Drive Products Income Fund and 2256479 Ontario Inc.

Headnote

NP 11-203 -- MI 61-101 -- take-over bid and subsequent business combination -- MI 61-101 requires sending of information circular and holding of meeting in connection with second step business combination -- target's declaration of trust to be amended to provide that a resolution in writing executed by unitholders holding more than 66 2/3% of the outstanding units valid as if such voting rights had been exercised at a meeting of unitholders -- relief granted from requirement that information circular be sent and meeting be held -- minority approval to be obtained albeit in writing rather than at a meeting of unitholders.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

November 10, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

THE TAKE-OVER BID FOR

DRIVE PRODUCTS INCOME FUND

BY 2256479 ONTARIO INC.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer, in connection with a take-over bid (the Offer) for Drive Products Income Fund (the Fund) for a decision under the securities legislation of the Jurisdiction (the Legislation) that the following requirements of Section 4.2 of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions (MI 61-101) be waived (the MI 61-101 Exemption Sought):

(a) a Compulsory Acquisition or Subsequent Acquisition Transaction (each as defined below), as applicable, be approved at a meeting of the holders of units and special voting units of the Fund (the Voting Unitholders); and

(b) an information circular be sent to the Voting Unitholders in connection with either a Compulsory Acquisition or Subsequent Acquisition Transaction, as applicable.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

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

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in Quebec,

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and M1 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This Decision is based on the following facts represented by the Filer:

1. The Filer was incorporated under the laws of the Province of Ontario on September 10, 2010 and is controlled by Gregory Edmonds, Chief Executive Officer of the Fund, and Russell Bilyk, President of Drive Products, the operating partnership (the Operating Partnership) owned by the Fund (collectively, the Insiders). The Filer has not carried on any business prior to the date hereof other than in connection with the Offer, including the entering into of lock-up agreements, the Support Agreement (defined below) and the letter of intent dated September 17, 2010 among the Fund and the Filer. The Filer is not a reporting issuer in any of the provinces or territories of Canada. The registered office of the Filer is 1665 Shawson Drive, Mississauga, Ontario L4W 1T7. The Filer is not in default of securities legislation in any jurisdiction.

2. All information contained herein relating to the Fund and its affiliates is based solely upon information provided by the Fund or upon the Fund's publicly available documents.

3. The Fund is an unincorporated, open-ended, limited purpose trust formed under the laws of the Province of Ontario pursuant to a declaration of trust (the Declaration of Trust) dated May 1, 2006 (as amended and restated on August 25, 2006). The Fund's head office is located at 1665 Shawson Drive, Mississauga, Ontario L4W 1T7. The Fund is a reporting issuer in all of the provinces and territories of Canada. The Fund is authorized to issue:

i. an unlimited number of trust units (Units), which are listed on the Toronto Stock Exchange (the TSX) under the trading symbol "DPI.UN" and held by CDS Clearing and Depository Services Inc. in non-certificated inventory; and

ii. an unlimited number of special voting units (the Special Voting Units and, together with the Units, the Voting Units). Special Voting Units may only be issued to holders of Class B LP Units (defined below) for the purpose of providing voting rights with respect to the Fund to the holders of such securities. Special Voting Units are attached to the Class B LP Units to which they relate and are not transferable separately from such Class B LP Units.

4. As at October 8, 2010, there were issued and outstanding 6,889,365 Units and 6,360,418 Special Voting Units. As at the date hereof, the Filer and its affiliates, together with the Insiders and Michael Edmonds, Robert Edmonds, 1257727 Alberta Ltd. (a company controlled by Russell Bilyk), Daniel Bostrom, Falynn Bostrom and Ryan Bilyk (collectively, the Excluded Parties) own or control 874,100 Units and 6,185,418 Class B LP Units representing approximately 13% of the currently outstanding Units and approximately 53% of the outstanding Units on a fully-diluted basis.

5. Drive Products Limited Partnership, a subsidiary of the Fund, is authorized to issue an unlimited number of Class B limited partnership units (the Class B LP Units). The Class B LP Units are indirectly exchangeable into Units on a one-for-one basis and are non-transferable, except in connection with an exchange for Units. As at October 8, 2010, there were issued and outstanding 6,360,418 Class B LP Units.

