First Ontario Labour Sponsored Investment Fund Ltd.

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- approval of a merger of certain Labour Sponsored Investment Funds and approval of suspension of redemptions in connection with the merger under National Instrument 81-102 Mutual Funds.

Rules Cited

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(b), (d).

June 23, 2006

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S. 5, AS AMENDED

AND

IN THE MATTER OF

FIRST ONTARIO LABOUR SPONSORED INVESTMENT FUND LTD.

DECISION

UPON the Director having received an application (the "Application") from First Ontario Labour Sponsored Investment Fund Ltd. ("FOF") dated May 8, 2006 for approval of a proposed merger of FOF together with GrowthWorks Canadian Fund Ltd. ("GW Canadian") (the "Merger") pursuant to clause 5.5(1)(b) of National Instrument 81-102 - Mutual Funds ("NI 81-102").

AND UPON considering the Application and the recommendation of the staff of the Ontario Securities Commission (the "Commission");

AND UPON the defined terms contained in National Instrument 14-101 Definitions having the same meaning in this decision unless they are defined herein;

AND UPON FOF and GW Canadian having represented to the Director the following facts:

GrowthWorks Canadian Fund Ltd.

1. GW Canadian was incorporated under the Canada Business Corporations Act.

2. GW Canadian is a registered labour sponsored investment fund corporation under the Community Small Business Investment Funds Act (Ontario) (the "Ontario Act") and is a registered labour-sponsored venture capital corporation under the Income Tax Act (Canada) (the "Tax Act"). GW Canadian is also an approved fund under the Labour-Sponsored Venture Capital Corporations Act (Saskatchewan). GW Canadian's investing activities are governed by such legislation (the "GW LSIF Legislation").

3. GW Canadian primarily invests in small and medium sized businesses with the objective of obtaining long term capital appreciation and must make "eligible investments" in "eligible businesses" as prescribed under the LSIF Legislation.

4. The labour sponsor of GW Canadian is the Canadian Federation of Labour (the "GW Canadian Sponsor").

5. The authorized capital of GW Canadian is as follows:

(a) an unlimited number of Class A shares issuable in series, which are widely held, of which there are currently 15 series created and issued;

(b) 40 million Class B shares which are held by the GW Canadian Sponsor which will be consolidated to 1000 Class B shares prior to the next meeting of GW Canadian shareholders; and

(c) an unlimited number of Class C shares issuable in series, of which there is one series created and issued designated as "IPA shares" held by the manager of GW Canadian to provide for a "participating" or "carried" interest in the venture investments of GW Canadian.

6. GrowthWorks WV Management Ltd. (the "GW Canadian Manager") is the manager of GW Canadian under a management contract.

7. GW Canadian's shares are not listed on an exchange, however GW Canadian currently offers 12 series of its Class A shares: Venture/Balanced Commission I and II, Venture/Growth Commission I and II, Venture/Income Commission I and II, Venture/Financial Services Commission I and II, Venture/Resource Commission I and II, and Venture/Diversified Commission I and II under a prospectus dated December 5, 2005, as amended (the "GW Canadian Prospectus").

8. As of March 31, 2006, GW Canadian had approximately $364 million in net assets.

9. The net asset value of GW Canadian is calculated at least weekly.

10. GW Canadian has complied with Part 11 of National Instrument 81-106 Investment Fund Continuous Disclosure ("NI 81-106") in connection with the Merger.

First Ontario Labour Sponsored Investment Fund Ltd.

11. FOF was amalgamated under the Business Corporations Act (Ontario).

12. FOF is a registered labour sponsored investment fund corporation under the Ontario Act and is a prescribed labour-sponsored venture capital corporation under the Tax Act. FOF's investing activities are governed by such legislation ("FOF LSIF Legislation").

13. FOF primarily invests in small and medium sized Ontario businesses with the objective of obtaining long term capital appreciation and must make "eligible investments" in "eligible businesses" as prescribed under FOF LSIF Legislation.

14. The labour sponsors of FOF are the Communications, Energy and Paperworkers Union of Canada, the United Steelworkers of America - District Six, the Service Employees International Union, the Power Workers' Union - Canadian Union of Public Employees - Local 1000, the Brewery, General and Professional Workers' Union (SEIU, Local 2.ON), the Public Service Alliance of Canada -- Ontario Region, the Public Service Alliance of Canada -- National Capital Region, the Ontario Worker Co-operative Federation Inc. and the Ontario Federation of Labour (collectively, the "FOF Sponsors").

15. The authorized capital of FOF is as follows:

(a) an unlimited number of Class A shares issuable in series, which are widely held, of which there are 3 series created but only 2 series issued and outstanding;

(b) an unlimited number of Class B shares, of which all of the issued and outstanding shares are held by the FOF Sponsors; and

(c) an unlimited number of Class C shares, of which there are no shares currently issued.

