Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- related party transactions -- relieffrom valuation requirement in connection with a proposed relatedparty transaction -- unwinding of arm's length merger agreementthat resulted in other party to transaction becoming relatedparty of the issuer -- settlement negotiations between mergerparties conducted at arm's length -- valuation of transactionscontemplated under settlement too subjective and uncertain tobe useful to shareholders -- fairness opinion to be providedto shareholders -- minority approval to be obtained --applicantexempt from valuation requirement.

Ontario Rule Cited

Rule 61-501 -- Insider Bids, Issuer Bids, GoingPrivate Transactions and Related Party Transactions, ss. 5.5and 9.1













WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker")in each of Québec and Ontario (the "Jurisdictions")has received an application from Terra Payments Inc. (formerlySureFire Commerce Inc.) ("Terra") for a decision,under the securities legislation of the Jurisdictions (the "Legislation"),exempting Terra from the requirements of providing a valuationin connection with a related party transaction in accordancewith Québec Policy Statement Q-27 ("Policy Q-27")of the Commission des valeurs mobilières du Québec(the "CVMQ") and Rule 61-501 ("Rule61-501") of the Ontario Securities Commission (the"OSC");

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the CVMQ is the principal regulator for this application;

AND WHEREAS Terra has presented to theDecision Makers that:

1. Terra was incorporated under the CanadaBusiness Corporations Act on December 16, 1982;

2. the registered office and principal placeof business of Terra is located at 2 Place Alexis-Nihon, 3500de Maisonneuve Blvd. West, Suite 700, Montreal, Québec,H3Z 3C1;

3. Terra is a reporting issuer under the SecuritiesAct (Québec) the ("Act") and isalso a reporting issuer in the provinces of Ontario, Albertaand British Columbia;

4. the common shares of Terra (the "CommonShares") are currently traded on the Toronto StockExchange (the "TSX");

5. on October 1st, 2002, Terra entered intoa merger agreement (the "Merger Agreement")and an option agreement (the "Option Agreement")with ebs Holding AG ("EBS Holding"), a companygoverned by the laws of Germany, and ebs Electronic BillingSystems AG ("EBS Billing"), a company governedby the laws of Germany and, at that time, wholly-owned subsidiaryof EBS Holding;

6. neither EBS Holding nor EBS Billing isa reporting issuer, or the equivalent, in any of the provincesor territories of Canada and neither has shares which arelisted or posted for trading on any stock exchange;

7. the Merger Agreement provided that Terrawould, on the closing date of the transactions contemplatedin such agreement, purchase such number of shares of EBS Billingas would represent 51% of the total number of issued and outstandingshares of EBS Billing, in exchange for the issuance by Terrato EBS Holding of 2,795,249 Common Shares, which would representapproximately 21% of the issued and outstanding Common Sharesimmediately after the closing;

8. the Option Agreement provided that Terrawould, on the closing of the transactions contemplated inthe Merger Agreement, grant to EBS Holding an irrevocable,exclusive and non-transferable option (the "Option")to subscribe for and purchase 15,109,453 Common Shares, which,together with the Common Shares issued pursuant to the MergerAgreement, would represent approximately 63% of the issuedand outstanding Common Shares immediately after the closingof the transactions contemplated by the Option Agreement,in consideration for the sale and delivery by EBS Holdingto Terra of all of the shares of EBS Billing which had notbeen transferred to Terra on the closing of the transactionscontemplated by the Merger Agreement, such shares representing49% of all of the shares of EBS Billing;

9. EBS Holding would be entitled to exercisethe Option only once and at any time after the closing ofthe transactions contemplated by the Merger Agreement andno later than December 31, 2003;

10. the Option Agreement also provided that,on the closing of the transactions contemplated therein, Terrawould enter into a warrant agreement with EBS Holding pursuantto which EBS Holding would have the non-transferable optionto receive 0.42 of a Common Share in certain circumstancesupon issuance of Common Shares pursuant to the exercise ofTerra stock options;

11. the provisions of the Merger Agreementand the Option Agreement were the result of arm's length negotiationsconducted among representatives of Terra, EBS Holding, EBSBilling and their legal advisors;

12. pursuant to the requirements of the TSX,the Merger Agreement and Option Agreement were approved bya majority of votes cast by the holders of Common Shares presentin person or by proxy at a meeting of such holders held onMarch 26, 2003;

13. on April 1, 2003, the closing of the transactionscontemplated by the Merger Agreement occurred and the Optionwas granted to EBS Holding;

14. as of the date hereof, EBS Holding holds2,795,249 Common Shares, representing approximately 21% ofthe issued and outstanding Common Shares, and Terra holds51% of the total number of issued and outstanding shares ofEBS Billing;

