Pulse Data Inc. and Request Income Trust - MRRS Decision

Headnote

MutualReliance Review System for Exemptive Relief Applications - relieffrom requirement to provide identical consideration to permitthe offeror under securities exchange take-over bid to sellshares that would otherwise go to U.S. residents and remit thecash proceeds to them - relief from requirement to provide threeyears of audited financial statements of offeror in take-overbid circular as offeror commenced the applicable activitiesless than three years prior - relief from the requirement toprovide financial statements of acquired businesses in take-overbid circular as the vendors were not under an obligation toprovide them.

ApplicableOntario Statutory Provisions

SecuritiesAct, R.S.O. 1990, c.S.5, as am., sections 97, 98 and 104(2)(c)

Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.,Form 32.

ApplicableOntario Rule

OntarioSecurities Commission Rule 41-501 General Prospectus Rule

INTHE MATTER OF

THESECURITIES LEGISLATION

OFBRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA

ONTARIO,QUEBEC, NOVA SCOTIA, NEW BRUNSWICK,

ANDNEWFOUNDLAND

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM

FOREXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF

PULSEDATA INC.

AND

INTHE MATTER OF

REQUESTINCOME TRUST

MRRSDECISION DOCUMENT

1.WHEREAS the local securities regulatory authorityor regulator (the "Decision Maker") in each of British Columbia,Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia,New Brunswick and Newfoundland (the "Jurisdictions") has receivedan application from Pulse Data Inc. ("Pulse") for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that, in connection with Pulse's offer (the "Offer") to acquireall of the issued and outstanding units (the "Units") of ReQuestIncome Trust ("ReQuest"):

1.1 the requirement contained in the Legislation to offer allholders of the same class of securities identical consideration(the"Identical Consideration Requirement") shall not apply to U.S.Unitholders (as defined below) who receive the cash proceedsfrom the sale of ReQuest Units in accordance with the procedurein paragraph 3.19 below; and

1.2 the requirement to include audited statements of income,retained earnings and cash flows for each of the three mostrecently completed financial years of Pulse (the "Issuer FinancialStatement Requirement") in the take-over bid circular of Pulseshall not apply to the Offer; and

1.3 the requirement to include financial statements requiredpursuant to Parts 4 and 6 of Ontario Rule 41-501 ("NI 41-501")(the "Acquired Business Financial Statement Requirement") inthe take-over bid circular for a business acquired by Pulseshall not apply to the Offer.

2.AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the Alberta Securities Commission is the principal regulatorfor this application;

3.AND WHEREAS the Applicant has represented tothe Decision Makers that:

3.1 Pulse is a corporation organized under the Canada BusinessCorporations Act (the "CBCA") specializing in the development,marketing, acquisition and subsequent licensing of non-exclusiveseismic data in western Canada to the oil and gas industry.Its head office is in Calgary, Alberta;

3.2 Pulse was originally incorporated pursuant to the CBCA as144020 Canada Ltd. on August 26, 1985. Prior to October 1,1998, Pulse was involved in the business of exploration anddevelopment of mining claims;

3.3 pursuant to a Plan of Arrangement effective October 1, 1998(the "Augusta Plan of Arrangement"), the then existing liabilities,assets and mineral properties held by the Pulse, then knownas Augusta Gold Corporation, were transferred to and assumedby another corporation;

3.4 on October 13, 1999, Pulse acquired a 50% undivided interestin certain 2D seismic data (the "Pulse Seismic Data Purchase").In addition, as part of the Pulse Seismic Data Purchase, thePulse purchased certain intellectual property and other seismicrelated assets. In conjunction with this acquisition, all ofthe officers and most of the directors of Pulse were replaced;

3.5 subsequent to the completion of the Augusta Plan of Arrangementand prior to the completion of the purchase of seismic datapursuant to the Pulse Seismic Data Purchase, Pulse did not carryon active business and did not own any material assets otherthan cash;

3.6 the authorized share capital of Pulse consists of an unlimitednumber of common shares (the "Common Shares") and an unlimitednumber of preferred shares, issuable in series, of which, asof December 5, 2001, 17,297,686 Common Shares and no preferredshares were issued and outstanding;

3.7 the Common Shares of Pulse are listed and posted for tradingon The Toronto Stock Exchange (the "TSE");

3.8 Pulse is a reporting issuer or the equivalent in the provincesof Alberta, British Columbia, Saskatchewan, Manitoba, Ontarioand Quebec and is not in default of any requirement of the Legislation;

3.9 ReQuest is an open-ended mutual fund trust governed by thelaws of the Province of Alberta. ReQuest was created on February 5,2001 pursuant to a Declaration of Trust (the "Declaration ofTrust"). Its head office is in Calgary, Alberta;

3.10 the authorized capital of ReQuest consists of classes ofUnits and "special voting units" of which, as of December 5,2001, 10,984,846 Units and no "special voting units" were issuedand outstanding;

3.11 the Units are listed and posted for trading on the TSEunder the symbol "RSH.UN";

3.12 ReQuest is a reporting issuer, or the equivalent, in eachprovince of Canada;

3.13 effective November 25, 2001, Pulse, ReQuest, Request SeismicSurveys Ltd., a wholly owned subsidiary of ReQuest, and ReQuestManagement Inc. (the manager of ReQuest) entered into a pre-acquisitionagreement pursuant to which Pulse will make the Offer on orabout December 24, 2001 by way of formal take-over bid underthe Legislation;

