Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Relief from registration and prospectusrequirements in connection with a statutory arrangement involvingan exchangeable share structure.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am,ss. 25(1), 53(1) and 74(1).

Applicable Instruments

Multilateral Instrument 45-102 Resale of Securities,s. 2.6.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO
NEW BRUNSWICK, NOVA SCOTIA,
PRINCE EDWARD ISLAND AND
NEWFOUNDLAND AND LABRADOR

AND

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

AND

IN THE MATTER OF
TRANSFORCE INC. AND
TRANSFORCE INCOME FUND

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick,Nova Scotia, Prince Edward Island and Newfoundland and Labrador(the "Jurisdictions") has received an applicationfrom TransForce Inc. ("TransForce") and TransForceIncome Fund (the "Fund") (collectively, the "Applicants")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that the requirements under theLegislation to be registered to trade in a security (the "RegistrationRequirement") and to file and obtain a receipt for a preliminaryprospectus and a prospectus (the "Prospectus Requirement")shall not apply to certain trades and distributions of securitiesto be made in connection with or subsequent to the proposedeffective conversion of TransForce into the Fund pursuant toa reorganization agreement among TransForce, the Fund and certainother parties;

AND WHEREAS pursuant to the Mutual RelianceReview System ("MRRS") for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application;
AND WHEREAS the Applicants have represented to the DecisionMakers that:

1. TransForce was incorporated on April 30,1985 pursuant to the Companies Act (Québec) under thename 2320-2351 Québec Inc. On October 19, 1987, TransForceamalgamated with Location Speribel Inc. The Articles were alsoamended on October 1, 1986 to change the corporate name to GroupeCabano d'Anjou Inc.; on August 7, 1987 to change the corporatename to Cabano Expeditex Inc.; on December 4, 1990 to changethe corporate name to Groupe Transport Cabano Inc./Cabano TransportationGroup Inc.; on May 30, 1995 to change the corporate name toCabano Kingsway Inc.; and on April 23, 1999 to change the corporatename to TransForce Inc. The head office of TransForce is locatedat 6600 Chemin St-François, Montreal, Quebec H4S 1B7;

2. TransForce's authorized share capital consistsof an unlimited number of common shares (the "Common Shares")without par value and an unlimited number of preferred sharesissuable in series. As at July 31, 2002, there were 51,681,585Common Shares and no preferred shares issued and outstanding;

3. the Common Shares are listed on the TorontoStock Exchange (the "TSX"). TransForce is a reportingissuer in each of the provinces of Québec and Ontarioand is not in default of any of the requirements of the Legislation;

4. TransForce is a leading player in the freighttransportation industry in eastern Canada, providing both transportand related logistic services to its clientele. TransForce believesthat it directly services more urban centres than any othercarrier in Canada;

5. the Fund is an unincorporated open-endedlimited purpose trust established pursuant to a declarationof trust dated as of July 31, 2002 under the laws of Québec.The Fund was created for the purpose of acquiring and holdingcertain investments, primarily units of TFI Operating Trust(the "Operating Trust"). The head office of the Fundis located at 6600 Chemin St.-François, Montreal, QuébecH4S 1B7;

6. the Fund is authorized to issue an unlimitednumber of trust units (the "Trust Units"), each ofwhich represents an equal undivided beneficial interest in theFund. The Trust Units are transferable and are redeemable atany time on demand by the holders thereof for a redemption priceto be based on the market price of the Trust Units on the principalmarket on which they are listed for trading on the redemptiondate. In certain circumstances the redemption price for theTrust Units will be paid and satisfied by the issuance of notesof a wholly-owned subsidiary of the Fund. It is anticipatedthat the redemption right described above will not be the primarymechanism for holders of Trust Units to dispose of their TrustUnits. Securities that may be distributed in specie to holdersof Trust Units in connection with a redemption will not be listedon any stock exchange. As of July 31, 2002, the capitalizationof the Fund consists of one Trust Unit which was issued fora consideration of $10.00;

7. in connection with the conversion of TransForceinto the Fund (the "Transaction"), the Fund will issueTrust Units to shareholders of TransForce (the "Shareholders")(other than Shareholders electing to receive units of TFI HoldingsInc. (the "Tracking Share Units") indirectly in exchangefor their Common Shares of TransForce. The Tracking Share Unitsare intended to be, to the greatest extent possible, the economicequivalent of the Trust Units. The Tracking Share Units maybe exchanged at any time for Trust Units on a one-for?one basis.The Fund has applied to the TSX for the listing on the TSX ofthe Trust Units issuable in connection with the Transaction.The Trust Units issuable from time to time in exchange for TrackingShare Units will also be listed on the TSX, subject to receiptof final listing approval from the TSX;

8. in connection with the Transaction, the Fundmay create and issue voting units to holders of Tracking ShareUnits ("Special Voting Units"). Special Voting Unitswill give holders of Tracking Share Units one vote at all meetingsof unitholders of the Fund (the "Unitholders") foreach Tracking Share held. Upon exchange of Tracking Share Unitsfor Trust Units, the Special Voting Units will be redeemed fornominal consideration and cancelled;

