Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - relief granted,subject to certain conditions, from the prospectus and registration requirements inrespect of trades in connection with a statutory arrangement where the Arrangementexemption is not available for technical reasons.

Reporting issuer exempted from certain continuous disclosure requirements subject tocertain conditions. Disclosure required to be provided by these provisions would notbe meaningful to shareholders.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 35(1)15.i, 53, 72(1)(i), 72(5), 74(1),75, 77, 78, 79, 80(b)(iii), 81(2), 107, 108, 109.

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s.21.

IN THE MATTER OF THE SECURITIES LEGISLATIONOF ALBERTA, BRITISH COLUMBIA, SASKATCHEWANMANITOBA, ONTARIO, NEW BRUNSWICK, NEWFOUNDLAND, NOVA SCOTIA, PRINCE EDWARD ISLAND, THE NORTHWEST TERRITORIES,NUNAVUT AND THE YUKON TERRITORY

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
E*TRADE GROUP, INC., EGI CANADA CORPORATION, 3045175 NOVA SCOTIA COMPANY ANDVERSUS TECHNOLOGIES INC.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, NewBrunswick, Newfoundland, Nova Scotia, Prince Edward Island, The Northwest Territories,Nunavut and The Yukon Territory (collectively, the "Jurisdictions") has received anapplication from E*TRADE Group, Inc. ("EGI"), EGI Canada Corporation ("ECC") and3045175 Nova Scotia Company ("EGI Newco") (collectively, the "Filer") for a decisionpursuant to the securities legislation of the Jurisdictions (the "Legislation") that:

(a) the trades of securities involved in connection with the proposed acquisition(the "Transaction") by EGI of VERSUS Technologies Inc. ("VERSUS") to beeffected by way of an Arrangement (as defined below) shall be exempt fromthe registration and prospectus requirements of the Legislation; and

(b) ECC be exempt from the requirements of the Legislation to issue a pressrelease and report material changes, to file with the Decision Makers anddeliver to securityholders (as defined below) interim financial statements andaudited annual financial statements, and to make an annual filing with theDecision Makers in lieu of filing an information circular (the "ContinuousDisclosure Requirements");

all subject to certain conditions, as described below;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. EGI, EGI Newco, ECC, VERSUS, VERSUS Brokerage Services Inc., VERSUSBrokerage Services (U.S.) Inc. and Fairvest Securities Corporation have enteredinto a merger agreement dated as of June 14, 2000 (the "Merger Agreement"),providing for the Transaction, which is to be effected by way of an arrangement (the"Arrangement") under section 192 of the Canada Business Corporations Act("CBCA").

2. EGI was incorporated in California in 1982 and reincorporated in Delaware in July1996. EGI is currently subject to the informational requirements of the UnitedStates Securities Exchange Act of 1934, as amended, and is not a "reportingissuer" under the Legislation. The common stock of EGI (the "EGI Shares") is listedon the National Stock Market's National Market ("NASDAQ"). EGI's principalcorporate offices are located at 4500 Bohannon Drive, Menlo Park, California94025.

3. EGI's authorized capital consists of 600,000,000 EGI Shares, U.S.$0.01 par valueper share, and 1,000,000 shares of Preferred Stock, U.S.$0.01 par value per share.The EGI Shares are fully participating voting shares. As of July 5, 2000, there were298,290,560 EGI Shares and no shares of Preferred Stock issued and outstanding.

4. As part of the Transaction, EGI will issue one special voting share (the "SpecialVoting Share") to a trustee (the "Trustee") which will be appointed as trustee undera voting and exchange trust agreement (the "Voting and Exchange TrustAgreement"), as described below.

5. ECC was incorporated under the Ontario Business Corporations Act on June 12,2000. ECC is an indirect wholly-owned subsidiary of EGI and a direct wholly-ownedsubsidiary of EGI Newco. ECC's registered office is located at 66 Wellington St.West, Suite 3600, Toronto, Ontario M5K 1N6.