3.14 under the proposed terms of the Offer, the holders of ReQuestUnits will be entitled to 2.1 Common Shares of Pulse for eachUnit;

3.15 the Common Shares will not be registered or otherwise qualifiedfor distribution in the United States. Accordingly, withoutfurther action by Pulse, the delivery of Pulse Common Shareswould constitute a violation of the laws of the United States;

3.16 to the knowledge of senior management of Pulse, as of December5, 2001, there were ten beneficial holders resident in the UnitedStates holding an aggregate of 1,101,750 of the outstandingReQuest Units;

3.17 9.75% of the outstanding ReQuest Units are held by Chaney& Partners IV L.P., ("Chaney") a limited partnership residentin the United States. Pulse has been advised that Chaney isan accredited investor under the securities laws of the UnitedStates. As such, the issuance of Pulse Common Shares to Chaneyunder the Offer will be exempt from the registration requirementsof the securities laws of the United States.

3.18 to the knowledge of senior management of Pulse, as of December5, 2001, the maximum percentage of the outstanding ReQuest Unitsheld by residents of the United States other than Chaney (the"U.S. Unitholders"), was not more than 1% of the outstandingReQuest Units;

3.19 Pulse proposes to deal with any Common Shares issuableto U.S. Unitholders under the Offer in the following manner:

3.19.1 the total number of Common Shares issuable to U.S. Shareholdersfor which appropriate exemptions from the registration requirementsof the U.S. Securities Act are not available to the Applicantshall be delivered to the depositary of Pulse under the Offer(the "Depositary");

3.19.2 the Depositary will then pool and sell such Common Shareson the TSE on behalf of the U.S. Unitholders in a manner thatis intended to minimize any adverse effect on the market priceof Pulse Common Shares;

3.19.3 as soon as possible following completion of such sale,the Depositary will provide the U.S. Unitholders with theirrespective share of the proceeds of the sale, less any commissionsand withholding taxes;

3.20 the Legislation requires that Pulse include in its take-overbid circular

3.20.1 audited statements of income, retained earnings and cashflows of Pulse for each of the three most recently completedfinancial years of Pulse (the "Issuer Financial Statement Requirement"),being the years ended December 31, 2000, 1999 and 1998;and

3.20.2 certain financial statements pertaining to the businessacquired by the Applicant pursuant to the Pulse Seismic DataPurchase (the "Acquired Business Financial Statement Requirement")

3.21 the audited financial statements of Pulse for the financialyear ended December 31, 1998 was a period in which Pulsewas not operating its current seismic data business and thereforesuch financial statements are misleading and immaterial to anypotential investors in Pulse's Common Shares;

3.22 Pulse will include in the Circular

3.22.1 the audited financial statements of Pulse for each ofthe two most recently completed financial years of the Applicant,being the years ended December 31, 2000 and 1999, and

3.22.2 consolidated unaudited financial statements of Pulsefor the nine month periods ended September 30, 2001 and September30, 2000;

3.23 Pulse acquired the assets under the Pulse Seismic DataPurchase from six vendors. Because of the manner in which therevenues and costs from the assets acquired in the Pulse SeismicData Purchase was accounted for by each vendor, financial statementscannot be prepared. Further, four of the six vendors are nolonger involved in the operation of such seismic data, haveno requirement to disclose their records for analysis and haverefused to disclose such records.

3.24 the financial statements required to be included in theCircular under the Acquired Business Financial Statement Requirementare not available for inclusion in the Circular;

3.25 relief from both the Issuer Financial Statement Requirementand the Acquired Business Financial Statement Requirement wasprovided to Pulse by the Decision Maker in each of British Columbia,Alberta, Saskatchewan, Manitoba and Ontario in connection witha long-form prospectus of the Applicant for which a receiptwas issued on November 2, 2000 (the "Prospectus");

3.26 in the Prospectus, Pulse included disclosure in a sectiontitled "Selected Revenue Information" which included unauditedfinancial information with respect to certain license revenuefor Pulse for the six months ended June 30, 2000 and for theyears ended December 31, 1999, 1998 and 1997 as an alternativeto the Acquired Business Financial Statement Requirement;

3.27 except to the extent that relief is granted to Pulse inthe MRRS Decision Document, the Offer is being made in compliancewith the requirements under the Legislation concerning take-overbids;

4.AND WHEREAS under the System, this MRRS DecisionDocument evidences the decision of each Decision Maker (collectively,the "Decision");

5.AND WHEREAS each of the Decision Makers issatisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decisionhas been met;

6.AND WHEREAS the Decision of the Decision Makersunder the Legislation is that, in connection with the Offer:

6.1 Pulse is exempt from the Identical Consideration Requirementinsofar as U.S. Unitholders who accept the Offer will receivecash proceeds from the Depositary's sale of Pulse Common Sharesin accordance with the procedure set out in paragraph 3.19 insteadof Pulse Common Shares;

6.2 Pulse is exempt from the Issuer Financial Statement Requirementprovided that the Pulse includes in the Circular to be sentto ReQuest Unitholders the audited financial statements of Pulsereferred to in paragraph 3.22; and

6.3 Pulse is exempt from the Acquired Business Financial StatementRequirement for the Pulse Seismic Data Purchase provided thatPulse includes in the Circular to be sent to the ReQuest Unitholders,disclosure substantially similar to that included in the Prospectusreferred to in paragraph 3.26.

December21, 2001.

"GlendaA. Campbell, Vice-Chair"       "John W. Cranston,Member"