Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- issuer bids -- convertible debentures-- debentures convertible into common shares at a conversionprice far in excess of current value of common shares -- conversionfeature is of no material value -- debentures trade like non-convertible,subordinated, unsecured debt based on applicant's underlyingcreditworthiness -- convertible debentures are out-of-the-money-- circular to include opinion letter on convertibility feature-- applicant to comply with all other requirements -- applicantexempt from valuation requirement.

Applicable Rule

61-501 -- Insider Bids, Issuer Bids, Going PrivateTransactions and Related Party Transactions, ss. 3.3, 3.4, and9.1.

















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application (the "Application") fromThe Descartes Systems Group Inc. (the "Corporation")and 3079393 Nova Scotia Company, a wholly-owned subsidiary ofthe Corporation (the "Subsidiary" and, together withthe Corporation, the "Applicants"), for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that the requirement contained in the Legislation to obtaina valuation (the "Valuation Requirement") shall notapply to the proposed purchase by the Subsidiary of a portionof the Corporation's outstanding 5.5% Convertible UnsecuredSubordinated Debentures due June 30, 2005 (the "Debentures")pursuant to a formal issuer bid (the "Proposed Issuer Bid");

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor the Application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS the Applicants have representedto the Decision Makers that:

1. The Corporation was amalgamated under theBusiness Corporations Act (Ontario) on January 26,1999. Its principal executive office is located in Waterloo,Ontario.

2. The Corporation is authorized to issuean unlimited number of common shares (the "Common Shares").As of May 23, 2003, the Corporation had outstanding 52,231,711Common Shares.

3. As of May 23, 2003 the Corporationhad outstanding Debentures in the aggregate principal amountof U.S.$71,995,000.

4. The Corporation is a reporting issuer orthe equivalent in each of the Jurisdictions and is not indefault of any requirements of the Legislation. The CommonShares are listed and posted for trading on the Toronto StockExchange (the "TSX") under the trading symbol "DSG"and on the Nasdaq National Market under the trading symbol"DSGX" and its Debentures are listed and postedfor trading on the TSX under the trading symbol "DSG.DB.U".

5. The Subsidiary was incorporated on May27, 2003 and is governed by the Nova Scotia Companies Act.It is a wholly-owned subsidiary of the Corporation. The Subsidiaryis not a reporting issuer in any of the Jurisdictions.

6. The Debentures were issued pursuant toan indenture dated June 30, 2000 (the "Indenture")between the Corporation and Montreal Trust Company of Canada(now Computershare Trust Company of Canada) and distributedpursuant to a short form prospectus dated June 26, 2000.

7. The Indenture provides that, unless an"Event of Default" (as defined in the Indenture)has occurred and is continuing under the Indenture, the Corporationmay purchase for cancellation any or all of the Debenturesby invitation for tenders or by private contract. No Eventof Default has occurred under the Indenture. There are noother restrictions upon the Corporation's and no restrictionson the Subsidiary's ability to purchase the Debentures.

8. The Debentures are convertible at the Debentureholder'soption into Common Shares at any time prior to the earlierof June 30, 2005 and the last business day immediately precedingthe date specified for redemption by the Corporation. Theconversion price for the Debentures is U.S.$35.00 per CommonShare, being a rate of approximately 28.57 Common Shares perU.S.$1,000 principal amount of Debentures.

9. On August 1, 2002, the Corporation announcedan offer to repurchase for cancellation by way of a substantialissuer bid expiring on September 6, 2002 (the "2002 DebentureOffer") up to an aggregate of U.S.$51,428,571 principalamount of its outstanding Debentures at a price of U.S.$700for each U.S.$1,000 principal amount of Debentures plus unpaidinterest accrued to the date of purchase. The Corporationpurchased for cancellation a nominal amount of Debenturespursuant to the 2002 Debenture Offer.

10. A significant holder of Debentures hasagreed with the Corporation to tender U.S.$30,856,500 aggregateprincipal amount of Debentures under the Proposed Issuer Bidat a purchase price of U.S.$950 for each U.S.$1,000 principalamount of Debentures. To the knowledge of the Corporationno other person or company holds more than 10% of the aggregateprincipal amount of outstanding Debentures.

11. The Corporation proposes to purchase,for a period concurrent with the Proposed Issuer Bid, up to11,578,000 Common Shares at a single purchase price withinthe range of Cdn.$3.00 to Cdn.$3.85 using a "Dutch Auction"procedure.

12. The Corporation announced the intentionto make the Proposed Issuer Bid and certain anticipated detailsof the Proposed Issuer Bid on May 12, 2003 (the "AnnouncementDate"). The purchase price is U.S.$950 for each U.S.$1,000principal amount of Debentures.

13. Over the 12 complete months prior to theAnnouncement Date, the Debentures traded on the TSX on 158out of 272 trading days, with an average daily trading valueof U.S.$48,596 on the days traded, and the price range overthat period was U.S.$680 to U.S.$930 per U.S.$1,000 principalamount of Debentures.

14. As at May 12, 2003 and May 13, 2003 (oneday after the Announcement Date), the closing price of theDebentures on the TSX was Cdn.$850.00 and U.S.$922.50 perU.S.$1,000 aggregate principal amount outstanding respectively.

15. The Debentures are convertible into CommonShares at a conversion price which is significantly in excessof the current market price of the Common Shares. The Debentureconversion price of U.S.$35.00 per Common Share for each U.S.$1,000in aggregate principal amount of Debentures outstanding isequivalent to Cdn.$48.55 per Common Share based on the foreignexchange rates as of May 13, 2003. On May 13, 2003, the closingprice of the Common Shares on the TSX was Cdn.$3.20, whichwas approximately 6.4% of the conversion price of the Debenturesat such time, based on the foreign exchange rates then ineffect. Over the 12 months ended April 30, 2003, the CommonShares traded on the TSX in a range between Cdn.$2.88 andCdn.$6.06 per Common Share.

16. In a letter (the "Opinion Letter")dated June 2, 2003, Griffiths McBurney & Partners ("GMP")advised the Corporation that, in GMP's opinion:

(i) the convertibility feature of the Debenturesis of no material value; and

(ii) the Debentures trade on the TSX likenon-convertible, subordinated, unsecured debt based on theCorporation's underlying creditworthiness.

17. The Proposed Issuer Bid is proceedingby way of an issuer bid circular dated June 2, 2003, whichincludes a summary and copy of the Opinion Letter. The ProposedIssuer Bid will expire on July 11, 2003, unless extended.

18. The Subsidiary intends to acquire theaggregate principal amount of U.S.$45,000,000 of Debenturesat the Purchase Price, representing approximately 62.5% ofthe outstanding principal amount of Debentures. The Corporationanticipates using cash on hand, cash equivalents and/or marketablesecurities to fund the Debenture acquisitions.

19. The Proposed Issuer Bid is an "issuerbid" within the meaning of the Legislation in the Jurisdictionsbecause the Debentures are convertible debt securities.

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 inthe Jurisdictions under the Legislation is that the ValuationRequirement shall not apply to Proposed Issuer Bid, providedthat the Applicants comply with the other applicable provisionsof the Legislation relating to formal issuer bids.

June 25, 2003.

"Ralph Shay"