16. First Ontario Management Ltd. (the "FOF Manager") is the manager of FOF under a management contract.

17. FOF offers Class A Series I Shares and Class A Series III Shares under a prospectus dated December 20, 2005, as amended (the "FOF Prospectus").

18. As of March 31, 2006, FOF had approximately $36 million in net assets.

19. The net asset value of FOF is calculated daily.

20. FOF has complied with Part 11 of NI 81-106 in connection with the proposed Merger.

The Merger

21. On March 24, 2006, FOF and GW Canadian announced that a memorandum of understanding (the "MOU") had been signed regarding a proposed merger of FOF into GW Canadian. Under the MOU, the Merger is subject to approval by the boards of both Funds, the shareholders of FOF, as well as applicable regulatory approvals. The Merger is not subject to approval by the shareholders of GW Canadian.

22. Shareholders of FOF voted on the Merger at the shareholders' meeting that was held on June 6, 2006 (the "FOF Shareholders' Meeting"). Shareholders approved the Merger which is expected to be effective on or about July 14, 2006 (the "Effective Date").

23. In connection with the FOF Shareholders' Meeting, shareholders of FOF were sent an information circular (the "Circular") which contains details of the proposed Merger, including income tax considerations associated with the Merger.

24. The Merger will be subject to the completion of a valuation review by KPMG LLP (the "Valuation Expert") of each Fund's venture investments as contemplated in the engagement letter signed by the Funds and KPMG LLP dated February 28, 2006 and the satisfaction of each Fund (acting reasonably) with the report summarizing the results of the review.

25. The Merger will be effected by the following steps:

(a) GW Canadian will purchase the net assets of FOF in exchange for Class A shares of GW Canadian (the "Merger Shares"); and

(b) FOF will redeem all of its own issued Class A shares through an automatic redemption procedure ("Merger Redemption Procedure") in exchange for transferring Merger Shares to its shareholders.

The end result of these steps is that the net assets of FOF will be held by GW Canadian and shareholders of FOF will become shareholders of GW Canadian.

FOF will retain sufficient assets to pay its liabilities, if any, as of the Effective Date. It is currently contemplated that with no public shareholders and no assets or liabilities, FOF will be dissolved or wound-up as soon as reasonably possible, after all necessary ancillary steps have been taken to complete the transfer of FOF's net assets to GW Canadian under the Merger.

26. GW Canadian will not generally assume the liabilities of FOF in connection with the Merger. However, if directors and officers of FOF and directors of the FOF Manager have indemnity agreements from FOF, FOF's obligations under those indemnity agreements will be assumed by GW Canadian subject to the overriding provision that recourse against GW Canadian under all such indemnities will be strictly limited, in aggregate, to the value of the net assets of GW Canadian attributable on the books and records of GW Canadian to the specific series of GW Canadian Class A shares distributed as Merger Shares. Liability arising from this assumption of indemnities will be allocated solely to these series of shares.

27. For a moment in time immediately after GW Canadian purchases the net assets of FOF in exchange for the Merger Shares of GW Canadian, FOF will have 100% of its portfolio invested in shares of GW Canadian and may own 10% or more of the outstanding shares of GW Canadian.

28. The Merger will not be a "qualifying transaction" within the meaning of section 132.2 of the Tax Act. Therefore, the distribution of Merger Shares of GW Canadian on the redemption of Class A shares of FOF will be a taxable event resulting in a capital gain or capital loss to the shareholders of FOF depending on each shareholder's adjusted cost base of the shares. However, about 97% of issued and outstanding Class A shares of FOF are held in registered retirement savings plans not subject to tax. Moreover, based on historical selling prices and the anticipated relative values of the Merger Shares and the Class A shares of FOF on the Effective Date, very few of the shareholders of FOF will realize a capital gain as a result of the Merger.

29. The last scheduled pricing date for Class A shares of FOF before the anticipated Effective Date of the Merger will be on or about June 30, 2006, two weeks before the proposed Effective Date of the Merger. The Class A shares of FOF will go off-sale and off-redemption as at the close of business on this date while back office data transfers/conversions from existing service providers to FOF takes place and the Merger transaction is completed and reported out to dealer back-offices. FOF shareholders also approved FOF going off-redemption temporarily during this short transition period. Redemptions of Class A shares of GW Canadian will not be suspended in connection with the Merger. Former FOF shareholders may place orders to redeem their Merger Shares on the business day following the Effective Date of the Merger, expected to be on or about July 17, 2006. Redemptions may be effected on similar terms to those that apply to FOF Class A shares now.

30. It is intended that Class A shares of GW Canadian will be sold through the Payroll Deduction Plans post-Merger. The Circular contains disclosure advising FOF shareholders who currently participate in the Payroll Deduction Plans ("Plan Participants") that their participation will continue post-Merger in respect of Class A shares of GW Canadian, unless they advise GW Canadian or FOF in writing or by telephone that they no longer wish to be Plan Participants within 60 days after the Merger. If a Plan Participant withdraws from the Payroll Deduction Plans within that 60 day period, any post-Merger purchases will be rescinded and the related payroll deductions will be refunded.