6. The Insiders, along with Christopher Boudreau, the Chief Financial Officer of the Operating Partnership, and Bradley Fleming, a Vice-President of the Operating Partnership, own or control all of the outstanding Class B LP Units.

7. On October 8, 2010, the Filer and the Fund entered into a support agreement (the Support Agreement) pursuant to which the Filer agreed to make the Offer to purchase all of the issued and outstanding Units, other than any Units owned and/or controlled, directly or indirectly, by the Filer, its affiliates, the Insiders, and the Excluded Parties and the Fund agreed to recommend that Unitholders accept the Offer. The Support Agreement also provides that the Offer shall remain open for acceptance for not less than 35 days following the mailing of the Circular. The Filer currently intends to take up and pay for Units deposited under the Offer on or before November 15, 2010.

8. The Filer's offer and take-over bid circular (the Circular), together with the related letter of transmittal and the related Trustees' Circular, was mailed to registered holders of Units (the Unitholders) and registered holders of Class B LP Units, respectively, on October 8, 2010.

9. Pursuant to the Circular;

i. the Filer has made an offer (the Offer), subject to certain terms and conditions as set out in the Circular, to purchase at a price of $2.50 cash per Unit all of the Units other than any Units owned directly or indirectly by the Filer, its affiliates, the Insiders and the Excluded Parties, including all Units issued or conditionally issued before the expiry of the Offer upon the exercise, conversion or exchange of Class B LP Units. The Offer is made only for Units, and not for any Class B LP Units;

ii. the Offer will be open for acceptance until 5:00 p.m. (Toronto time) on Friday, November 12, 2010, unless the Offer is extended or withdrawn;

iii. the Offer is conditional upon, among other things, there having been validly deposited under the Offer and not withdrawn at the expiry of the Offer (i) such number of Units which constitutes, together with the Units owned by the Filer, its affiliates, the Insiders and the Excluded Parties, at least 66 2/3% of the outstanding Voting Units and (ii) at least a majority of the Units, the votes attached to which would be included in the minority approval of a second step business combination under MI 61-101 (together, the Deposit Conditions);

iv. section 13.12 of the Declaration of Trust currently permits the Filer to acquire the Units held by Unitholders who do not accept the Offer (including a subsequent Unitholder who acquires such Units upon the conversion or exchange of Class B LP Units) (the Dissenting Unitholders) if, within 120 days after the date the Offer is made, the Offer is accepted by Unitholders who in aggregate hold at least 90% of the Units (on a fully-diluted basis, assuming the exchange of all Class B LP Units for Units), other than Units beneficially owned, or over which control or direction is exercised, on the date of the Offer, by the Filer. If the Filer has taken up and paid for the Units held by such accepting Unitholders, then the Filer is entitled to (i) acquire all the Units that are held by the Dissenting Unitholders on the terms on which the Filer acquired the Units of Unitholders who accepted the Offer and (ii) require the automatic exchange of Class B LP Units to Units and acquire such Units issued as a result of such automatic exchange on the same terms as the Units acquired pursuant to (i) above ((i) and (ii) above, collectively, a Compulsory Acquisition);

v. assuming the Deposit Conditions are met, the Filer currently intends to amend the provisions of Section 13.12 of the Declaration of Trust to provide that (i) a Compulsory Acquisition may be effected if, within 120 days after the date the Offer is made, the Offer is accepted by the holders of such number of Units which constitutes, together with the Units owned by the Filer, its affiliates, the Insiders and the Excluded Parties, at least 66 2/3% of the outstanding Voting Units, and (ii) if a Compulsory Acquisition is effected, Units held by Dissenting Unitholders will be deemed to have been transferred to the Filer immediately upon the sending of an Filer's notice (Filer's Notice) to Dissenting Unitholders (as opposed to upon the transfer by the Fund of the Units held by the Dissenting Unitholders to the Filer referred to above) and that the Dissenting Unitholders will cease to have any rights as Unitholders from and after that time, other than the right to be paid the consideration that the Filer would have paid to Dissenting Unitholders had they accepted the Offer. If the Filer elects to effect a Compulsory Acquisition, the Filer currently intends to send the Filer's Notice to Dissenting Unitholders immediately following the take-up of Units deposited under the Offer with the result that the Filer would acquire all of the Units at that time, other than any Units owned and/or controlled, directly or indirectly, by the Filer, its affiliates, the Insiders and the Excluded Parties. The Filer does not intend to send the Filer's Notice to any holders of Class B LP Units or require the automatic exchange of any Class B LP Units pursuant to a Compulsory Acquisition;

