Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - Employment agreements entered into betweenofferor and key executives of the offeree who are also sellingsecurityholders of the offeree - agreements reflect commerciallyreasonable terms and negotiated at arm's length - Decision madethat agreements being entered into for reasons other than toincrease the value of the consideration paid to the sellingsecurityholders for their shares and that such agreements maybe entered into notwithstanding the prohibition on collateralbenefits.

Relief from identical consideration requirementin connection with a take-over bid to permit the payment ofsale proceeds in lieu of shares of the offeror to holders ofofferee shareholders resident in the United States of America.

Applicable Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as amended,ss. 97(1), 97(2), 104(2)(a), and 104(2)(c).










WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Quebec and Ontario (the "Jurisdictions") has receivedan application from Cognicase Inc. ("Cognicase") fora decision under the securities legislation of the Jurisdictions(the "Legislation") that, in connection with Cognicase'soffer (the "Offer") to purchase all of the issuedand outstanding common shares (the "Common Shares")of AVI Software Inc. ("AVI"), Cognicase shall be exemptfrom the requirements in the Legislation to offer all holdersof the same class of securities identical consideration (the"Identical Consideration Requirement") insofar ascertain holders of Common Shares who accept the Offer may receivecash for their Common Shares instead of receiving CognicaseShares or cash plus Cognicase Shares and that, in connectionwith the Offer, certain contractual arrangements entered intobetween Cognicase and certain holders of Common Shares who acceptthe Offer have been made for reasons other than to increasethe value of the consideration paid to such shareholders andmay be entered into despite the provisions in the Legislationthat prohibits an offeror who makes or intends to make a take-overbid and any person acting jointly or in concert with the offerorfrom entering into any collateral agreement, commitment or understandingwith any holder or beneficial owner of securities of the offereeissuer that has the effect of providing to the holder or ownera consideration of greater value than that offered to otherholders of the same class of securities (the "Prohibitionon Collateral Arrangements");

AND WHEREAS pursuant to 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 Cognicase has representedto the Decision Makers that:

1. Cognicase is a company incorporated underthe Canada Business Corporations Act with its head office inMontreal, Quebec.

2. The common shares of Cognicase ("CognicaseShares") are listed on The Toronto Stock Exchange (the"TSE") and NASDAQ.

3. Cognicase is a reporting issuer for the purposesof certain Canadian securities legislation and Cognicase isnot in default of any requirements of the Legislation.

4. AVI is a company incorporated under the CanadaBusiness Corporations Act with its head office in Quebec City,Quebec.

5. The Common Shares are listed on the CanadianVenture Exchange.

6. AVI is a reporting issuer for the purposesof certain Canadian securities legislation.

7. The Offer is being made on the basis of,at the option of the holder, $0.675 cash plus 0.0668316 of aCognicase Share or 0.1336633 of a Cognicase Share for each CommonShare (unless the weighted average trading price of the CognicaseShares on the TSE for the five trading days ending two calendardays prior to the date of expiry of the Offer is less than $10.00,in which case the Offer shall be on the basis of $1.35 cashfor each Common Share (the "Cash Offer Contingency")).

8. The Offer is being made in compliance withthe Legislation except to the extent that exemptive relief isgranted.

9. The Cognicase Shares issuable under the Offerto shareholders of AVI resident in the United States ("USShareholders") have not been and will not be registeredunder the United States Securities Act of 1933. The CognicaseShares issuable under the Offer to holders of the Common Sharesresident in foreign countries other than the United States ("OtherForeign Shareholders") will not be registered under anylegislation of a jurisdiction outside Canada. Accordingly, thedelivery of Cognicase Shares to US Shareholders or Other ForeignShareholders without further action by Cognicase may constitutea violation of the laws of the United States or other jurisdictions.

10. The registered list of holders of the CommonShares dated March 1, 2002 indicates that US Shareholders holdapproximately 7.7% of the Common Shares and Other Foreign Shareholdershold less than 0.01% of the Common Shares (such US Shareholdersand Other Foreign Shareholders collectively referred to as the"Foreign Shareholders").

11. Cognicase proposes that, unless the CashOffer Contingency has become applicable, Cognicase will deliverthe Cognicase Shares to National Bank Trust Inc. (the "Depository")instead of to the Foreign Shareholders who accept the Offer,for sale of such Cognicase Shares by the Depository on behalfof such Foreign Shareholders. All Cognicase Shares that theDepository is required to sell will be pooled and sold by privatesale or on the TSE in a manner that is intended to minimizeany adverse effect such a sale could have on the market priceof Cognicase Shares as soon as practicable and, in any event,no later than three business days after the date Cognicase firsttakes up any of the Common Shares tendered by such Foreign Shareholdersand the Depository will hold the aggregate net proceeds afterexpenses of such sale in trust for such Foreign Shareholders.As soon as reasonably possible after such sale, and in any eventno later than two business days following completion of suchsale of Cognicase Shares, the Depository will deliver to eachForeign Shareholder whose Cognicase Shares have been sold bythe Depository an amount equal to such Foreign Shareholder'spro rata share of the aggregate net proceeds of the Depository'ssale of the Cognicase Shares.

