French law, the Depositary mustbe selected by the Manager from among a limited number ofcompanies identified on a list by the French Minister of theEconomy, and its appointment must be approved by the COB.The Depositary carries out orders to purchase, trade and sellsecurities in the portfolio and takes all necessary actionto allow each Compartment to exercise the rights relatingto the securities held in its portfolio.

28. Canadian Participants will not be inducedto participate in the Employee Share Offering by expectationof employment or continued employment.

29. The total amount invested by a CanadianParticipant through the Employee Share Offering, includingany Deutsche Bank Contribution, cannot exceed 25% of his orher estimated gross annual compensation although a lower limitmay be established by the Canadian Affiliates.

30. None of the Filer, the Manager, the CanadianAffiliates or any of their employees, agents or representativeswill provide investment advice to the Qualifying Employeeswith respect to an investment in the Units.

31. The Filer will retain a securities dealerregistered as a broker/investment dealer under the Legislationof the Jurisdictions (the "Registrant") toprovide advisory services to the Canadian Participants inconnection with the Leveraged Plan and to make a determination,in accordance with industry practices, as to whether an investmentin the Leveraged Plan is suitable for each Canadian Participantbased on his or her particular financial circumstances. TheRegistrant will establish accounts for, and will receive theinitial account statements from the Leveraged Compartmenton behalf of, such Canadian Participants.

32. The Units of the Leveraged Compartmentwill be issued by the Leveraged Compartment to Canadian Participantssolely through the Registrant. The Units will be evidencedby account statements issued by the Leveraged Compartment.

33. The Canadian Participants will receivean information package in the French or English language,as applicable, which will include a summary of the terms ofthe Employee Share Offering and a tax notice relating to therelevant Compartment containing a description of Canadianincome tax consequences of subscribing to and holding theUnits and redeeming Units at the end of the Lock-Up Period.The information package will also include a risk statementrelating to the Leveraged Plan only, which will describe certainrisks associated with an investment in Units pursuant to theLeveraged Plan.

34. Upon request, Canadian Participants mayreceive copies of the Filer's French Document de Référencefiled with the COB in respect of the Shares, the FCPE's rules(which are analogous to company by-laws), and copies of allcontinuous disclosure materials relating to the Filer whichare furnished to shareholders generally.

35. The Filer will provide contractual rightsof action to Canadian Participants who participate in theLeveraged Plan if the offering documents provided to the CanadianParticipants contain a material misrepresentation in respectof the Leveraged Plan.

36. There are approximately 311 QualifyingEmployees resident in Canada, in the provinces of Québec(163), Ontario (74) and Nova Scotia (74), who represent inthe aggregate less than 1% of the number of Employees worldwide.

37. As of the date hereof and after givingeffect to the Employee Share Offering, Canadian residentsdo not and will not beneficially own (which term, for thepurposes of this paragraph, is deemed to include all Sharesheld by the Compartments on behalf of Canadian Participants)more than 10% of the Shares and do not and will not representin number more than 10% of the total number of holders ofthe Shares as shown on the books of the Filer.

AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that:

(a) the Prospectus Requirements shall notapply to trades in Units of the Compartments to or with theCanadian Participants pursuant to the Employee Share Offering,provided that all trades that are sales in a Jurisdictionare made through a dealer that is registered as a broker/investmentdealer in the Jurisdiction, and the first trade in such Unitsacquired by Canadian Participants pursuant to this Decision,in a Jurisdiction, shall be deemed a distribution or a primarydistribution to the public under the Legislation of such Jurisdiction;

(b) the Registration Requirements shall notapply to trades in Units of the Classic Compartment to theCanadian Participants pursuant to the Classic Plan;

(c) the Registration and Prospectus Requirementsshall not apply to:

(i) trades of Shares by the Compartmentsto the Canadian Participants upon the redemption of Unitsby Canadian Participants pursuant to the Employee ShareOffering; or

(ii) the issuance of Units of the ClassicCompartment to holders of Leveraged Compartment Units uponthe transfer of the assets of the Leveraged Compartmentto the Classic Compartment;

provided that, the first trade in any suchShares or Units acquired by a Canadian Participant pursuantto this Decision, in a Jurisdiction, shall be deemed a distributionor a primary distribution to the public under the Legislationof such Jurisdiction;

(d) the Registration and Prospectus Requirementsshall not apply to the first trade in any Shares acquiredby a Canadian Participant under the Employee Share Offeringprovided that such trade is:

(i) made through a person or company who/whichis appropriately licensed to carry on business as a broker/dealer(or the equivalent) under the applicable securities legislationin the foreign jurisdiction where the trade is executed;and

(ii) executed through the facilities ofa stock exchange outside of Canada; and

(e) the Manager shall be exempt from the AdviserRegistration Requirements, where applicable, in order to carryout the activities described in paragraphs 24 and 25 hereof.

September 26, 2002.

"Josée Deslauriers"