6. The authorized capital of ECC will consist of an unlimited number of commonshares and non-voting exchangeable shares (the "Exchangeable Shares"). As ofJuly 5, 2000 there were 71,729 common shares issued and outstanding, all of whichwere indirectly beneficially owned by EGI.

7. ECC will apply to list the Exchangeable Shares on the Toronto Stock Exchange("TSE"), and EGI will apply to list the EGI Shares issuable on exchange ofExchangeable Shares and those issued directly to VERSUS Shareholders, onNASDAQ.

8. Upon completion of the Transaction and subject in certain of the Jurisdictions to theExchangeable Shares being listed on the TSE, ECC will become or will be deemedto become a reporting issuer in certain of the Jurisdictions.

9. EGI Newco is an indirect, wholly-owned subsidiary of EGI. EGI Newco was formedon June 13, 2000 as an unlimited liability company under the laws of the Provinceof Nova Scotia to hold all of the common shares of ECC and to hold the various callrights related to the Exchangeable Shares.

10. The authorized capital of EGI Newco consists of 10,000,000 common shares. Asof July 5, 2000, there were 71,729 common shares issued and outstanding, all ofwhich were indirectly beneficially owned by EGI.

11. VERSUS was incorporated on March 2, 1992 under the CBCA. On September 2,1994, VERSUS amalgamated with 3061442 Canada Inc. and carried on asVERSUS Technologies Inc. On December 20, 1996, VERSUS amalgamated withCapital Works Inc. and Capital Works Brokerage Services Inc. to form VERSUSTechnologies Inc. VERSUS has been a reporting issuer under the Legislation sinceMarch 5, 1999 and, to the best of the knowledge of EGI, ECC and EGI Newco,VERSUS is not in default of any of the requirements thereunder. The VERSUSShares (as defined below) are listed on the TSE. VERSUS' registered office islocated at 181 Bay Street, Suite 3810, Toronto, Ontario M5J 2T3.

12. VERSUS' authorized capital consists of an unlimited number of common shares anda class of preferred shares. As of July 5, 2000, 12,881,150 VERSUS Shares andno first preferred shares were issued and outstanding. As of July 5, 2000,2,336,365 VERSUS Shares were reserved in the aggregate for issuance in respectof the VERSUS Options (as defined below) and 156,950 VERSUS Shares werereserved in the aggregate for issuance in respect of the Compensation Options (asdefined below). As of July 5, 2000, no debt securities of VERSUS wereoutstanding.

13. Pursuant to the Transaction, holders of VERSUS Shares and associated rightsissued under the VERSUS Shareholder Rights Plan (the "VERSUS Shares") (otherthan those held by dissenting holders, EGI or any subsidiary or affiliate thereof andholders who elect to receive EGI Shares) will receive in exchange for eachVERSUS Share they own Exchangeable Shares of ECC based on an exchangeratio (the "Exchange Ratio") determined from (i) the total consideration payable forVERSUS Shares of U.S.$173.9 million, (ii) the number of VERSUS Sharesoutstanding on a fully diluted basis, and (iii) the average closing price of EGIShares for the 10 trading days immediately prior to the date on which the ExchangeRatio is fixed, being the third trading day prior to closing of the Transaction (the"Effective EGI Share Price"), subject to a minimum Effective EGI Share Price ofU.S.$15.20 and a maximum Effective EGI Share Price of U.S.$22.80. VERSUS hasthe right to terminate the Transaction if the Effective EGI Share Price is belowU.S.$10.00 and EGI has the right to terminate the Transaction if the Effective EGIShare Price is above U.S.$28.00. Upon completion of the Transaction, EGI,through ECC, will be the sole beneficial holder of all the issued and outstandingVERSUS Shares. Holders of VERSUS Shares shall also have the right, subject tothe first two exceptions noted above, to elect, pursuant to the Transaction, totransfer their VERSUS Shares to EGI Newco in exchange for EGI Shares based onthe Exchange Ratio.