9. the Fund filed a preliminary prospectus inrespect of an initial public offering (the "Public Offering")on August 12, 2002. Upon receipt of the MRRS decision documentwith respect to the prospectus (the "Prospectus")for this offering, the Fund will become a reporting issuer (orthe equivalent thereof) in each of the Jurisdictions and Québec;

10. TFI Operating Trust (the "OperatingTrust") is an unincorporated open-ended limited purposetrust to be established under the laws of the Province of Québec.The Operating Trust was created to invest in securities of entitiescarrying on, directly or indirectly, transportation and relatedbusinesses;

11. the Operating Trust is authorized to issuean unlimited number of trust units ("Operating Trust Units").It is not intended that Operating Trust Units be issued or heldby any person other than the Fund. Each Operating Trust Unitrepresents an equal undivided beneficial interest in the OperatingTrust. The Operating Trust Units are redeemable and retractablefor a price based on the redemption price of the Trust Unitsof the Fund which is payable in cash, notes or a combinationof the two;

12. the Operating Trust is not a reporting issuer(or its equivalent) in any Jurisdiction and there is no intentionfor the Operating Trust to become one;

13. TFI Holdings will be incorporated underthe Canada Business Corporations Act solely for the purposeof facilitating the Transaction. All of the shares of TFI Holdingswill be owned by the Operating Trust with the exception of theTracking Shares Units that will be issued in connection withthe Transaction;

14. upon the completion of the Transaction,TransForce will be wound up into TFI Holdings;

15. the Transaction will be effected, in part,pursuant to sections 49 and 123.109 of the Companies Act (Québec)which requires (i) the adoption of a special resolution of theShareholders to confirm a by-law to authorize the articles ofamendment (the "Articles of Amendment"); and (ii)final approval of the said by-law by the Québec SuperiorCourt;

16. pursuant to the Articles of Amendment, allof the issued and outstanding Common Shares will be convertedto new shares in the capital of TransForce ("New Shares")on a one-for-one basis;

17. the attributes of the New Shares includeexchange rights pursuant to which the holders of the New Shares,in connection with the Transaction, must elect to exchange theirNew Shares for either (i) notes issued by TFI Holdings ("TFIHoldings Notes"); or (ii) Tracking Share Units or a combinationof Tracking Share Units and TFI Holdings Notes;

18. pursuant to the reorganization agreement;(i) the TFI Holdings Notes will automatically be exchanged fornotes issued by the Operating Trust ("OT Notes");and (ii) the OT Notes will automatically be exchanged for TrustUnits;

19. any Shareholder who so elects will havehis/her shares in an eligible holding company automaticallyexchanged with TFI Holdings for Tracking Share Units or a combinationof TFI Holding Notes and Tracking Share Units;

20. upon the completion of the Transaction,TransForce will be wound up into TFI Holdings. The issued andoutstanding capital of the resulting company will be the CommonShares and TFI Holdings Notes held by the Operating Trust aswell as Tracking Share Units;

21. Completion of the Transaction is conditionalupon, among other things:

(a) approval of the Articles of Amendment byat least three-quarters of the votes cast by the holders ofCommon Shares present in person or represented by proxy at thespecial general meeting of Shareholders to be held on September12, 2002;

(b) receipt of a fairness opinion;

(c) completion of the Public Offering;

(d) certain necessary consents of regulatoryauthorities and third parties having been obtained, includingthe listing of the Trust Units on the TSX; and

(e) the granting by the Quebec Superior Courtof a final order approving the ratification by the Shareholdersof a by-law of TransForce authorizing the proposed Articlesof Amendment.

22. the Management Proxy Circular contains prospectus-leveldisclosure of the business and affairs of TransForce and theFund (as does the Prospectus) and the particulars of the Transaction;

23. the steps under the Transaction, the termsof the Tracking Share Units and the exercise of certain rightsprovided for in connection with the Transaction and the TrackingShare Units including the subsequent issuance by the Fund ofTrust Units in exchange for Tracking Share Units and the redemptionof Trust Units by the Fund involve or may involve a number oftrades or potential trades of Common Shares, Tracking ShareUnits, Special Voting Units, New Shares, TFI Holdings Notes,OT Notes, Trust Units and rights to acquire Trust Units underthe Transaction (collectively, the "Trades") for whichthere may be no exemption from the Registration and the ProspectusRequirements;

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 Makersunder the Legislation is that:

(a) the Registration Requirement and the ProspectusRequirement will not apply to the Trades provided that the firsttrade in securities acquired under this Decision shall be deemedto be a distribution or primary distribution to the public;and

(b) the Prospectus Requirement will not applyto the first trade in (i) Trust Units and Tracking Share Unitsacquired by Shareholders under the Transaction; or (ii) TrustUnits issued upon the exchange of Tracking Share Units, providedthat the conditions in subsections (3) or (4) of section 2.6of Multilateral Instrument 45?102 Resale of Securities ("MI45?102"), with the issuer being the Fund, are satisfied;and provided further that, for the purposes of determining theperiod of time that the Fund has been a reporting issuer undersection 2.6 of MI 45?102, the period of time that TransForcewas a reporting issuer in at least one of the jurisdictionslisted in Appendix B of MI 45?102 immediately before the Transactionmay be included.

September 17, 2002.

"Paul Moore"     "R.W.Korthals"