Morneau Sobeco Income Fund - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Application by an Issuer for a decision that the Issuer be permitted to file in a confidential manner certain side letters to material contracts and certain portions of schedules to material contracts -- specified side letters and schedules contain personal and commercially sensitive information that would be seriously prejudicial to the interests of the Issuer and others if publicly disclosed -- specified side letters and schedules do not contain information in relation to the Issuer or securities of the Issuer that would be material to an investor -- relief granted.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 6(3), 140(2).

Applicable Ontario Instruments

Rule 41-501 General Prospectus Requirements, s. 13.3(1)(6).

Companion Policy 41-501CP General Prospectus Requirements, ss. 5.3, 5.4.

May 16, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC, NOVA SCOTIA,

NEWFOUNDLAND AND LABRADOR,

NEW BRUNSWICK, PRINCE EDWARD ISLAND,

NORTHWEST TERRITORIES, NUNAVUT

AND YUKON TERRITORY (the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MORNEAU SOBECO INCOME FUND

(the Issuer)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker, and collectively the Decision Makers) in each of the Jurisdictions has received an application from the Issuer for a decision under the securities legislation of the Jurisdictions (the Legislation) permitting the Issuer to file in a confidential manner portions of schedules to certain material contracts of the Issuer on the basis that the information in such schedules contains personal and commercially sensitive information that would be seriously prejudicial to the interests of the Issuer and others if publicly disclosed (the Requested Relief).

Under the Mutual Reliance Review System for Exemptive Relief Applications,

(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Unless otherwise defined, the terms herein have the same meaning set out in National Instrument 14-101 Definitions.

Representations

This decision is based on the following facts represented by the Issuer:

1. On September 21, 2005, the Issuer filed a final long form prospectus (the "Final Prospectus") with each of the Jurisdictions. The OSC was designated as principal regulator for the review of the Final Prospectus.

2. The Final Prospectus was filed with the OSC pursuant to OSC Rule 41-501 -- Prospectus Contents -- Non-Financial Matters ("OSC Rule 41-50l"). Pursuant to Subsection 13.3(1)6 of OSC Rule 41-501, the Issuer was required to file copies of all of its material contracts with the Final Prospectus.

3. Concurrently with filing the Final Prospectus, a copy of the Underwriting Agreement (as defined in the Final Prospectus) was filed with each of the Jurisdictions.

4. In addition, the Issuer provided an undertaking to each of the Securities Regulatory Authorities that it would file, among other material contracts, the Investment and Acquisition Agreement and the Credit Agreement (as defined in the Final Prospectus) of which the Investment and Acquisition Agreement was subsequently filed.

5. In connection with the Investment and Acquisition Agreement and Underwriting Agreement, W.F. Morneau Services Inc. ("Morneau") and its former shareholders prepared disclosure letters (the "Disclosure Letters") for the purposes of setting forth certain exceptions to some of the representations and warranties contained in the agreements and to provide certain additional disclosure called for by the terms of the agreements. In the case of the Credit Agreement, this additional disclosure is set out in the schedules to the agreement itself.

6. Although the Disclosure Letters are referenced in the Investment and Acquisition Agreement and Underwriting Agreement, an investor does not need to review the Disclosure Letters nor the schedules in the Credit Agreement containing similar information in order to understand the substance of the agreements or the transactions contemplated thereby. More specifically, by reviewing the Underwriting Agreement, the Investment and Acquisition Agreement and the Credit Agreement, an investor will be able to understand (i) the nature of the representations and warranties provided by Morneau and its former shareholders in connection with the Issuer's indirect acquisition of Morneau and (ii) the nature and extent of the Issuer's potential recourse against Morneau and its former shareholders in the event of any breach or inaccuracy of such representations.

7. Furthermore, the Disclosure Letters and schedules to the Credit Agreement contain certain personal and commercially sensitive information that would be seriously prejudicial to the interests of the Issuer and others if publicly disclosed.

8. Therefore, the Issuer has redacted the following schedule references in respect of the Disclosure Letters and schedules to the Credit Agreement :

Investment and Acquisition Disclosure Letter

Schedule 1.1 (bbb) -- Material Contracts

Schedule 5.2 (j) -- Authorized and Issued Capital of the Morneau Entities and the Registered and Beneficial Ownership Thereof

Schedule 5.2 (l) -- Litigation

Schedule 5.2 (n) -- Dividends and Distributions since December 31, 2004

Schedule 5.2 (kk)(i), (vii) -- Employment Matters

Schedule 5.2(oo) -- Insurance

Schedule 5.2(h) -- Required Consents

Underwriting Agreement Disclosure Letter

Schedule 1 -- Material Contracts

Schedule 8(1)(s) -- Authorized and Issued Capital of the Morneau Entities and the Registered and Beneficial Ownership Thereof

Schedule 8(1)(u) -- Litigation

Schedule 8(1)(aa) -- Dividends and Distributions since December 31, 2004

Schedule 8(1)(xx)(i),(vii) -- Employment Matters

Schedule 8(1)(bbb) -- Insurance

Credit Agreement

Schedule 1.1(25) -- Branches of Account

Schedule 8.1(13) -- Litigation

Schedule 8.1(19) -- Corporate Organization Chart

Schedule 8.1(23) -- Leased Property

9. The Disclosure Letters and schedules to the Credit Agreement in respect of which the Requested Relief is being sought do not contain information in relation to the Issuer or securities of the Issuer that would be material to an investor.

10. The Issuer is not in default of any requirement of the Legislation.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.