14. No fractional Exchangeable Shares or EGI Shares will be delivered in exchange forVERSUS Shares pursuant to the Arrangement. In lieu of fractional shares, eachholder of VERSUS Shares who is otherwise entitled to a fractional interest in anExchangeable Share or EGI Share will receive a cash payment equal to suchholder's pro rata portion of the net proceeds received by the depository (afterexpenses) upon the sale of whole shares representing an accumulation of allfractional interests in Exchangeable Shares or EGI Shares to which all such holderswould otherwise be entitled. The depository will sell whole Exchangeable Sharesor EGI Shares through the facilities of the TSE, in the case of the ExchangeableShares, and NASDAQ, in the case of EGI Shares, as soon as reasonablypracticable following the Effective Date (as defined below).

15. The VERSUS Employee Stock Option Plans and each VERSUS option issuedthereunder (a "VERSUS Option") will be assumed by EGI pursuant to theArrangement. Each such option so assumed (an "Assumed Option") shall have thesame terms and conditions as those set forth in the VERSUS Stock Option Plansand the applicable stock option agreements then in effect immediately prior to theeffective time of the Arrangement (the "Effective Time"), except that (i) each suchAssumed Option will be exercisable for that number of whole EGI Shares equal tothe product of the number of VERSUS Shares that were issuable upon exercise ofsuch option immediately prior to the Effective Time multiplied by the ExchangeRatio and rounded down to the nearest whole number of EGI Shares, and (ii) theper share exercise price for the EGI Shares issuable upon the exercise of eachsuch Assumed Option will be equal to the quotient determined by dividing theexercise price per VERSUS Share at which such option was exercisableimmediately prior to the Effective Time (adjusted for the U.S. Dollar/Canadian Dollarexchange rate effective as of the close of business on the effective date of theArrangement (the "Effective Date")) by the Exchange Ratio, rounded up to thenearest whole cent.

16. Certain outstanding rights, expiring March 12, 2001, held by certain underwritersto purchase VERSUS Shares at an exercise price of CDN$11.50 per share (the"Compensation Options") shall be assumed by ECC and each such option soassumed (an "Assumed Compensation Option") shall continue to have and besubject to the same terms and conditions set forth therein immediately prior to theEffective Time except that (i) each such Assumed Compensation Option will beexercisable for that number of whole Exchangeable Shares equal to the product ofthe number of VERSUS Shares that were issuable upon exercise of such optionimmediately prior to the Effective Time multiplied by the Exchange Ratio androunded down to the nearest whole number of Exchangeable Shares, and (ii) theper share exercise price for the Exchangeable Shares issuable upon exercise ofeach such Assumed Compensation Option will be equal to the quotient determinedby dividing the exercise price per VERSUS Share at which such option wasexercisable immediately prior to the Effective Time by the Exchange Ratio, roundedup to the nearest whole cent.

17. Subject to confirmation in the interim order to be obtained from Ontario's SuperiorCourt of Justice (the "Court"), the Arrangement must be approved by the holders ofthe VERSUS Shares, VERSUS Options and Compensation Options (collectively,the "securityholders") by at least two-thirds of the votes cast by securityholdersvoting as a single class. Following the approval of securityholders, theArrangement is subject to approval of the Court, to be granted in a final order.

18. In connection with the securityholders' meeting to be held to consider theTransaction, VERSUS has delivered to securityholders a management proxycircular (the "VERSUS Circular") containing prospectus level disclosure of thebusiness and affairs of EGI and of the particulars of the Transaction and theArrangement.

