1. SADI Overview

2. Strategic Aerospace and Defence Initiative Overview Strategic Aerospace and Defence Initiative  SADI is a program managed by the Industrial Technologies Office, a Special Operating Agency of Industry Canada.  Launched in April 2007 as a replacement for the Technology Partnerships Canada (TPC) program. Higher standards for transparency and accountability. More predictable repayment structure.  Open to companies of all sizes.

3. Strategic Aerospace and Defence Initiative Overview A Repayable Contribution Program  SADI funding helps support companies that are investing in R&D, allowing projects to proceed successfully and generating benefits for Canadians.  SADI provides Canadian companies performing work in the aerospace, defence, space and security (A&D) industries with repayable contributions for strategic R&D projects.  SADI contributions will equal approximately 30 percent of a project's total eligible costs.

4. Strategic Aerospace and Defence Initiative Overview Objectives  Encourage strategic R&D that will result in innovation and excellence in new products and services;  Enhance the competitiveness of Canadian aerospace, defence, space and security companies; and,  Foster collaboration between research institutes, universities, colleges, and the private sector.

5. Strategic Aerospace and Defence Initiative Overview Collaboration  SADI is placing increased emphasis on fostering collaboration between companies and academic institutions  Benefits for companies: Find a solution to a problem  innovation Develop new technology  competitive advantage Develop a new process  higher productivity, lower costs Improve performance and features  competitiveness Access to world-recognized experts  innovation Increase R&D  faster time to market

6. Strategic Aerospace and Defence Initiative Overview SADI Funding  Originally authorized to invest up to $225 Million per year.  Additional $200 million in SADI funding announced in September 2009.  To date, SADI has invested more than $824 million in 24 projects across Canada, leveraging an additional $1.7 billion in R&D investments. $2.08 in R&D investments leveraged for each SADI dollar.  Typically, SADI contributes 30 % of a project`s eligible costs. 40% for JSF and DDSA projects

7. Strategic Aerospace and Defence Initiative Overview Eligibility  Companies must be incorporated under Canadian law.  Proposal must show that the company's project will consist of eligible activities: industrial research and/or pre-competitive development resulting in either new or improved products, processes or services.  Project must include strategic R&D activities.  Applicant must demonstrate that government support is required to meet the scope and timing of the proposed project.  Strategic R&D and benefits must occur in Canada.

8. Strategic Aerospace and Defence Initiative Overview Assessment Criteria  Company capability to achieve the stated objectives Financial resources Management and technical expertise and experience Business plan  Technological Benefits Degree of strategic technology innovation and/or excellence Feasibility of R&D leading to product/service applications  Social and Economic Benefits Feasibility of achieving stated economic benefits Technology diffusion to other companies or sectors; and Collaborative partnerships developed during the course of the project

9. Strategic Aerospace and Defence Initiative Overview SADI Project Lifecycle  First contact  Proposal developed  Determine project eligibility  Perform due diligence  Approvals  Contribution Agreement signed  Undertake R&D (Work Phase) SADI funding disbursed via project claims  Project complete (Benefits Phase) Project monitoring & audits Repayments

10. Strategic Aerospace and Defence Initiative Overview Repayments  Conditional or Unconditional Repayment Terms  Conditional Repayments: based on Gross Business Revenue (GBR) - amounts due are easily verifiable with annual financial statements.  Unconditional Repayments: based on fixed yearly repayments over the length of the repayment period.  Begin one year after completion of R&D phase  Generally do not extend beyond 15 years  Transparent: disclosed on ITO website

11. Strategic Aerospace and Defence Initiative Overview SADI Portfolio (August 2011)  AeroMechanical Services Ltd. Next-generation data communication systems for commercial and military aircraft  ASCO Aerospace Canada Ltd. Innovative manufacturing for aircraft bulkheads and specialized metal components  Axys Technologies Inc. Real-time maritime monitoring and surveillance data unification technology  BelAir Networks Inc. Wireless networking technologies to improve defence industry communications  CAE Inc. Innovative aircraft simulator systems  CMC Electronics Inc. Cost-effective cockpit technologies for next-generation aircraft  D-Ta Systems Inc. High-end sensor interfacing and processing systems to meet defence communications needs

12. Strategic Aerospace and Defence Initiative Overview SADI Portfolio (continued)  Diamond D-Jet Corporation An all-composite, single-engine, five-passenger jet aircraft  GMA Cover, ULC  Héroux Devtek Inc. More reliable and environmentally-friendly landing gear systems  Integran Technologies Inc. (3 projects) Nanotechnology-based coatings for aerospace applications  Kongsberg Mesotech Ltd. Next-generation sonar technologies for underwater surveillance and maritime security  Magellan Aerospace Limited (Bristol Aerospace) New processes for composite manufacturing and complex assemblies  Mechtronix Systems Inc. Build in-house capabilities to develop flight simulator training products  Norsat International Inc. Next-generation portable ground satellite telecommunications technologies

13. Strategic Aerospace and Defence Initiative Overview SADI Portfolio (continued)  PCI Geomatics Enterprises Incorporated Next-generation earth observation technologies  Pratt & Whitney Canada Corp. Lighter aircraft engines with more power, better fuel consumption and improved durability  SkyWave Mobile Communications Inc. Technologies for satellite-based goods tracking and monitoring  Sputtek Inc. Advanced protective coating technology  Thales Canada Inc. Innovative flight control systems  Ultra Electronics TCS Inc. Next-generation tactical radio systems for military and government security

14. Strategic Aerospace and Defence Initiative Overview Contact SADI Industrial Technologies Office Industry Canada 235 Queen Street, 7th Floor Ottawa, ON K1A 0H5 Fax: 613-954-5649 Website: ito.ic.gc.caito.ic.gc.ca Email: info@ito.ic.gc.cainfo@ito.ic.gc.ca Toll free (Canada): 1-800-266-7531 Toll free TTY (hearing impaired only): 1-866-468-1669

15. Strategic Aerospace and Defence Initiative Overview