Securities Law & Instruments

Headnote

Mutual Reliance Review Systemfor Exemptive Relief Applications - Relief from registrationand prospectus requirements granted in connection with an arrangementwhere exemptions not available for technical reasons. Firsttrade of securities acquired deemed a distribution unless certainconditions in Multilateral Instrument 45-102 Resale of Securitiesare satisfied.

Applicable Alberta Provisions

Securities Act, R.S.A., 2000,c. S-4, s. 144.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ALBERTA, MANITOBA, NEW BRUNSWICK,

NEWFOUNDLAND AND LABRADOR,THE NORTHWEST TERRITORIES,

NOVA SCOTIA, NUNAVUT, ONTARIO,PRINCE EDWARD ISLAND,

QUÈBEC, SASKATCHEWANAND THE YUKON TERRITORY

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

PARKLAND INCOME FUND, PARKLANDINVESTMENT TRUST AND

PARKLAND HOLDINGS LIMITEDPARTNERSHIP

 

MRRS DECISION DOCUMENT

1. WHEREAS the Canadian securitiesregulatory authority or regulator (collectively, the "DecisionMakers") in each of Alberta, Manitoba, New Brunswick,Newfoundland and Labrador, the Northwest Territories, NovaScotia, Nunavut, Ontario, Prince Edward Island, Quèbec,Saskatchewan and the Yukon Territory (the "Jurisdictions")has received an application from Parkland Income Fund (the"Fund"), Parkland Investment Trust (the "Trust")and Parkland Holdings Limited Partnership ("HoldingsLP") for a decision under the securities legislation(the "Legislation") of the Jurisdictions that therequirements under the Legislation to be registered to tradein a security (the "Registration Requirement") andto file and obtain a receipt for a preliminary prospectusand a prospectus (the "Prospectus Requirement"),shall not apply in respect of certain trades and distributionsof securities to be made in connection with a plan of arrangement(the "Arrangement") under section 193 of the BusinessCorporations Act (Alberta) (the "Business CorporationsAct") involving Parkland Industries Ltd. ("Parkland")and the shareholders (the "Shareholders") of Parklandand certain trades relating to securities issued in connectiontherewith;

2. AND WHEREAS under the MutualReliance Review System for Exemptive Relief Application (the"System"), the Alberta Securities Commission isthe principal regulator for the application;

3. AND WHEREAS the Fund, theTrust and Holdings LP have represented to the Decision Makersthat:

3.1 Parkland is a corporationincorporated under the Business Corporations Act. It isengaged in the transportation fuels marketing business,including retail and wholesale sale of gasoline, and theoperation of convenience stores in western Canada;

3.2 the authorized capitalof Parkland consists of an unlimited number of common shares("Parkland Shares") in the capital of Parklandand preferred shares. As of May 9, 2002 there was an aggregateof 5,042,488 Parkland Shares issued and outstanding or reservedfor issuance on the exercise of stock options. It is anticipatedthat all options to acquire Parkland Shares will be exercisedon or before the effective date (the "Effective Date")of the Arrangement;

3.3 the Parkland Sharesare presently listed on the Toronto Stock Exchange (the"TSX") and Parkland is a reporting issuer (orthe equivalent) in each of British Columbia, Alberta, Saskatchewanand Ontario. Following the Effective Date, the ParklandShares will be delisted from the TSX and Parkland will applyto cease to be a reporting issuer, where applicable;

3.4 the Fund is an open-ended,limited purpose trust formed under the laws of the Provinceof Alberta pursuant to a declaration of trust (the "FundDeclaration of Trust") dated April 30, 2002. The Fundwas formed in order to hold the securities of the Trust;

3.5 the Fund was establishedwith nominal capitalization and currently has only nominalassets (including its interest in the Trust, the trusteeof the Trust and the general partner of Holdings LP) andno liabilities. The only activity currently anticipatedto be carried on by the Fund will be the holding of securitiesof the Trust, the trustee of the Trust and the general partnerof Holdings LP;

3.6 the Fund is authorizedto issue an unlimited number of units ("Units");

3.7 Units are redeemableat any time on demand by the holders thereof. In certaininstances such a redemption may be paid and satisfied byway of, at the option of the Fund, the issuance of notes("Fund Notes") of the Fund or a distribution inspecie of a number of securities of the Trust held by theFund and any other assets of the Fund;

3.8 the Fund has receivedconditional approval from the TSX for the listing on theTSX of the Units issuable in connection with the Arrangementand the Exchange (as defined below);

3.9 the Trust is an open-ended,limited purpose trust formed under the laws of the Provinceof Alberta pursuant to a declaration of trust (the "TrustDeclaration of Trust") dated April 30, 2002. The Trustwas formed in order to hold securities of Holdings LP;