19. The Exchangeable Shares, together with the Voting and Exchange Trust Agreementto be entered into by EGI, ECC and the Trustee contemporaneously with theclosing of the Transaction, will provide holders thereof with a security of a Canadianissuer having economic and voting rights which are, as nearly as practicable,equivalent to those of an EGI Share. Each Exchangeable Share will beexchangeable by the holder, at any time, for one EGI Share (subject to certain anti-dilution provisions) and will be required to be exchanged upon the occurrence ofcertain events.

20. The rights, privileges, restrictions and conditions attaching to the ExchangeableShares (the "Exchangeable Share Provisions"), and the Exchangeable ShareSupport Agreement (described in paragraph 28 below) will provide that eachExchangeable Share will entitle the holder to dividends from ECC equivalent toeach dividend paid by EGI on an EGI Share, subject to applicable law.

21. The Exchangeable Shares will be retractable at any time. Subject to the overridingretraction call right of EGI Newco, upon retraction the holder will be entitled toreceive from ECC for each Exchangeable Share retracted an amount equal to thecurrent market price (as defined in the Exchangeable Share Provisions) of an EGIShare on the last business day prior to the retraction date, to be satisfied by thedelivery of one EGI Share (the "Retraction Price"), together with, on the designatedpayment date therefor, all declared and unpaid dividends on each such retractedExchangeable Share held by the holder on any dividend record date prior to thedate of retraction (the "Dividend Amount"). Upon being notified by ECC of aproposed retraction of Exchangeable Shares, EGI Newco will have an overridingretraction call right to purchase from the holder exercising the retraction right all ofthe Exchangeable Shares that are the subject of the retraction notice for a price pershare equal to the Retraction Price (to be satisfied by the delivery of one EGIShare), plus an amount, to the extent not paid by ECC, equal to the DividendAmount.

22. Subject to applicable law and the overriding redemption call right of EGI Newco,ECC will be entitled to redeem all but not less than all of the then outstandingExchangeable Shares on or after the fifth anniversary of the Effective Date of theArrangement, unless the board of directors of ECC has accelerated the redemptiondate in the circumstances outlined in the Exchangeable Share Provisions (the"Redemption Date"). Upon such redemption, a holder will be entitled to receivefrom ECC for each Exchangeable Share redeemed an amount equal to the currentmarket price of an EGI Share on the last business day prior to the RedemptionDate, to be satisfied by the delivery of one EGI Share (the "Redemption Price"),together with an additional amount equivalent to all declared and unpaid dividendson each such redeemed Exchangeable Share held by the holder on any dividendrecord date which occurred prior to the Redemption Date (the "RedemptionDividend Amount"). Upon being notified by ECC of a proposed redemption ofExchangeable Shares, EGI Newco will have an overriding redemption call right topurchase on the Redemption Date all of the then outstanding Exchangeable Shares(other than Exchangeable Shares held by EGI and its affiliates) for a price pershare equal to the Redemption Price (to be satisfied by the delivery of one EGIShare) plus, to the extent not paid by ECC, an amount equivalent to theRedemption Dividend Amount. Upon the exercise of the overriding redemption callright by EGI Newco, holders will be obligated to sell their Exchangeable Shares toEGI Newco. If EGI Newco exercises its overriding redemption call right, ECC's rightand obligation to redeem the Exchangeable Shares on the Redemption Date willterminate.

23. Subject to the overriding liquidation call right of EGI Newco, in the event of theliquidation, dissolution or winding up of ECC or any other distribution of the assetsof ECC among its shareholders for the purpose of winding up its affairs, a holderof Exchangeable Shares will be entitled, subject to applicable law, to receive fromthe assets of ECC, before any distribution among the holders of the common sharesor any other shares ranking junior to the Exchangeable Shares, an amount pershare equal to the current market price of an EGI Share on the last business dayprior to the effective date (the "Liquidation Date") of the liquidation, dissolution orwinding up of ECC, to be satisfied by the delivery of one EGI Share, together withan additional amount equivalent to all declared and unpaid dividends on each suchExchangeable Share held by such holder on any dividend record date whichoccurred prior to the Liquidation Date.