15. as of the date hereof, the Option heldby EBS Holding had not yet been exercised;

16. the Merger Agreement contains an indemnificationprovision pursuant to which any damages payable to eitherparty to the Merger Agreement as a result of any breach ofany representation, warranty or covenant by any party underthe Merger Agreement must be satisfied by the surrender forcancellation or issuance, as the case may be, by a party tothe other party of a number of Common Shares having a valueequal to the amount of such damages as of the date of payment;

17. the Merger Agreement also provides thatany disputes arising therefrom shall be settled under theRules of Arbitration of the International Chamber of Commerce(the "Arbitration");

18. shortly after April 1, 2003, the partiesto the Merger Agreement alleged facts that, if proven true,would have consisted of breaches of representations, warrantiesand covenants contained in the Merger Agreement by the otherparty;

19. the dispute arising from those allegationsand from determining whether or not there have been damagessuffered by Terra would have caused Terra and EBS Holdingto go to Arbitration;

20. in the interest of avoiding the significantcosts and inconveniences resulting from a formal Arbitration,Terra and EBS Holding initiated discussions in early July,2003 with the intention of reaching an agreement that wouldapply the indemnification provision contained in the MergerAgreement without the necessity of resorting to arbitration;

21. on August 7, 2003, a merger adjustmentagreement (the "MAA") was entered into amongTerra, EBS Holding and EBS Billing pursuant to which the partiesagreed to amend the terms of the transactions contemplatedby the Merger Agreement and the Option Agreement;

22. the MAA provides that, upon closing ofthe transactions contemplated therein (the "MAA Closing"),the Option Agreement will be terminated; EBS Holding willretain its 21% interest in Terra but will no longer be entitledto exercise the Option.

23. the MAA also provides that all warrantrights that would have been granted to EBS Holding upon exerciseof the Option will be cancelled;

24. the other salient terms of the MAA areas follows:

(a) EBS Holding will pay to Terra the sumof U.S.$500,000 in six monthly installments.

(b) Terra will reduce its ownership of EBSBilling from 51% to 10.5%.

(c) Until Terra's 2004 annual meeting, EBSHolding has agreed to a restriction on the voting rightsattached to its Terra shares such that it may only voteits shares in proportion to all other shareholders of Terrawho exercise their voting rights at a particular meeting.

(d) EBS Holding has agreed not to acquirefor a period of two (2) years any securities of Terra (otherthan treasury issuances of securities).

(e) Terra will grant to EBS Holding an option,exercisable after July 2004, to purchase its remaining 10.5%interest in EBS Billing (the "Call Option").The MAA contains provisions allowing the parties to obtaina valuation from an independent valuator in the event thereis a dispute on the value of the shares underlying the CallOption.

(f) Beginning on the date of the MAA, EBSHolding only has the right to propose one (1) nominee forelection to the board of directors of Terra (down from three(3) prior to the execution of the MAA);

25. by virtue of EBS Holding having a 21%interest in Terra and the Option ,the transaction contemplatedby the MAA, as a whole, is considered as a related party transactionunder Policy Q-27 and Rule 61-501 thereby requiring Terra,absent an exemption or discretionary relief, to comply withthe valuation and minority approval requirements containedin Part 5 of Policy Q-27 and Part 5 of Rule 61-501;

26. the transactions contemplated under theMAA were the result of protracted and difficult negotiationsbetween the parties who each retained their own legal counseland, according to the parties to the MAA, such transactionswere negotiated and concluded in a manner comparable to anarm's length transaction, as is demonstrated by many of thesalient features of the MAA described above in paragraph 24;

27. according to the Corporation's financialadvisor, a valuation for the transactions contemplated underthe MAA would be very subjective due to the factual assumptionsand hypothetical scenarios a valuator would have to take intoaccount and make in ascertaining the value for avoiding arbitrationproceedings which is an essential element in the present case;

28. the shareholders of Terra will be providedwith an opinion from a financial advisor to the effect thatthe transaction is fair to Terra from a financial point ofview;

29. it is expected that Terra will complywith all of the other requirements of Policy Q-27 and Rule61-501 in connection with the transaction contemplated bythe MAA, including the minority approval requirement.

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;

IT IS DECIDED pursuant to section 9.1of Policy Q-27 and section 9.1 of Rule 61-501 that Terra shallbe exempted from the valuation requirements applicable to relatedparty transactions pursuant to Part 5 of Policy Q-27 and Part5 of Rule 61-501 in connection with the transactions contemplatedby the MAA.

October 31, 2003.

"Josée Deslauriers"