3.10 the Trust was establishedwith nominal capitalization and currently has only nominalassets (including its interest in Holdings LP) and no liabilities.The only activity currently anticipated to be carried onby the Trust will be the holding of securities of HoldingsLP;

3.11 the Trust is authorizedto issue an unlimited number of units (the "Trust Units").As of the date hereof, there was one Trust Unit issued andoutstanding and that Trust Unit is owned by the Fund;

3.12 Trust Units are redeemableat any time on demand by the holders thereof. In certaininstances such a redemption may be paid and satisfied byway of, at the option of the Trust, the issuance of notes("Trust Notes") of the Trust or a distributionin specie of a number of securities of Holdings LP heldby the Trust and any other assets of the Trust;

3.13 the Trust is not areporting issuer (or equivalent) in any of the Jurisdictions;

3.14 Holdings LP is a limitedpartnership formed under the laws of the Province of Albertaby a limited partnership agreement (the "Limited PartnershipAgreement") dated as of April 30, 2002;

3.15 Holdings LP was formedwith nominal capitalization and currently has only nominalassets and no liabilities. The only activity currently anticipatedto be carried on by Holdings LP will be the holding of ParklandShares, directly or indirectly, and securities of a limitedpartnership that is currently a subsidiary of Parkland;

3.16 Holdings LP is authorizedto issue an unlimited number of each of two classes of limitedpartnership units: "Holdings LP Units" and "RolloverLP Units". The Trust holds all of the Holdings LP Units;

3.17 "Holdings Notes"are promissory notes to be issued by Holdings LP to certainShareholders in connection with the Arrangement;

3.18 Holdings LP is nota reporting issuer (or equivalent) in any of the Jurisdictions.

3.19 the Arrangement willrequire the prior approval of (i) two-thirds of the votescast by Shareholders present in person or by proxy at theMeeting on a resolution to approve the Arrangement and (ii)the Alberta Court of Queen's Bench;

3.20 a notice of specialmeeting and management information circular has been preparedin conformity with the provisions of Business CorporationsAct and applicable securities laws and an interim ordergranted by the Alberta Court of Queen's Bench and containsprospectus-level disclosure of the business and affairsof Parkland and the Fund and a detailed description of theparticulars of the Arrangement and the securities to beissued in connection therewith;

3.21 on the Arrangementbecoming effective and in accordance with the terms of theArrangement:

3.21.1 the outstandingParkland Shares (except those held by Holding Companies(as defined below)) and the shares of certain holdingcorporations ("Holding Companies") which willbe transferred to Holdings LP as part of the Arrangementin lieu of the transfer of Parkland Shares will be transferredto Holdings LP in exchange for Holdings Notes or RolloverLP Units;

3.21.2 all such HoldingsNotes will be exchanged with the Trust for Trust Unitsand Trust Notes;

3.21.3 all such TrustUnits and Trust Notes will be exchanged with the Fundfor Units;

3.21.4 all of the ParklandShares and shares of Holding Companies will be transferredby Holdings LP to 988386 Alberta Ltd. ("Acquisitionco"),a wholly-owned subsidiary of Holdings LP, in exchangefor notes and shares of Acquisitionco;

3.21.5 Holdings LP willissue Holdings LP Units to the Trust in exchange for theissuance to Holdings LP by the Trust of Trust Notes; and

3.21.6 the Trust willredeem the Holdings Notes and Holdings LP will redeemthe Trust Notes.

3.22 upon the completionof the Arrangement, all of the issued and outstanding ParklandShares will be held, indirectly, by Holdings LP;

3.23 the Rollover LP Unitsare intended to be, to the greatest extent practicable,the economic equivalent of Units of the Fund and are exchangeablepursuant to the Exchange Agreement (as hereinafter defined)at any time at the option of the holder until June 30, 2008for Trust Units and Trust Notes in a specified ratio, whichTrust Units and Trust Notes will be immediately and automaticallyexchanged for Units with the result that each Rollover LPUnit is indirectly exchangeable for one Unit. Holdings LPmay compel such exchange in certain circumstances, includingat any time after June 30, 2008. In certain other circumstances,the Rollover LP Units are to be automatically exchangedon the same basis;

3.24 the Limited PartnershipAgreement provides that the Rollover LP Units will generallynot be (except as required by the Limited Partnership Agreementor by applicable law) entitled to receive notice of or attendany meeting of the partners of Holdings LP, but pursuantto the Fund Declaration of Trust will be entitled to receivenotice of and attend any meeting of holders of Units andto one vote at such meeting in respect of each Unit forwhich such Rollover LP Units are exchangeable. Each RolloverLP Unit will entitle the holder to distributions from HoldingsLP payable at the same time as, and equivalent to, eachdistribution paid by the Fund on a Unit. On the liquidation,dissolution or winding-up of Holdings LP, a holder of RolloverLP Units will be entitled to receive from Holdings LP anamount equal to all declared and unpaid distributions oneach such Rollover LP Unit held by the holder on any distributionrecord date prior to the date of liquidation, dissolutionor winding-up but will not otherwise be entitled to participatein a distribution of the assets of Holdings LP. RolloverLP Units may only be transferred in certain limited circumstances.The Limited Partnership Agreement has certain standard anti-dilutionprovisions;

