Boyd Group Income Fund and The Boyd Group Inc. - MRRS Decision

Headnote

MRRS for Exemptive Relief Applications. Relieffrom registration and prospectus requirements granted for issuanceof trust units of the Applicant issued under a new distributionreinvestment plan, subject to certain conditions. First traderelief granted, subject to certain conditions.

Statutes Cited

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

Instruments Cited

Multilateral Instrument 45-102 Resale of Securities.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, MANITOBA,

ONTARIO, QUEBEC, NEWFOUNDLANDAND LABRADOR,

NEW BRUNSWICK, NOVA SCOTIAAND PRINCE EDWARD ISLAND

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BOYD GROUP INCOME FUND ANDTHE BOYD GROUP INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Newfoundland and Labrador, New Brunswick, Nova Scotiaand Prince Edward Island (the "Jurisdictions") hasreceived an application from Boyd Group Income Fund (the "Fund")for a decision, pursuant to the securities legislation of theJurisdictions (the "Legislation"), that the requirementscontained in the Legislation to be registered to trade in asecurity and to file and obtain a receipt for a preliminaryprospectus and a final prospectus (the "Registration andProspectus Requirements") shall not apply to certain tradesin units of the Fund issued pursuant to a distribution reinvestmentplan;

AND WHEREAS the Decision Maker in Manitobahas received an application from The Boyd Group Inc. ("BGI")and the Fund for a decision, pursuant to the Legislation ofthat Jurisdiction that Registration and Prospectus Requirementsshall not apply to certain trades in securities of BGI and theFund under a dividend reinvestment plan of BGI;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Manitoba Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Fund has representedto the Decision Makers that:

1. The Fund is an unincorporated open-endedinvestment trust governed by the laws of the Province of Manitobacreated pursuant to a declaration of trust dated as of December16, 2002. The head office of the Fund is located in Winnipeg,Manitoba.

2. The Fund was established for the purposesof, among other things, investing in securities of BGI.

3. As of June 30, 2003, the Fund directlyheld approximately 63.7% of the voting equity securities ofBGI. The remaining voting equity interest in BGI is held directlyby Boyd Group Holdings Inc. ("BGHI"), a corporationthat is controlled by the Fund through its ownership of 70%of the outstanding voting shares of BGHI.

4. The Fund has been a reporting issuer orthe equivalent under the Legislation of British Columbia,Alberta, Saskatchewan, Manitoba and Ontario since February17, 2003 and, to the best of its knowledge, is not in defaultof any requirements of such Legislation.

5. The Fund is not a "mutual fund"under the Legislation as the holders of Units are not entitledto receive on demand an amount computed by reference to thevalue of a proportionate interest in the whole or in partof the net assets of the Fund, as contemplated by the definitionof "mutual fund" in the Legislation.

6. The Fund is authorized to issue an unlimitednumber of units ("Units"), each of which representsan equal fractional undivided beneficial interest in any distributionsfrom the Fund and in any net assets of the Fund in the eventof termination or winding-up of the Fund. All Units are ofthe same class with equal rights and privileges. Each Unitis transferable, entitles the holder thereof to participateequally in distributions and entitles the holder thereof toone vote at all meetings of holders of Units ("Unitholders")for each Unit held. As of June 30, 2003, there were 3,626,443Units issued and outstanding.

7. The Units are listed and posted for tradingon the Toronto Stock Exchange (the "TSX").

8. The Fund makes and expects to continueto make monthly cash distributions to its Unitholders in anamount per Unit equal to a pro rata share of all amounts receivedby the Fund in each month including, without limitation, dividends,interest or other distributions on securities held by theFund, less: (i) costs and expenses of the Fund incurred oranticipated; (ii) amounts that may be paid by the Fund inconnection with any cash redemptions of Units; (iii) interestexpenses of the Fund; and (iv) any amount the trustees ofthe Fund feel is necessary to provide for the liabilitiesand costs incurred in the activities and operations of theFund.

