Cell-Loc Location Technologies Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from the requirement to include prospectus-level disclosure, including financial statements, in an information circular for an entity participating in a restructuring transaction -- The shareholders receiving the information circular will not gain or acquire any direct or indirect economic interest in the subject entity -- prospectus-level disclosure of the subject entity will not be relevant to the shareholders receiving the information circular in making a reasoned and informed decision regarding the restructuring transaction -- The business, directors and management of the resulting entity immediately following the completion of the restructuring transaction will be exactly the same as the reporting issuer's business, directors and management immediately before the completion of the transaction.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

Citation: Cell-Loc Location Technologies Inc., Re, 2011 ABASC 541

October 24, 2011

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CELL-LOC LOCATION TECHNOLOGIES INC.

(Current Cell-Loc or the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement under the Legislation to provide prospectus-level disclosure with respect to a private limited partnership (Private LP) proposed to be involved in a restructuring transaction (the Restructuring Transaction) with the Filer, including the financial statements of Private LP (the Financial Statements), required by Section 14.2 of Form 51-102F5 Information Circular (the Circular Form) pursuant to National Instrument 51-102 Continuous Disclosure Obligations in the management information circular (the Circular) to be prepared by the Filer and delivered to the holders (Current Cell-Loc Shareholders) of its common shares (Current Cell-Loc Common Shares) in connection with an annual and special meeting (the Current Cell-Loc Shareholder Meeting) of Current Cell-Loc Shareholders expected to be held in late November 2011 to consider the Restructuring Transaction (the Exemption Sought).

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

(a) the Alberta Securities Commission is the principal regulator for this application;

(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 British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

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

Representations

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

ENTITIES INVOLVED

Current Cell-Loc

1. Current Cell-Loc is a corporation incorporated under and governed by the provisions of the Business Corporations Act (Alberta) (ABCA).

2. The head office of Current Cell-Loc is located in Calgary, Alberta.

3. Current Cell-Loc is a reporting issuer under applicable securities legislation in each of the provinces of Canada. To its knowledge, Current Cell-Loc is not in default of securities legislation in any jurisdiction of Canada.

4. The Current Cell-Loc Common Shares are listed for trading on the TSX Venture Exchange under the trading symbol "XCT".

5. Current Cell-Loc currently has 35,968,247 Current Cell-Loc Common Shares outstanding.

6. Current Cell-Loc is engaged in an active business being the business of providing location technology services.

New Cell-Loc

7. Current Cell-Loc will incorporate a new company (New Cell-Loc) under the provisions of the ABCA pursuant to the Restructuring Transaction for the purpose of participating in the Restructuring Transaction.

8. At the effective time of the Restructuring Transaction but prior to the completion of any transactions contemplated by the Restructuring Transaction:

(a) the head office of New Cell-Loc will be located in Calgary, Alberta;

(b) no shares of New Cell-Loc shall have been issued;

(c) New Cell-Loc will not be, or have been, a reporting issuer under applicable securities legislation in any jurisdiction;

(d) no securities of New Cell-Loc will be, or have been, listed or posted for trading on any exchange or quotation and trade reporting system; and

(e) New Cell-Loc will not have carried on any business and will have no assets, liabilities or business.

Private Profitco

9. "Private Profitco" is a private corporation incorporated under and governed by the provisions of the ABCA.

10. The head office of Private Profitco is located in Calgary, Alberta.

11. Private Profitco is not a reporting issuer under applicable securities legislation in any jurisdiction.

12. No securities of Private Profitco are listed or posted for trading on any exchange or quotation and trade reporting system.

13. The only material asset of Private Profitco is its ownership of 100% of the outstanding limited partnership interest in Private LP.

Private LP

14. Private LP is a private limited partnership established pursuant to the Partnership Act (Alberta).

15. Private LP's sole limited partner is Private Profitco.

16. Private LP's sole general partner is a wholly-owned corporate subsidiary of Private Profitco.

17. The head office of the general partner of Private LP is located in Calgary, Alberta.

18. Private LP is not a reporting issuer under applicable securities legislation in any jurisdiction.

19. No securities of Private LP are listed or posted for trading on any exchange or quotation and trade reporting system.