3.25 concurrently with theeffective time of the Arrangement, the Fund, the Trust,Holdings LP and all of the holders of which will enter intoan agreement (the "Exchange Agreement") pursuantto which:

3.25.1 the Fund and theTrust will grant to each holder of Rollover LP Units theright (the "Exchange Right") to exchange allor any portion of the Rollover LP Units held by them forUnits on the basis of one Unit for each one Rollover LPUnit exchanged, subject to adjustment, at any time untilJune 30, 2008;

3.25.2 each Unitholderwill grant to the Fund and the Trust the right (the "CallRight") to exchange all, but not less than all, ofthe Rollover LP Units held by them for Units on the basisof one Unit for each one Rollover LP Unit exchanged, subjectto adjustment, at any time after June 30, 2008 and incertain other stated events; and

3.25.3 the parties willagree that in certain stated events, the Rollover LP Unitswill be automatically exchanged (the "Automatic Exchange")for Units on the basis of one Unit for each one RolloverLP Unit exchanged, subject to adjustment;

3.26 the Exchange Agreementprovides that (i) on exercise of the Exchange Right by aholder of Rollover LP Units, (ii) on exercise of the CallRight by the Fund and the Trust, and (iii) on an AutomaticExchange, the following shall occur, and be deemed to occur,automatically in the following order without any furtheract or formality:

3.26.1 all of outstandingRollover LP Units shall be transferred to the Trust;

3.26.2 in exchange therefor,Trust Units and Trust Notes shall be issued by the Trustto the holders of Rollover LP Units on the basis of oneTrust Unit and one Trust Note for each one Rollover LPUnit;

3.26.3 such Trust Unitsand Trust Notes shall be transferred to the Fund; and

3.26.4 in exchange therefor,Units shall be issued by the Fund to the holders of RolloverLP Units in such amount as the holders of Rollover LPUnits are entitled on exercise of the Exchange Right orthe Call Right or on an Automatic Exchange, as the casemay be.

3.27 the steps under theArrangement, the exercise of the Exchange Right and theCall Right, an Automatic Exchange pursuant to the ExchangeAgreement, and the redemption of Units pursuant to the FundDeclaration of Trust or Trust Units pursuant to the TrustDeclaration of Trust involve a number of trades ("Trades"),each of which will or may occur;

3.28 there may be no exemptionsfrom the Registration Requirement and the Prospectus Requirementavailable under the Legislation for certain of the Trades;

4. AND WHEREAS under the System,this MRRS Decision Document evidences the decision of eachof the Decision Makers (collectively, the "Decision");

5. AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the Jurisdictionto make the Decision has been met;

6. THE DECISION of the DecisionMakers under the Legislation is that:

6.1 the Registration Requirementand the Prospectus Requirement shall not apply to the Trades;and

6.2 the first trade in RolloverLP Units, the first trade of Units acquired under the Decision,on the exercise of the Exchange Right or the Call Rightor on the Automatic Exchange and the first trade in securitiesissued or transferred by the Fund or the Trust on the redemptionof, respectively, Units or Trust Units shall be deemed tobe a distribution or a primary distribution to the public,unless:

6.2.1 except in Quèbec,the conditions is subsections (3) or (4) of section 2.6of Multilateral Instrument 45-102 Resale of Securities("MI 45-102") are satisfied, except that forthe purposes of determining the period of time that theFund has been a reporting issuer under section 2.6 ofMI 45-102 the period of time that Parkland was a reportingissuer immediately before the Arrangement may be included;and

6.2.1.1 in Quèbec,

6.2.1.1.1 the alienationof such Rollover LP Units or Units is made on an organizedmarket outside of Québec or upon the Fund becominga reporting issuer in Queébec and having, orbeing deemed to have, complied with the appropriaterequirements for more than 12 months immediately precedingthe trade;

6.2.1.1.2 no unusualeffort is made to prepare the market or to createa demand for the securities that are the subject ofthe trade;

6.2.1.1.3 no extraordinarycommission or consideration is paid to a person orcompany in respect of the trade; and

6.2.1.1.4 if the sellingshareholder is an insider or officer of the issuer,the selling shareholder has no reasonable groundsto believe that the issuer is in default of securitieslegislation.

July 4, 2002.

"Glenda A. Campbell"                    "EricT. Spink"