9. The Fund intends to establish a distributionreinvestment plan (the "Fund Plan") pursuant towhich eligible Unitholders may, at their option, direct thatcash distributions paid by the Fund in respect of their existingUnits ("Cash Distributions") be applied to the purchaseof additional Units ("Additional Units") to be heldfor their account under the Fund Plan (the "DistributionReinvestment Option").

10. Alternatively, the Fund Plan will enableeligible Unitholders who wish to reinvest their Cash Distributionsto authorize and direct the trust company that is appointedas agent under the Fund Plan (the "Fund Plan Agent"),to pre-sell through a designated broker (the "Fund PlanBroker"), for the account of the Unitholders who so elect,a number of Units approximately equal to the number of AdditionalUnits issuable on such reinvestment, and to settle such pre-saleswith the Additional Units issued on the applicable distributionpayment date in exchange for a premium cash payment equalto 102% of the reinvested Cash Distribution (the "PremiumDistribution Option"). The Fund Plan Broker will be entitledto retain for its own account the difference between the proceedsrealized in connection with such pre-sales and the cash paymentto the Fund Plan Agent in an amount equal to 102% of the reinvestedCash Distributions.

11. Eligible Unitholders who have directedthat their Cash Distributions be reinvested in AdditionalUnits under either the Distribution Reinvestment Option orthe Premium Distribution Option ("Participants")may also be able to directly purchase Additional Units underthe Fund Plan by making optional cash payments within thelimits established thereunder (the "Cash Payment Option").The Fund shall have the right to determine from time to timewhether the Cash Payment Option will be available. The CashPayment Option will only be available to Unitholders thatare Participants.

12. The Fund anticipates that Unitholderswho are resident in the United States will be permitted underU.S. federal securities laws to participate in the DistributionReinvestment Option or the Premium Distribution Option, butnot the Cash Payment Option.

13. All Additional Units purchased under theFund Plan will be purchased by the Fund Plan Agent directlyfrom the Fund on the relevant distribution payment date ata price determined by reference to the Average Market Price(as defined in the Fund Plan), being the arithmetic averageof the daily volume weighted average trading prices of theUnits on the TSX for a defined period prior to the distributionpayment date.

14. Additional Units purchased under the DistributionReinvestment Option or the Premium Distribution Option willbe purchased at a 5% discount to the Average Market Price.Additional Units purchased under the Cash Payment Option willbe purchased at the Average Market Price.

15. The Fund Plan Broker's prima faciereturn under the Premium Distribution Option will be approximately3% of the reinvested Cash Distributions (based on pre-salesof Units having a market value of approximately 105% of thereinvested Cash Distributions and a fixed cash payment tothe Fund Plan Agent, for the account of applicable Participants,of an amount equal to 102% of the reinvested Cash Distributions).The Fund Plan Broker may, however, realize more or less thanthis prima facie amount, as the actual return will vary accordingto the prices the Fund Plan Broker is able to realize on thepre-sales of Units. The Fund Plan Broker bears the entirerisk of adverse changes in the market, as Participants whohave elected the Premium Distribution Option are assured apremium cash payment equal to 102% of the reinvested CashDistributions.

16. All activities of the Fund Plan Brokeron behalf of the Fund Plan Agent that relate to pre-salesof Units for the account of Participants who elect the PremiumDistribution Option will be in compliance with applicableLegislation and the rules and policies of the TSX (subjectto any exemptive relief granted). The Fund Plan Broker willalso be a member of the Investment Dealers Association ofCanada and will be registered under the legislation of anyJurisdiction where the first trade in Additional Units pursuantto the Premium Distribution Option makes such registrationnecessary.

17. Participants may elect either the DistributionReinvestment Option or the Premium Distribution Option inrespect of their Cash Distributions. Eligible Unitholdersmay elect to participate in either the Distribution ReinvestmentOption or the Premium Distribution Option at their sole optionand are free to terminate their participation under eitheroption, or to change their election, in accordance with theterms of the Fund Plan.

18. Under the Distribution Reinvestment Option,Cash Distributions will be paid to the Fund Plan Agent andapplied by the Fund Plan Agent to the purchase of AdditionalUnits, which will be held under the Fund Plan for the accountof Participants who have elected to participate in that componentof the Fund Plan.

