6799221 Canada Limited and Persistence Capital Partners LP - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions-- take-over bid and subsequent business combination -- MI 61-101 requires the sending of an information circular and holding of a meeting in connection with second step business combination -- second step business combination to be subject to minority approval, calculated in accordance with section 8.2 of MI 61-101 -- relief granted from requirement that information circular be sent and meeting be held, provided that minority approval is obtained by written resolution.

Applicable Ontario Statutory Provisions

Sections 4.2, 8.2 and 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

TRANSLATION

March 20, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

6799221 CANADA LIMITED

AND

PERSISTENCE CAPITAL PARTNERS LP

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of Quebec and Ontario (the "Jurisdictions") has received an application from 6799221 Canada Limited (the "Offeror"), a wholly-owned subsidiary of Persistence Capital Partners LP ("PCP"), and PCP (together with the Offeror, the "Applicants") in connection with the offer (the "Offer") by the Offeror to acquire all of the issued and outstanding ordinary trust units (the "Units") of Medisys Health Group Income Fund (the "Fund"), for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") to waive the requirements of the Legislation that:

1. a meeting of unitholders of the Fund (the "Unitholders") to approve a Compulsory Acquisition or any Subsequent Acquisition Transaction (each as defined below) be called; and

2. an information circular be sent to Unitholders in connection with a meeting to approve a Compulsory Acquisition or a Subsequent Acquisition Transaction (each as defined below);

(collectively, the "Requested Relief").

Under the Mutual Reliance System for Exemptive Relief Applications ("MRRS"):

a) Autorité des marchés financiers is the principal regulator for this application; and

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

Interpretation

Defined terms contained in National Instrument 14-101 - Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

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

1. The Offeror is a corporation incorporated under the Canada Business Corporations Act and a wholly-owned subsidiary of PCP. The Offeror was formed for the purpose of making the Offer. Its registered office is located at 500 Sherbrooke Street West, Suite 500, Montreal, Quebec, H3A 3C6. The Offeror is not a reporting issuer in any jurisdiction.

2. PCP is a limited partnership formed under the Partnership Act (Manitoba) and the Business Names Registration Act (Manitoba). PCP currently carries on no operations or businesses other than those incidental to its formation and those relating to the equity investment in connection with the Offer. The principal place of business of PCP is located at 500 Sherbrooke Street West, Suite 500, Montreal, Quebec, H3A 3C6.

3. The Fund is an unincorporated, open-ended, limited purpose investment trust governed by the laws of the Province of Ontario, established pursuant to the Fund Declaration of Trust, dated November 19, 2004, as amended and restated on December 29, 2004, and as further amended by a first supplemental indenture dated January 31, 2005 (the "Declaration of Trust"). Its Units are listed for trading on the Toronto Stock Exchange under the symbol "MHG.UN". The registered office and principal office of the Fund are each located in Quebec.

4. The Offeror commenced the Offer on February 13, 2008 by delivering the Offer and a take-over bid circular (the "Circular"), prepared in compliance with the Legislation, to Unitholders.

5. The Offer includes the following terms and conditions:

a) the Offeror has offered to acquire all of the issued and outstanding Units at a price of $8.50 per Unit, including any Units that may become issued and outstanding prior to the Expiry Time (defined below) upon the conversion, exchange or exercise of securities that are convertible into, or exchangeable or exercisable for, Units;

b) the Offer is open for acceptance until 5:00 p.m. (Toronto time) on March 19, 2008, unless withdrawn, extended or varied by the Offeror (the "Expiry Time"); and

c) there shall have been validly deposited under the Offer and not withdrawn at the Expiry Time that number of Units constituting (i) at least 50.1% of the total number of Units outstanding (calculated on a fully diluted basis, excluding the Exchangeable Securities, as defined below) and (ii) together with any Units beneficially owned, or over which control or direction is exercised, by the Offeror and its joint actors, at least 66 2/3% of the Units outstanding at the Expiry Time, calculated on a fully-diluted basis, including the Exchangeable Securities (the "Minimum Condition").