24. Subject to the overriding liquidation call right of EGI Newco, under the Voting andExchange Trust Agreement, EGI will grant to the Trustee for the benefit of theholders of the Exchangeable Shares a right (the "Exchange Right"), exercisableupon an insolvency event relating to ECC (as defined in the Voting and ExchangeTrust Agreement), to require EGI to purchase from a holder of ExchangeableShares all or any part of the Exchangeable Shares held by the holder. Thepurchase price for each Exchangeable Share purchased by EGI under theExchange Right will be an amount equal to the current market price (as defined inthe Voting and Exchange Trust Agreement) of an EGI Share on the last businessday prior to the day of closing the purchase and sale of such Exchangeable Shareunder the Exchange Right, to be satisfied by the delivery to the Trustee, on behalfof the holder, of one EGI Share, together with an additional amount, to the extentnot paid by ECC, equal to the full amount of all declared and unpaid dividends onsuch Exchangeable Share held by the holder on any dividend record date whichoccurred prior to the closing of the purchase and sale.

25. Upon a proposed liquidation, dissolution or winding up of ECC, EGI Newco willhave an overriding liquidation call right to purchase from all but not less than all ofthe holders of Exchangeable Shares (other than Exchangeable Shares held by EGIand its affiliates) on the Liquidation Date all of the Exchangeable Shares held byeach such holder for a price per share equal to the current market price of an EGIShare on the last business day prior to the Liquidation Date, to be satisfied by thedelivery of one EGI Share, together with, to the extent not paid by ECC, anadditional amount equivalent to the full amount of all declared and unpaid dividendson each such Exchangeable Share held by such holder on any dividend record datewhich occurred prior to the date of purchase by EGI Newco.

26. Under the Voting and Exchange Trust Agreement, upon the liquidation, dissolutionor winding up of EGI or any proceedings to effect any other distribution of assetsof EGI among its shareholders for the purpose of winding up its affairs (the"Liquidation Event Effective Date"), EGI will be required to purchase eachoutstanding Exchangeable Share, and each holder will be required to sell theExchangeable Shares held by that holder (the "Automatic Exchange Right"), for apurchase price per share equal to the current market price of an EGI Share on thefifth business day prior to the Liquidation Event Effective Date, to be satisfied by thedelivery of one EGI Share, together with an additional amount, to the extent notpaid by ECC, equivalent to the full amount of all declared and unpaid dividends oneach such Exchangeable Share held by the holder on any dividend record dateprior to the date of the exchange.

27. The Exchangeable Shares will be non-voting (except as required by theExchangeable Share Provisions or by applicable law). The Special Voting Sharewill be issued to the Trustee for the benefit of the holders of the ExchangeableShares outstanding from time to time (other than EGI and its affiliates). Except asotherwise required by applicable law or the charter of EGI, the Special Voting Sharewill be entitled to the number of votes, exercisable at any meeting of the holders ofEGI Shares and with respect to all written consents sought by EGI from itsshareholders, equal to the number of Exchangeable Shares outstanding from timeto time not owned by EGI and its affiliates. Each voting right attached to theSpecial Voting Share must be voted by the Trustee pursuant to the instructions ofthe holder of the related Exchangeable Share. In the absence of any suchinstruction from a holder as to voting, the Trustee will not be entitled to exercise therelated voting rights. Upon the exchange of all of a holder's Exchangeable Sharesfor EGI Shares, all rights of such holder of Exchangeable Shares to instruct theTrustee to exercise votes attached to the Special Voting Share will cease.

28. Contemporaneously with the closing of the Transaction, EGI, ECC and EGI Newcowill enter into an Exchangeable Share Support Agreement which will provide thatEGI, among other things, so long as any Exchangeable Shares not owned by EGIor its affiliates are outstanding: (a) will not declare or pay any dividends on the EGIShares unless ECC simultaneously declares or pays, as the case may be, anequivalent dividend on the Exchangeable Shares; and (b) will ensure that ECC andEGI Newco will be able to honour the redemption and retraction rights andliquidation entitlements that are attributes of the Exchangeable Shares and therelated redemption, retraction and liquidation call rights described above.