19. Under the Premium Distribution Option,Cash Distributions will be paid to the Fund Plan Agent andapplied by the Fund Plan Agent to the purchase of AdditionalUnits for the account of Participants who have elected toparticipate in that component of the Fund Plan, but the AdditionalUnits purchased thereby will be automatically transferredto the Fund Plan Broker to settle pre-sales of Units madeby the Fund Plan Broker on behalf of the Fund Plan Agent forthe account of such Participants in exchange for a premiumcash payment equal to 102% of the reinvested Cash Distributions.

20. Under the Cash Payment Option, a Participantmay, through the Fund Plan Agent, purchase Additional Unitsup to a specified maximum dollar amount per distribution periodand subject to a minimum amount per remittance. The aggregatenumber of Additional Units that may be purchased under theCash Payment Option by all Participants in any financial yearof the Fund will be limited to a maximum of 2% of the numberUnits issued and outstanding at the start of the financialyear.

21. No brokerage fees or service charges willbe payable by Participants in connection with the purchaseof Additional Units under the Fund Plan.

22. Additional Units purchased and held underthe Fund Plan will be registered in the name of the Fund PlanAgent (or its nominee) and credited to the accounts of theappropriate Participants, and all Cash Distributions on Unitsso held under the Fund Plan will be automatically reinvestedin Additional Units in accordance with the terms of the FundPlan and the current election of that Participant.

23. The Fund Plan permits full investmentof reinvested Cash Distributions and optional cash paymentsunder the Cash Payment Option (if available) because fractionsof Units, as well as whole Units, may be credited to Participants'accounts with the Fund Plan Agent.

24. The Fund reserves the right to determine,for any distribution payment date, the amount of Unitholders'equity that may be issued pursuant to the Fund Plan.

25. If, in respect of any distribution paymentdate, fulfilling all of the elections under the Fund Planwould result in the Fund exceeding either the limit on Unitholders'equity set by the Fund or the aggregate annual limit on AdditionalUnits issuable pursuant to the Cash Payment Option, then electionsfor the purchase of Additional Units on such distributionpayment date will be accepted: (i) first, from Participantselecting the Distribution Reinvestment Option; (ii) second,from Participants electing the Premium Distribution Option;and (iii) third, from Participants electing the Cash PaymentOption (if available). If the Fund is not able to accept allelections in a particular category, then purchases of AdditionalUnits on the applicable distribution payment date will bepro rated among all Participants in that category accordingto the number of Additional Units sought to be purchased.

26. If the Fund determines not to issue anyUnitholders' equity through the Fund Plan on a particulardistribution payment date, then all Participants will receivethe Cash Distribution announced by the Fund for that distributionpayment date.

27. A Participant may terminate its participationin the Fund Plan at any time by submitting a termination formto the Fund Plan Agent, provided that a termination form receivedbetween a distribution record date and the distribution paymentdate to which such record date relates will not become effectiveuntil after that distribution payment date.

28. The Fund reserves the right to amend,suspend or terminate the Fund Plan at any time, provided thatsuch action shall not have a retroactive effect that wouldprejudice the interests of the Participants. All Participantswill be sent written notice of any such amendment, suspensionor termination.

29. The distribution of Additional Units bythe Fund pursuant to the Fund Plan cannot be made in relianceon registration and prospectus exemptions contained in theLegislation as the Fund Plan involves the reinvestment ofdistributions of the distributable cash of the Fund and notthe reinvestment of dividends, interest or distributions ofcapital gains or out of earnings or surplus.

30. The distribution of Additional Units bythe Fund pursuant to the Fund Plan cannot be made in relianceon registration and prospectus exemptions contained in theLegislation for distribution reinvestment plans of mutualfunds, as the Fund is not a "mutual fund" as definedin the Legislation.

AND WHEREAS BGI and the Fund have representedto the Decision Maker in Manitoba that:

31. BGI is a corporation amalgamated on February28, 2003, pursuant to a plan of arrangement (the "Arrangement")under the laws of the Province of Manitoba and maintains itshead office in Winnipeg, Manitoba. BGI owns and operates,either directly or through subsidiaries, automotive collisionrepair centers in Canada and the United States.