6. All of the issued and outstanding Units are held by CDS Clearing and Depositary Services Inc. in book-entry only form.

7. If the conditions of the Offer (including the Minimum Condition) are satisfied or waived and the Offeror takes up and pays for the Units deposited under the Offer, the Offeror will, to the extent possible, acquire, or cause the redemption of, directly or indirectly, the Units not tendered to the Offer (the "Remaining Units") through a Compulsory Acquisition or a Subsequent Acquisition Transaction.

8. Section 13.13 of the Declaration of Trust currently permits an offeror to acquire the Units not tendered to an offer (a "Compulsory Acquisition") if, within the time provided in the offer for its acceptance or within 45 days after the date the offer is made, whichever period is the shorter, the offer is accepted by the holders representing at least 90% of the total outstanding Units, including the Units issuable at that time in accordance with the Exchange Agreement dated May 31, 2005 entered into by the Fund, Medisys Health Group Trust, Medisys Holding LP, the general partner of Medisys Holding LP, Dr. Sheldon Elman, 4093496 Canada Inc. and 4107225 Canada Inc. and the holder of Class C limited partnership units of Medisys Holding LP, in connection with the exercise in full of the exchange rights associated with the outstanding special shares of Medisys GP Limited, Class B Units of Medisys Holding LP, and Class C limited partnership units of Medisys Holding LP (collectively, the "Exchangeable Securities").

9. Following certain amendments to the Declaration of Trust to be effected as described in the Circular, it is the intention of the Offeror to avail itself of the amended Compulsory Acquisition provisions of the Declaration of Trust, to acquire the Remaining Units. If the Offeror elects to proceeds with the Compulsory Acquisition, the consideration payable to acquire the remainder of the Units will be the identical consideration per Unit payable by the Offeror under the Offer.

10. If the Offeror is not entitled to acquire the Remaining Units through a Compulsory Acquisition or the Offeror decides not to avail itself of such rights, the Offeror intends to use reasonable commercial efforts to proceed with the acquisition or cause the redemption of the Remaining Units as soon as practicable by way of an alternative transaction involving the Fund and/or its subsidiaries and the Offeror or an affiliate of the Offeror (including a transaction involving amendments to the Declaration of Trust) which, if successfully completed, would result in the Offeror or an affiliate of the Offeror owning, directly or indirectly, all of the Units and/or all of the assets the Fund (a "Subsequent Acquisition Transaction").

11. In order to effect either a Compulsory Acquisition or a Subsequent Acquisition Transaction, if the Minimum Condition is satisfied, in accordance with the foregoing, rather than seeking Unitholder approval at a special meeting of the Unitholders to be called for such purpose, the Offeror intends to rely on section 12.10 of the Declaration of Trust, which would permit the special resolutions to be approved in writing by Unitholders holding not less than 66 2/3% of the issued and outstanding Units and special voting units of the Fund.

12. A Compulsory Acquisition and a Subsequent Acquisition Transaction would be a "business combination" under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101").

13. To effect either a Compulsory Acquisition or a Subsequent Acquisition Transaction, the Offeror will comply with the provisions of Regulation 61-101 and, specifically, will obtain minority approval (as the term is defined in Regulation 61-101) calculated in accordance with the terms of Part 8 of Regulation 61-101 ("Minority Approval") by written resolution rather than at a meeting of Unitholders.

14. The Circular contains all disclosure required by applicable Legislation, including, without the limitation, the take-over bid provisions and form requirements of the Legislation, including the provisions of Regulation 61-101 relating to the disclosure required to be included in a disclosure document for a formal bid in respect of a second-step business combination.

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 decision has been met.

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

(i) the Offeror takes up and pays for Units tendered to the Offer; and

(ii) the Minority Approval is obtained by written resolution rather than at a meeting of Unitholders.