vi. assuming the Deposit Conditions are met, if the Filer takes up and pays for Units validly deposited under the Offer and the right of Compulsory Acquisition is not available to the Filer or the Filer chooses not to avail itself of such right, the Filer currently intends to take such action as is necessary or advisable to acquire all Units not acquired under the Offer (a Subsequent Acquisition Transaction). A Subsequent Acquisition Transaction may take the form of one or more amendments to the Declaration of Trust to provide for the redemption of all outstanding Units (other than any Units owned and/or controlled, directly or indirectly, by the Filer, its affiliates, the Insiders and the Excluded Parties) or the purchase of such Units by the Filer, in either case for a price equal to, and payable in the same form as, the consideration paid for Units taken up under the Offer. The timing and details of any Subsequent Acquisition Transaction will necessarily depend on a variety of factors, including the number of Units acquired under the Offer. The Filer does not intend to require the automatic exchange of any Class B LP Units pursuant to a Subsequent Acquisition Transaction; and

vii. in order to effect either a Compulsory Acquisition or a Subsequent Acquisition Transaction, in accordance with the foregoing, rather than seeking the approval of the holders of Voting Units (the Voting Unitholders) at a special meeting of Voting Unitholders to be called for such purpose, the Filer intends to rely on section 12.10 of the Declaration of Trust, which specifies that a written resolution circulated to all Unitholders and executed by Unitholders holding more than 66 2/3% of the votes attached to the outstanding Units required to vote in favour thereof at a meeting of Unitholders to approve that resolution, if such resolution is a special resolution, shall be as valid and binding for all purposes of the Declaration of Trust as if such Unitholders had exercised at that time all of their voting rights in favour of such resolution at a meeting of Unitholders duly called for that purpose, which written resolution (the Written Resolution) will approve, among other things, the Compulsory Acquisition and the Subsequent Acquisition Transaction.

10. Notwithstanding that section 12.10 of the Declaration of Trust permits certain actions of the Fund, including the Compulsory Acquisition and the Subsequent Acquisition Transaction, to be authorized by the Written Resolution, section 4.2 of MI 61-101 requires in certain circumstances that transactions, such as the Compulsory Acquisition and the Subsequent Acquisition Transaction, be approved at a meeting of Voting Unitholders called for such purpose and, in connection therewith, that an information circular containing certain prescribed disclosure be sent to Voting Unitholders.

11. Immediately upon completion of the Offer, it is intended that the Units held by the Insiders and the Excluded Parties and all of the outstanding Class B LP Units will be exchanged for Class B common shares of the Filer on a tax deferred basis under section 85(1) of the Income Tax Act (Canada).

12. The Filer intends, if permitted by applicable laws, to cause the Fund to: (a) apply to delist the Units from the TSX as soon as practicable after completion of the Offer and any Compulsory Acquisition or Subsequent Acquisition Transaction; and (b) cease to be a reporting issuer under the securities laws of each province and territory of Canada in which it is a reporting issuer.

13. Neither the Filer nor the Fund is in default of any requirement under applicable securities laws in any province or territory of Canada.

14. It is a condition of the Offer that minority approval (as contemplated in Part 8 of MI 61-101) shall have been obtained. Minority approval (as contemplated in Part 8 of MI 61-101) will be obtained by the Written Resolution rather than at a meeting of Voting Unitholders.

15. The Circular contains all the disclosure required by applicable securities laws, including the take-over bid provisions and form requirements of the Legislation and the provisions of MI61-101 relating to the disclosure required to be included in an information circular distributed in respect of an insider bid and a business combination under MI 61-101.

16. The Circular contains the text of the Written Resolution.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the MI 61-101 Exemption Sought is granted provided that minority approval (as contemplated in Part 8 of MI 61-101) shall have been obtained by the Written Resolution.