Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - issuer bids - relief granted from thevaluation requirement in connection with an offer by the issuerfor its out-of-the-money convertible debentures - issuer representingin order that convertibility feature is of no material valueand debentures trade only on the issuer's underlying creditworthiness- offer otherwise to be made in compliance with issuer bid requirements- offer document to include summary of financial opinion onconvertibility feature.

Applicable Ontario Rules Cited

Rule 61-501 - Insider Bids, Issuer Bids, GoingPrivate Transactions and Related Party Transactions, ss. 3.3,3.4(1) and 9.1.














WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia and Newfoundland (the "Jurisdictions")has received an application (the "Application") fromThe Descartes Systems Group Inc. (the "Corporation")for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that, in connectionwith the proposed purchase by the Corporation of a portion ofits outstanding 5.5% Convertible Unsecured Subordinated Debenturesdue June 30, 2005 (the "Debentures") pursuant to aformal issuer bid (the "Proposed Bid"):

(1) the Corporation be exempt from the requirementsin the Legislation to obtain a valuation of the Debentures(the "Valuation Requirement"); and

(2) the Application and this MRRS DecisionDocument (the "Decision") be held in confidenceby the Decision Makers, subject to certain conditions.

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 the Corporation has representedto the Decision Makers as follows:

1. The Corporation was amalgamated under theBusiness Corporations Act (Ontario) on January 26,1999.

2. The Corporation is authorized to issuean unlimited number of Common Shares (the "Common Shares").As of July 3, 2002, the Corporation had outstanding 52,241,265Common Shares.
As of July 3, 2002, the Corporation hadoutstanding Debentures in the aggregate principal amount ofU.S.$72,000,000.

3. The Corporation is a reporting issuer orthe equivalent in each of the Jurisdictions and its CommonShares are listed and posted for trading on the Toronto StockExchange (the "TSX") under the trading symbol "DSG"and on the Nasdaq National Market ("Nasdaq") underthe trading symbol "DSGX". The Debentures are listedand posted for trading on the TSX under the trading symbol"DSG.DB.U".

4. 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.

5. 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. No Event of Default has occurredunder the Indenture. There are no other restrictions uponthe Corporation's ability to purchase the Debentures.

6. 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.

7. On December 21, 2001, the Corporation filedand the TSX accepted a Notice of Intention to Make a NormalCourse Issuer Bid (the "Notice") in respect of theDebentures.

8. Pursuant to the Notice, the Corporationmay acquire through the facilities of the TSX up to a maximumof U.S.$7,500,000 of its outstanding Debentures, representingapproximately 10% of the public float of Debentures as atDecember 22, 2001. An aggregate principal amount of U.S.$3,000,000have been acquired pursuant to the Notice up to and includingMarch 13, 2002, the last date on which Debentures were acquiredpursuant to the Notice.

9. To the knowledge of management of the Corporation,no person or company holds more than 10% of the aggregateprincipal amount of outstanding Debentures.

10. Over the 12 complete months prior to July3, 2002, the Debentures traded on the TSX on 111 out of 250trading days, with an average daily trading volume of U.S.$68,396on the days traded, and the price range over that period wasU.S.$580 to U.S.$800 per U.S.$1,000 principal amount of Debentures.

11. As at July 3, 2002, the closing priceof the Debentures on the TSX was U.S.$680 per $1,000 aggregateprincipal amount outstanding.

12. 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.$53.61 per Common Share based on the foreignexchange rates as of July 3, 2002. On July 3, 2002, the closingprice of the Common Shares on the TSX was Cdn.$4.73, whichwas approximately 8.8% of the conversion price of the Debenturesat such time, based on the foreign exchange rates then ineffect. Over the 12 months preceding that date, the CommonShares traded on the TSX in a range between Cdn.$4.10 andCdn.$27.40 per Common Share.

13. In a letter (the "Opinion Letter")dated July 15, 2002, 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.

14. The Proposed Bid will proceed by way ofan issuer bid circular which will include a summary and acopy of the Opinion Letter.

15. The Corporation intends to acquire upto an aggregate principal amount of U.S.$51,428,571 of Debentures,representing approximately 71.4% of the outstanding Debentures.The Corporation anticipates using cash on hand and cash equivalentsto fund the Debenture acquisitions.

16. The Proposed Bid will be an "issuerbid" within the meaning of the Legislation in the Jurisdictionsbecause the Debentures are convertible debt securities.

17. The Corporation has not yet announcedits intention to proceed with the Proposed Bid, which remainssubject to approval by the Board of Directors of the Corporation.Given the potential size of the Proposed Bid, release of theDecision prior to such an announcement could affect the marketprice of the Debentures.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the Decision of each DecisionMaker;

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 Makersin the Jurisdictions pursuant to the Legislation is that, inconnection with the Proposed Bid, the Corporation is exemptfrom the Valuation Requirement, provided that the Corporationcomplies with the other applicable provisions of the Legislationrelating to formal bids made by issuers.

THE FURTHER DECISION of the DecisionMakers pursuant to the Legislation is that the Application andthe Decision shall be held in confidence by the Decision Makersuntil the earlier of the date that the Circular is filed inconnection with the Proposed Bid and August 14, 2002.

July 30, 2002.

"John Hughes"