29. The Transaction and the attributes of the Exchangeable Shares contained in theExchangeable Share Provisions, the Voting and Exchange Trust Agreement andthe Exchangeable Share Support Agreement involve or may involve a number oftrades and/or distributions of securities. The trades and/or distributions ofsecurities to which the Transaction and such attributes give rise are the following:

(a) the issuance of Exchangeable Shares by ECC to holders of VERSUS Sharesand the transfer of VERSUS Shares (and associated rights under theVERSUS shareholder rights plan) by holders thereof to ECC, as part of theArrangement;

(b) the assumption of VERSUS Options (the "Assumed Options") by EGI as partof the Arrangement, the issuance of a document evidencing each suchAssumed Option by EGI, and the issuance and delivery of EGI Shares byEGI on exercise of an Assumed Option;

(c) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, to enable EGI Newco to deliver EGI Shares in connectionwith the Arrangement;

(d) the delivery of EGI Shares by EGI Newco to holders of VERSUS Shares whoso elect to receive EGI Shares and the transfer of VERSUS Shares (andassociated rights under the VERSUS shareholder rights plan) by holdersthereof to EGI Newco, as part of the Arrangement;

(e) the sale by the depository of accumulated fractional entitlements toExchangeable Shares or EGI Shares, the net proceeds of which are to bedistributed on a pro rata basis to former holders of VERSUS Shares as partof the Arrangement;

(f) the assumption of VERSUS Compensation Options (the "AssumedCompensation Options") by ECC as part of the Arrangement, the issuanceof a document evidencing each such Assumed Compensation Option byECC, and the issuance and delivery of Exchangeable Shares by ECC onexercise of an Assumed Compensation Option;

(g) the grant by EGI to the Trustee for the benefit of the holders ofExchangeable Shares, pursuant to the Voting and Exchange TrustAgreement of the Exchange Right, the Automatic Exchange Right and thevoting rights attached to the Special Voting Share;

(h) the grant of the redemption, retraction and liquidation call rights in favour ofEGI Newco as described above;

(i) the issuance by EGI of the Special Voting Share to the Trustee for thebenefit of the holders of the Exchangeable Shares;

(j) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, from time to time to enable ECC to deliver EGI Shares toa holder of Exchangeable Shares upon a retraction of the ExchangeableShares held by such holder, and the subsequent delivery of such EGIShares to such holder by ECC upon such retraction;

(k) the transfer of Exchangeable Shares by the holder to ECC upon the holder'sretraction of Exchangeable Shares;

(l) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, from time to time to enable EGI Newco to deliver EGIShares to a holder of Exchangeable Shares in connection with EGI Newco'sexercise of its overriding retraction call right, and the subsequent delivery ofsuch EGI Shares by EGI Newco upon the exercise of such overridingretraction call right;

(m) the transfer of Exchangeable Shares by the holder to EGI Newco upon EGINewco exercising its overriding retraction call right;

(n) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, to enable ECC to deliver EGI Shares to holders ofExchangeable Shares upon the redemption of the Exchangeable Shares,and the subsequent delivery of such EGI Shares by ECC upon suchredemption;

(o) the transfer of Exchangeable Shares by holders to ECC upon the redemptionof Exchangeable Shares;

(p) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, to enable EGI Newco to deliver EGI Shares to holders ofExchangeable Shares in connection with EGI Newco's exercise of itsoverriding redemption call right, and the subsequent delivery of such EGIShares by EGI Newco upon the exercise of such overriding redemption callright;

(q) the transfer of Exchangeable Shares by holders to EGI Newco upon EGINewco exercising its overriding redemption call right;