32. BGI is not currently a reporting issueror the equivalent thereof in any of the provinces or territoriesof Canada, although it was a "reporting issuer"(or the equivalent thereof) in the Provinces of Manitoba andOntario until May 20, 2003 when The Manitoba Securities Commissionissued a decision under the System deeming BGI to have ceasedto be a reporting issuer in those Jurisdictions.

33. The authorized capital of BGI consistsof an unlimited number of Class I Shares, an unlimited numberof Class II Shares and an unlimited number of Class III Shares.As of June 30, 2003, there were 3,626,443 Class I Shares and2,062,863 Class II Shares issued and outstanding, all of whichare owned by the Fund and BGHI, respectively. There are presentlyno issued and outstanding Class III Shares. BGI also has outstandinga class of notes (the "BGI Notes"), all of whichare held by the Fund.

34. On January 5, 1998, BGI issued convertibledebentures in the aggregate principal amount of $2 million(the "1998 Debentures") and on December 3, 2002and December 16, 2002, issued convertible debentures in theaggregate principal amount of $7.5 million (collectively,the "2002 Debentures"). Prior to completion of theArrangement, each of the 1998 Debentures and the 2002 Debentureswere convertible into Class A (Restricted Voting) Shares ofBGI at a rate of one Class A (Restricted Voting) Share foreach $1.17647 of aggregate principal amount of the 1998 Debenturesso converted and at a rate of one Class A (Restricted Voting)Share for each $2.00 of aggregate principal amount of the2002 Debentures so converted. As part of the Arrangement,the trust indenture in respect of each of the 1998 Debenturesand the 2002 Debentures was amended by making the Fund a partythereto and changing certain of the provisions thereof toprovide the holder of the Debentures issued thereunder theright to exchange such Debentures for Units in lieu of BGI'spreviously publicly traded securities, Class A (RestrictedVoting) Shares, at the rate (after taking into account the4 for 1 share consolidation which was part of the Arrangement)of $4.68 and $8.00 per Unit, respectively. As at the datehereof, there are $1,332,000 aggregate principal amount of1998 Debentures and $6,525,000 aggregate principal amountof 2002 Debentures outstanding.

35. BGHI was incorporated under The CorporationsAct (Manitoba) for purposes of participating in the Arrangementand owns an approximate 36.3% voting equity interest in BGIthrough its ownership of all of the Class II Shares of BGI.BGHI, subject to applicable legal and contractual requirements,distributes all of its income on a monthly basis to its shareholdersby way of a dividend on its issued and outstanding commonshares.

36. The authorized capital of BGHI consistsof 2,062,606 Class A Common Shares, all of which are outstandingas fully paid and non-assessable shares in the capital ofBGHI, an unlimited number of Class B Common Shares of which257 are issued and outstanding, and an unlimited number ofVoting Shares, of which 100,000,000 are issued and outstanding.Of those 2,062,606 issued and outstanding Class A Common Shares,as of the date hereof, the public unitholders of the Fundhold approximately 57.4% of the Class A Common Shares and4612094 Manitoba Inc. ("Management Holdco"), a privatecorporation established by certain senior management of BGIto participate in the Arrangement, holds the remaining 42.6%.All of the issued and outstanding Class B Common Shares ofBGHI are owned by the Fund. The Fund owns 70% of the issuedand outstanding Voting Shares of BGHI and Management Holdcoowns the balance.

37. BGI intends to establish a dividend reinvestmentplan (the "BGI Plan") pursuant to which BGHI, thesole shareholder of BGI Class II Shares, at its option, maydirect that cash dividends paid by BGI in respect of its ClassII Shares (the "BGI Dividends") be applied to thepurchase of Class III Shares (the "BGI Class III Shares")of BGI (the "BGHI Dividend Reinvestment Option").The purchase price of the BGI Class III Shares purchased byBGHI pursuant to the BGHI Dividend Reinvestment Option willbe equal to a 5% discount of the Average Market Price of theUnits (as determined in accordance with the terms of the FundPlan).