20. Private LP is engaged in an active business.

RESTRUCTURING TRANSACTION

21. On 4 October 2011, Current Cell-Loc entered into an arm's length definitive arrangement agreement with Private Profitco (the Arrangement Agreement), which provides that the Restructuring Transaction be completed by way of a plan of arrangement under section 193(4) of the ABCA.

22. Pursuant to the Restructuring Transaction:

New Cell-Loc Creation

(a) Current Cell-Loc will transfer substantially all of its assets and all of its liabilities to New Cell-Loc; and

(b) the Current Cell-Loc Shareholders will receive New Cell-Loc common shares (New Cell-Loc Common Shares) on a pro rata basis consistent with their relative percentage holdings of Current Cell-Loc Common Shares immediately prior to giving effect to the Restructuring Transaction.

Current Cell-Loc Share Capital Structure Revision

(c) the share capital structure of Current Cell-Loc will be amended to create four (4) different classes of shares as follows:

(i) Class A common shares (with the Current Cell-Loc Common Shares being converted into Class A common shares);

(ii) Class B voting non-participating common shares (Skinny Common Shares);

(iii) Class C non-voting participating convertible common shares; and

(iv) Class D retractable non-voting preferred shares.

(d) the Current Cell-Loc Class A common shares held by the post-share capital structure revision Current Cell-Loc Shareholders will be converted into Skinny Common Shares; and

(e) the Skinny Common Shares will then be consolidated so that they are held by 15 or fewer Current Cell-Loc Shareholders.

Transaction with Private Profitco

(f) Private Profitco will subscribe for Class C non-voting participating convertible common shares of Current Cell-Loc for gross subscription proceeds of $1,190,000 (before expenses currently estimated to be approximately $290,000);

(g) the subscription proceeds referred to in subparagraph 22(f) above will be indirectly transferred to New Cell-Loc (i.e. Private Profitco will effectively indirectly provide $1,190,000 before expenses currently estimated to be approximately $290,000, in non-dilutive capital to New Cell-Loc); and

(h) the only material asset of Private Profitco is its ownership of 100% of the outstanding limited partnership units in Private LP of which, following completion of the Restructuring Transaction, Private Profitco will transfer all of such limited partnership units (being a 99.99% interest in Private LP) to Current Cell-Loc in exchange for a number of Skinny Common Shares to acquire approximately 49% of the voting shares of Current Cell-Loc) and additional Class C non-voting participating convertible common shares of Current Cell-Loc.

23. Upon completion of the Restructuring Transaction and the post-plan of arrangement transactions referred to in subparagraph 22(h) above:

New Cell-Loc

(a) New Cell-Loc will conduct the same business formerly conducted by Current Cell-Loc, with the same assets and liabilities of Current Cell-Loc;

(b) New Cell-Loc will not have access to the benefit of Current Cell-Loc's tax pools;

(c) New Cell-Loc will have the same shareholders that Current Cell-Loc formerly had, each with the same relative percentage shareholdings that they formerly held in Current Cell-Loc;

(d) New Cell-Loc will be a reporting issuer or the equivalent thereof under the securities legislation of each of the provinces of Canada and the New Cell-Loc Common Shares will, subject to approval by the TSX Venture Exchange, be listed on the TSX Venture Exchange; and

(e) New Cell-Loc will have received a gross cash infusion, before expenses estimated at approximately $290,000, of $1,190,000

Current Cell-Loc

(f) Current Cell-Loc will hold a 99.99% partnership interest in Private LP;

(g) the 15 or fewer post-consolidation Current Cell-Loc Shareholders will hold approximately 51% of Current Cell-Loc's Skinny Common Shares and, therefore, maintain voting control of Current Cell-Loc (but will have no economic interest in Current Cell-Loc);

(h) Private Profitco will hold:

(i) approximately 49% of Current Cell-Loc's Skinny Common Shares;

(ii) 100% of Current Cell-Loc's Class C non-voting participating convertible common shares which will entitle it to 100% of the economic upside of Current Cell-Loc via Private LP; and

(iii) Current Cell-Loc will continue to have access to 100% of the benefit of certain of Current Cell-Loc's tax pools; and

(i) the Current Cell-Loc Common Shares will be de-listed from the TSX Venture Exchange and Current Cell-Loc will apply to the applicable securities regulatory authorities to cease to be a reporting issuer or the equivalent thereof under the securities legislation of each of the provinces of Canada.

