VGS Seismic Canada Inc. - MRRS Decision

Headnote

Mutual Reliance Review System for Applications -- Related party transaction -- amendment to existing credit facility provided by a related party -- issuer has disclosed details of the transaction in a press release and in a material change report -- amendments were negotiated and approved by an independent committee of the board -- outside shareholders who intend to provide written consents to the transaction own more than 74% of the shares held by all minority shareholders, approval of the transaction by majority of minority shareholders at a shareholders' meeting would be foregone conclusion -- issuer will post information circular on SEDAR, send a copy to all outside shareholders considering the transaction and send a copy to any shareholder who requests it -- exemption from shareholders' meeting and information circular requirements granted provided written consent is obtained.

Rule Cited

Rule 61-501 -- Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions, ss. 5.4, 9.1.

December 28, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO AND QUEBEC

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

VGS SEISMIC CANADA INC.

(the "Filer")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirements of the Legislation that:

(a) the Amendments (as defined below) be approved at a meeting of the shareholders of the Filer; and

(b) an information circular be sent to shareholders of the Filer in connection with the Amendments,

be waived (the "Requested Relief").

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

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 Filer:

1. The Filer is a corporation existing under the Canada Business Corporation Act and conducts a seismic database business in western Canada.

2. The Filer is a reporting issuer in each of the Provinces of Canada and is not in default under the securities legislation of any of the jurisdictions.

3. The authorized capital of the Filer consists of an unlimited number of each of Class A Common Shares (the "Class A Shares"), Class B Non-Voting Common Shares (the "Class B Shares"), Non-Voting Preferred Shares and Class A Non-Voting Preferred Shares, of which 25,940,986 Class A Shares and 5,380,785 Class B Shares are outstanding. The Class A Shares are listed on the TSX Venture Exchange.

4. Plainfield Special Situation Master Fund Limited, which is an affiliate of Plainfield Offshore Holdings VI Inc. ("Plainfield"), owns greater than 10% of the outstanding Class A Shares and an executive of an affiliate of Plainfield is a member of the board of directors of the Filer.

5. In early December 2006, Plainfield extended a credit facility to the Filer (the "Credit Facility"). The Credit Facility includes a convertible debenture which, if fully converted, and warrants, which is fully exercised, would together increase the Class A Shares held by Plainfield and its affiliates to approximately 44% of the Class A Shares, on a fully diluted basis.

6. The Filer and Plainfield have negotiated certain amendments to the Credit Facility to ensure that funds are available to the Filer to conduct its operation in the winter 2007-2008 seismic acquisition season (the "Amendments").

7. The terms of the Amendments were negotiated by a special committee of the board of directors of the Filer which exclude those members of the board who are a member of management or a representative of Plainfield.

8. The special committee considered the Amendments and recommended the approval of the Amendments. In connection with its consideration, the special committee received advice from an independent financial advisor. On receipt of the recommendation of the special committee, the board of directors of the Filer considered and approved the Amendments.

9. Implementation of the Amendments is subject to the certain number of conditions, including, without limitation, the approval of applicable regulatory authorities and approval of a majority of the minority shareholders of the Filer.

10. Plainfield is a "related party" of the Filer pursuant to the Legislation because its affiliate owns 10% or more of the outstanding Class A Shares and consequently implementation of the Amendments is a "related party transaction" under OSC Rule 61-501 Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions ("Rule 61-501") and Autorité des marchés financiers du Québec ("AMF") Regulation Q-27 Respecting Protection of Minority Shareholders in the Course of Certain Transactions ("Regulation Q-27").

11. Implementation of the Amendments is exempt from the valuation requirement of Rule 61-501 pursuant to item 3 of section 5.5 of Rule 61-501. By separate application to the AMF, the Filer is seeking an exemption from the valuation requirements of Regulation Q-27.

12. On November 20, 2007, the Filer issued a press release disclosing the details of the Amendments and filed a material change report regarding the Amendments. The Filer has prepared the form of consent (the "Consent") and attached circular to be sent to shareholders of the Filer in connection with seeking their approval of the Amendments. The circular (the "Circular") includes the applicable disclosure required by Form 33 of the Regulation made under the Securities Act (Ontario) and Schedule XIV of the Regulation concerning Securities (Quebec).

13. To effect the Amendments, the Filer will obtain minority approval, as that term is defined in the Legislation, calculated in accordance with the terms of section 8.2 of Rule 61-501, and section 8.2 of Regulation Q-27 (the "Minority Approval"), albeit not at a meeting of shareholders, but by written consent.

14. Each shareholder who is considering approval of the Amendment will receive a copy of the Consent and Circular. The Circular will also be posted on SEDAR and will be sent to any shareholder who requests a copy.

15. The Consent will provide relevant details of the Amendments and include an acknowledgment that the Circular describes the Amendments in sufficient detail to allow shareholders to make an informed decision.

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 its decision has been met.

The Decision of the Decision Makers under the Legislation is that Requested Relief is granted provided that Minority Approval shall have been obtained by written consent.