38. The BGI Class III Shares are, by theirterms, convertible at the option of either the holder or BGIinto Units on a one-for-one basis (the "Class III Shareto Unit Conversion Right"). Pursuant to an exchange agreementbetween BGI, the Fund and BGHI, BGI can require the Fund toissue a sufficient number of Units (the "Class III ShareConverted Units") to satisfy any such conversion request,provided that BGI issues a sufficient number of BGI Notesand Class I Shares to the Fund in satisfaction of the purchaseprice for the Class III Share Converted Units.

39. It is anticipated that BGHI will electto convert all of the BGI Class III Shares that it receivespursuant to the BGHI Dividend Reinvestment Option into Units,and upon receipt thereof transfer such Class III Share ConvertedUnits to the Fund Plan Broker to settle pre-sales of Unitsmade by the Fund Plan Broker on behalf of BGHI in exchangefor a premium cash payment equal to 102% of the amount ofthe reinvested BGI Dividends. This arrangement between theFund Plan Broker and BGHI with respect to the pre-sale ofClass III Share Converted Units will be substantially thesame as that which is implemented under the Fund Plan withrespect to the Premium Distribution Option.

40. The issue of Units to BGHI upon the conversionof BGI Class III Shares (the "Class III Converted UnitsIssue") and the issue by BGI of the BGI Notes and ClassI Shares to the Fund in satisfaction of the purchase pricefor the Units issued in respect of the Class III Share toUnit Conversion Right (the "BGI Note and Class I ShareIssue") involve trades in securities occurring only inthe Province of Manitoba, but are not exempt from the Registrationand Prospectus Requirements under the Legislation of thatJurisdiction.

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 Makers with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that:

1. the trades of Additional Units by the Fundto the Fund Plan Agent for the account of Participants pursuantto the Fund Plan shall not be subject to the Registrationand Prospectus Requirements of the Legislation provided that:

(a) at the time of the trade the Fund isa reporting issuer or the equivalent in a jurisdiction listedin Appendix B of Multilateral Instrument 45-102 Resaleof Securities ("MI 45-102") and is not indefault of any requirements of the Legislation of that jurisdiction;

(b) no sales charge is payable in respectof the trade;

(c) the Fund has caused to be sent to theperson or company to whom the Additional Units are traded,not more than 12 months before the trade, a statement describing:

(i) their right to withdraw from the FundPlan and to make an election to receive Cash Distributionsinstead of Additional Units, and

(ii) instructions on how to exercise theright referred to in paragraph (i) above;

(d) the aggregate number of Additional Unitsissued under the Cash Payment Option of the Fund Plan inany financial year of the Fund shall not exceed 2% of theaggregate number of Units outstanding at the start of thatfinancial year;

(e) except in Quebec, the first trade inAdditional Units acquired pursuant to this Decision willbe a distribution or primary distribution to the publicunless the conditions in paragraphs 2 through 5 of subsection2.6(3) of MI 45-102 are satisfied;

(f) in Québec, the alienation ofAdditional Units acquired pursuant to this Decision willbe a distribution unless:

(i) all of the following are true:

(A) the Fund is and has been a reportingissuer in Québec for the 12 months precedingthe alienation;

(B) no unusual effort is made to preparethe market or to create a demand for the securitiesthat are the subject of the alienation;

(C) no extraordinary commission or otherconsideration is paid in respect of the alienation;

(D) if the seller of the securitiesis an insider of the issuer, the seller has no reasonablegrounds to believe that the issuer is in default ofany requirement of securities legislation; or

(ii) such alienation is made through theTSX;

2. the Registration and Prospectus Requirementsshall not apply to the first trade of the Class III ShareConverted Units by BGHI in settlement of the pre-sales ofUnits made by the Fund Plan Broker on its behalf, providedthat the conditions in paragraphs 2 through 5 of subsection2.6(3) of MI 45-102 are satisfied.

THE DECISION of the Decision Maker inManitoba pursuant to the Legislation of that Jurisdiction isthat the Registration and Prospectus Requirements shall notapply to the Class III Converted Units Issue or the BGI Noteand Class I Share Issue.

September 3, 2003.

"Chris Besko"