(r) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, to enable ECC to deliver EGI Shares to holders ofExchangeable Shares on the liquidation, dissolution or winding up of ECCor other distribution of the assets of ECC among its shareholders for thepurpose of winding up its affairs and the subsequent delivery of such EGIShares by ECC upon such liquidation, dissolution, winding up or otherdistribution;

(s) the transfer of Exchangeable Shares by holders to ECC on the liquidation,dissolution or winding up of ECC or other distribution of the assets of ECCamong its shareholders for the purpose of winding up its affairs;

(t) the issuance and intra-group transfers of EGI Shares and related issuancesof shares of EGI affiliates in consideration therefor, all by and between EGIand its affiliates, to enable EGI Newco to deliver EGI Shares to holders ofExchangeable Shares in connection with EGI Newco's exercise of itsoverriding liquidation call right, and the subsequent delivery of such EGIShares by EGI Newco upon the exercise of such overriding liquidation callright;

(u) the transfer of Exchangeable Shares by holders to EGI Newco upon EGINewco exercising its overriding liquidation call right;

(v) the issuance and delivery of EGI Shares by EGI to a holder of ExchangeableShares upon the exercise of the Exchange Right by such holder;

(w) the transfer of Exchangeable Shares by a holder to EGI upon the exerciseof the Exchange Right by such holder;

(x) the issuance and delivery of EGI Shares by EGI to holders of ExchangeableShares pursuant to the Automatic Exchange Right;

(y) the transfer of Exchangeable Shares by a holder to EGI pursuant to theAutomatic Exchange Right.

(collectively, the "Trades").

30. The fundamental investment decision to be made by a holder of VERSUS Sharesis made at the time when such holder votes in respect of the Arrangement. As aresult of this decision, unless Exchangeable Shares are sold in the market, a holder(other than a dissenting holder) will ultimately receive EGI Shares in exchange forthe VERSUS Shares held by such holder. The use of the Exchangeable Shares willprovide certain Canadian tax benefits to certain Canadian holders but will otherwisebe, as nearly as practicable, the economic and voting equivalent of the EGI Shares.As such, all subsequent exchanges of Exchangeable Shares are in furtherance ofthe holders initial investment decision.

31. As a result of the economic and voting equivalency in all material respects betweenthe Exchangeable Shares and the EGI Shares, holders of Exchangeable Shares willhave an equity interest determined by reference to EGI, rather than ECC. Dividendand dissolution entitlements will be determined by reference to the financialperformance and condition of EGI, not ECC. Accordingly, it is the informationrelating to EGI, not ECC, that will be relevant to holders of the ExchangeableShares.

32. EGI will send concurrently to all holders of Exchangeable Shares and EGI Sharesresident in the Jurisdictions all disclosure material furnished to holders of EGIShares resident in the United States including, without limitation, copies of itsannual financial statements and all proxy solicitation materials.

33. The VERSUS Circular will disclose that, in connection with the Arrangement,applications have been made for prospectus, registration and resale exemptionsand exemptions from the Continuous Disclosure Requirements. The VERSUSCircular will specify the disclosure requirements from which ECC has applied to beexempted and will identify the disclosure that will be made in substitution thereforif such exemptions are granted.

AND WHEREAS pursuant to the System, this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Makers with the Jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuant to the Legislation is:

1. that the requirements contained in the Legislation to be registered to trade in asecurity, to file a preliminary prospectus and a prospectus and receive receiptstherefor shall not apply to any of the Trades;

2. the first trade in Exchangeable Shares arising from a Trade shall be a distributionor a primary distribution to the public under the Legislation of the Jurisdiction inwhich the trade takes place (the "Applicable Legislation"), unless otherwise exemptthereunder or unless such first trade is made in the following circumstances:

(i) ECC is or is deemed to be a reporting issuer or the equivalent under theApplicable Legislation in the Jurisdiction in which such first trade is made or,if ECC is not a reporting issuer or the equivalent pursuant to the ApplicableLegislation, EGI complies with the filing requirements of paragraph 4 below;

(ii) if the seller is in a special relationship with ECC (as defined in the ApplicableLegislation) the seller has reasonable grounds to believe that ECC is not indefault of any requirement of the Applicable Legislation;

(iii) no unusual effort is made to prepare the market or to create a demand forthe Exchangeable Shares, and no extraordinary commission orconsideration is paid in respect of such first trade; and

(iv) disclosure of the exempt trade is made to the Decision Maker(s) (theDecision Makers hereby confirming that the filing of the VERSUS Circularwith the Decision Makers at the time of mailing the VERSUS Circular toholders of VERSUS Shares constitutes disclosure to the Decision Makers ofthe exempt trade);

then such a first trade is a distribution or a primary distribution to the public only ifit is a trade made from the holdings of any person, company or combination ofpersons or companies holding a sufficient number of any securities of EGI to affectmaterially the control of EGI but any holding of any person, company orcombination of persons or companies holding more than 20% of the outstandingvoting securities of EGI shall, in the absence of evidence to the contrary, bedeemed to affect materially the control of EGI (and for this purpose EGI Shares andExchangeable Shares are considered to be of the same class);

3. the first trade in EGI Shares arising from a Trade shall be a distribution or a primarydistribution to the public under the Legislation unless such trade is executedthrough the facilities of a stock exchange or market outside of the Jurisdictions andsuch first trade is made in accordance with the rules of the stock exchange ormarket upon which the trade is made in accordance with all laws applicable to suchstock exchange or market; and

4. that the Continuous Disclosure Requirements shall not apply to ECC, so long as:

(a) EGI sends to all holders of Exchangeable Shares resident in theJurisdictions all disclosure material furnished to holders of EGI Sharesresident in the United States, including, without limitation, copies of itsannual financial statements and all proxy solicitation materials;

(b) EGI files with the Decision Makers copies of all documents required to be filed pursuant tothe United States Securities Exchange Act of 1934, as amended, including, withoutlimitation, copies of any Form 10-K, Form l0-Q, Form 8-K and proxy statementsprepared in connection with EGI's stockholders' meetings;

(c) EGI complies with the requirements of NASDAQ in respect of making publicdisclosure of material information on a timely basis and forthwith issues in theJurisdictions and files with the Decision Makers any press release that discloses amaterial change in EGI's affairs;

(d) prior to or coincident with the distribution of the Exchangeable Shares, EGI shallcause ECC to provide to each recipient or proposed recipient of ExchangeableShares resident in the Jurisdictions a statement that, as a consequence of thisDecision, ECC will be exempt from certain disclosure requirements applicable toreporting issuers in the Jurisdictions, and specifying those requirements ECC hasbeen exempted from and identifying the disclosure that will be made in substitutiontherefor (which may be satisfied by the inclusion of such a statement in the VERSUSCircular);

(e) ECC complies with the requirements of the Legislation in respect of making publicdisclosure of material information on a timely basis in respect of material changesin the affairs of ECC that would be material to holders of Exchangeable Shares butwould not be material to holders of EGI Shares;

(f) EGI includes in all future mailings of proxy solicitation materials to holders ofExchangeable Shares a clear and concise statement explaining the reason for themailed material being solely in relation to EGI and not in relation to ECC, suchstatement to include a reference to the economic equivalency between theExchangeable Shares and the EGI Shares and the right to direct voting at EGI'sstockholders' meetings pursuant to the Voting and Exchange Trust Agreement;

(g) EGI remains the direct or indirect beneficial owner of all the issued and outstandingvoting securities of ECC; and

(h) ECC has not made a public offering of securities other than the ExchangeableShares.

August 23rd, 2000.

"J. A. Geller"      "Stephen N. Adams"