31. Information sessions about the Merger are planned to be held at the premises of the employers where most of the Plan Participants work. At these sessions, Plan Participants may provide notice that they would like to withdraw from the plans if the Merger proceeds. In addition to shareholder meeting materials, Plan Participants were sent a newsletter which outlines how the Merger will affect the Payroll Deduction Plans and a Notice of Withdrawal Form that they may submit in order to withdraw from the plans. Finally, each Plan Participant will receive a GW Canadian prospectus, as amended, in connection with their first purchase of GW Canadian shares post-Merger.

32. Shareholders of FOF were entitled to exercise dissent rights pursuant to and in the manner set forth in Section 185 of the Business Corporations Act (Ontario) with respect to the resolution approving the sale of all or substantially all of the assets of FOF to GW Canadian. Shareholders that validly exercised these rights and did not withdraw their dissent ("Dissenting Shareholders") were entitled to receive the "fair value" of their FOF Class A shares as at the day before the resolution approving the sale is adopted by shareholders. Any Dissenting Shareholders who held their FOF Class A shares for less than eight years were required, in accordance with applicable LSIF Legislation, to repay federal and provincial tax credits granted when the shares were originally purchased.

33. The GW Canadian Manager will continue to serve as manager for GW Canadian post-Merger.

34. The costs of effecting the Merger will be paid by the GW Canadian Manager, except that:

(a) the fees payable to the Valuation Expert will be shared 50/50 by the FOF Manager and GW Canadian Manager, provided that if the Merger is completed, the GW Canadian Manager will reimburse the FOF Manager for its share of the fees paid; and

(b) the FOF Manager will pay all merger-related legal costs incurred by itself and FOF in excess of $200,000.

Shareholder Disclosure

35. The materials to be sent to shareholders of FOF will not include a copy of the current long form prospectus of GW Canadian (as series of Class A shares of GW Canadian other than those offered under the GW Canadian Prospectus will be issued to FOF shareholders under the Merger) or a copy of the annual and interim financial statements of GW Canadian, as required by Section 5.6(1)(f)(ii) of NI 81-102. However, the Circular sent to FOF shareholders did instead:

(a) include disclosure about the Merger and prospectus-like disclosure concerning GW Canadian and the Merger Shares to be issued under the Merger including information regarding fees, expenses, investment objective, investment strategy, valuation procedures, the manager, the investment manager, redemptions, income tax considerations, dividend policy, net asset value and risk factors;

(b) for purposes of NI 81-106 and NI 51-102, incorporate by reference the GW Canadian Prospectus (as permitted under NI 51-102);

(c) disclose that shareholders can obtain a current copy of the GW Canadian Prospectus at no cost by accessing the SEDAR website at www.sedar.com, by accessing the GrowthWorks website at www.growthworks.ca or by calling a toll-free telephone number (in which case the Manager of GW Canadian will cause the requested material to be promptly mailed to the requesting shareholder); and

(d) disclose that shareholders can obtain annual and interim financial statements of GW Canadian as at and for the periods ended August 31, 2005 and February 28, 2006, respectively, and any management reports of fund performance produced by GW Canadian at no cost by accessing the SEDAR website at www.sedar.com, by accessing the GrowthWorks website at www.growthworks.ca or by calling a toll-free telephone number (in which case the Manager of GW Canadian will cause the requested material to be promptly mailed to the requesting shareholder).

36. The Circular contains a description of the Merger, including the tax considerations associated with the Merger. Disclosure will be provided to FOF shareholders to allow them to make an informed decision with respect to the Merger. This is in addition to the prospectus-like disclosure concerning the Merger Shares to be issued under the Merger.

37. Since a labour sponsored investment fund does not use the simplified prospectus and annual information form model of disclosure, and NI 81-106 does not require the filing of an annual information form by investment funds that have a current prospectus, an annual information form for GW Canadian will not be available to shareholders of FOF, as required by Section 5.6(1)(f)(iii) of NI 81-102.

AND UPON the Director being satisfied that the test contained in NI 81-102 has been met.

IT IS THE DECISION of the Director, under NI 81-102 that the Approval is granted subject to the following:

(a) FOF has prominently disclosed in the first few pages of the Circular of FOF that shareholders can obtain the most recent annual and interim financial statements of GW Canadian, that have been made public, at no cost by accessing the SEDAR website at www.sedar.com, by accessing the GrowthWorks website at www.growthworks.ca or by calling a toll-free telephone number, and

(b) FOF has prominently disclosed in the first few pages of the Circular of FOF a reference to where shareholders can find the prospectus-like disclosure concerning GW Canadian.