12. The principal shareholders of AVI are JacquesCastonguay ("Castonguay"), the President and ChiefExecutive Officer, Johanne Ferland ("Ferland"), theVice-President (Finance and Administration), Chief FinancialOfficer and Secretary, Alain Genest ("Genest"), theVice-President (Training and Special Projects), Sylvain Robert("Robert"), the Vice-President (Research and Development)and 2953-7917 Quebec Inc., a holding company the shares of whichare owned entirely by Genest, Ferland and Robert (collectively,with their successors, the "Principal Shareholders").The Principal Shareholders hold in the aggregate approximately57% of the outstanding Common Shares.

13. Ferland, Genest and Robert (the "ContinuingEmployees") have agreed to enter into employment agreementswith Cognicase (the "Cognicase Employment Agreements").Castonguay and Cognicase have entered into a separation agreement(the "Castonguay Agreement") whereby Castonguay willreceive a severance payment of $120,000. Cognicase, AVI andthe Principal Shareholders have entered into arrangements wherebythe Principal Shareholders will be subject to non-competitionand non-solicitation agreements, will make certain representationsand warranties with respect to AVI, will, to guarantee suchrepresentations and warranties, deposit in escrow a portionof the consideration received by them under the Offer and, otherthan 2953-7917 Quebec Inc. and Castonguay, will incur certainindemnification obligations to Cognicase (the foregoing arrangementsbeing, collectively, the "Principal Shareholder Terms").

14. The Continuing Employees have existing employmentagreements (the "Existing Agreements") with AVI. Underthe Existing Agreements, each Continuing Employee received acompensation package in the last year of $196,868 (the "CurrentCompensation").

15. Each Continuing Employee also benefits froma termination provision (the "Existing Termination Provision")of $200,000 if the Offer is completed and the Continuing Employeedoes not enter into an employment agreement with Cognicase.

16. The Existing Termination Provision was institutedby the board of directors of AVI following recommendation ofAVI's compensation committee, a majority of which is composedof outside directors.

17. The principal terms of the Cognicase EmploymentAgreements are as follows:

(a) an annual salary of $90,000 for Ferland,$85,000 for Genest and $115,000 for Robert;

(b) a signing bonus of $25,000, to be deductedfrom any severance payment payable to the employee if the employeeterminates his or her employment with Cognicase within the first30 days after the change of control of AVI to Cognincase (the"Signing Bonus Provision");

(c) the replacement of the Existing TerminationProvision with a termination provision of $175,000 (calculatedas $200,000 less the signing bonus of $25,000, pursuant to theSigning Bonus Provision) if the employee terminates his or heremployment within 30 days after the change of control of AVIto Cognicase, or a termination provision of the equivalent of9 months' salary if the employee terminates his or her employmentthereafter;

(d) a provision whereby, if the employee terminateshis or her employment within 30 days of change of control ofAVI to Cognicase, Cognicase will have the option of having theemployee continue for a further term of up to 90 days followingreceipt of the termination notice (the "Continued ServiceOption").

18. The Continuing Employees will not hold anymanagement position with Cognicase.

19. Cognicase believes that each of the PrincipalShareholders was instrumental in building AVI into a successfulcompany.

20. Cognicase believes that the continued serviceof the Continuing Employees is instrumental in ensuring a smoothtransition to ownership by Cognicase.

21. Cognicase believes that each of the ContinuingEmployees was an integral part of the successful developmentand operations of AVI and have substantial and valuable experiencein the development and distribution of AVI's financial managementsoftware.

22. Cognicase made the Offer primarily in orderto incorporate AVI's financial management software into itsline of products.

23. Cognicase believes that the continued serviceof the Continuing Employees is instrumental in ensuring thesuccessful integration of AVI's financial management softwareand will thus enable Cognicase to realize the full value ofthe technology acquired from AVI and therefore justify the considerationof the Offer.

24. The Signing Bonus Provision is intendedto encourage the Continuing Employees to stay with Cognicasethrough a transition period and, together with the ContinuedService Option, help assure Cognicase that it will receive thehelp of the Continuing Employees during the transition to Cognicaseownership.
25. The Employment Agreements recognize that the ContinuingEmployees will receive salaries that are approximately halftheir Current Compensation, that they will forego their ExistingTermination Provision upon change of control, that they willlose their status as senior executives, and that they will besubject to the non-competition and non-solicitation agreements,guarantees and escrow provisions referred to in paragraph 13above.

26. The Castonguay Agreement recognizes thatCastonguay will lose his employment as a result of the takeoverand that he will be subject to the non-competition and non-solicitationagreements, guarantees and escrow provisions referred to inparagraph 13 above.

27. The Principal Shareholder Terms were negotiatedon an arm's length basis and are on commercially reasonableterms.

28. The Principal Shareholder Terms were enteredinto for valid business reasons unrelated to the Principal Shareholders'holdings of Common Shares and not for the purpose of conferringa collateral benefit on the Principal Shareholders not enjoyedby other holders of Common Shares.

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, in connection with the Offer,

1. Cognicase is exempt from the Identical ConsiderationRequirement insofar as, unless the Cash Offer Contingency hasbecome applicable, Foreign Shareholders who accept the Offerwill receive the cash proceeds from the Depository's sale ofthe Cognicase Shares in accordance with the procedure set outin paragraph 11 above, instead of receiving such Cognicase Shares;and

2. The Principal Shareholder Terms are beingmade for reasons other than to increase the value of the considerationto be paid to the Principal Shareholders for the Common Sharesunder the Offer and that the Principal Shareholder Terms maybe entered into notwithstanding the Prohibition on CollateralAgreements.

May 3, 2002.

"Me Guy Lemoine"      "Viateur Gagnon"