24. Pursuant to the Arrangement Agreement, Current Cell-Loc and New Cell-Loc will enter into a divestiture agreement whereby New Cell-Loc will (a) acquire all of the assets of Current Cell-Loc; and (b) assume all of the liabilities and obligations of Current Cell-Loc accrued prior to the effective time of the Restructuring Transaction.

25. Pursuant to the Arrangement Agreement, Current Cell-Loc and New Cell-Loc will enter into an indemnity agreement (the Indemnity Agreement). The Indemnity Agreement will be designed to provide Current Cell-Loc with indemnification from New Cell-Loc, the resulting entity that will carry on the business previously carried on by Current Cell-Loc, for claims relating to the business of Current Cell-Loc carried on prior to the effective date of the Restructuring Transaction and relating to New Cell-Loc's business after the effective date of the Restructuring Transaction that are brought against Current Cell-Loc in the future, subject to certain limitations and conditions.

26. Pursuant to the ABCA and applicable securities laws, the Current Cell-Loc Shareholders are required to approve the Restructuring Transaction at the Current Cell-Loc Shareholder Meeting. The Current Cell-Loc Shareholder Meeting is anticipated to take place in late November 2011 and the Circular is expected to be mailed in late October 2011, subject to receipt of the Exemption Sought.

PROSPECTUS-LEVEL DISCLOSURE IN THE CIRCULAR

27. With respect to the Restructuring Transaction, Section 14.2 of the Circular Form requires, among other items, that the Circular contain the disclosure (including financial statements) for Private LP prescribed under securities legislation and described in the form of prospectus (the Prospectus Form)) that Private LP would be eligible to use immediately prior to the sending and filing of the Circular for a distribution of its securities.

28. In addition, Subsection 4.2(1) of National Instrument 41-101 General Prospectus Requirements (NI 41-101) requires that financial statements (other than interim financial statements) required to be included in the Circular must be audited in accordance with National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency.

29. Other than prospectus-level disclosure in respect of Private LP required by the Prospectus Form, which would include audited Financial Statements, the Circular will contain disclosure in accordance with the Circular Form, including Sections 14.1 and 14.2 of the Circular Form in particular. Such disclosure will include or incorporate by reference, among other things, financial statement disclosure in respect of Current Cell-Loc in compliance with NI 41-101.

30. The Filer will include in the Circular, in lieu of the historical and pro forma financial statements of Private LP required pursuant to section 14.2 of the Circular Form, the unaudited pro forma consolidated balance sheet of Current Cell-Loc as at the date of the most recent balance sheet to be incorporated by reference in the Circular which will give effect to the Restructuring Transaction as if it had taken place as at such date, with subsequent events and pro forma adjustments.

31. The Circular will otherwise comply with applicable securities laws and will contain disclosure regarding Current Cell-Loc's tax pools and how the tax position of New Cell-Loc following the completion of the Restructuring Transaction will differ from the tax position of Current Cell-Loc prior to the completion of the Restructuring Transaction.

32. The Circular will contain disclosure regarding the Indemnity Agreement including disclosure on the indemnities of Current Cell-Loc and New Cell-Loc to be provided pursuant to that agreement as well as the risks related to such indemnities.

33. Including the disclosure detailed in sections 29, 30, 31 and 32 above, the Circular will, in accordance with Section 14.1 of the Circular Form, provide Current Cell-Loc Shareholders with all other material information in sufficient detail to enable a reasoned judgment concerning the Restructuring Transaction, including ensuring that Current Cell-Loc Shareholders understand that following the completion of the Restructuring Transaction (i) New Cell-Loc will have all of the assets and liabilities of Current Cell-Loc prior to giving effect to the Restructuring Transaction and (ii) the Current Cell-Loc Shareholders holding Skinny Common Shares will not have any economic interest in Current Cell-Loc.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.

"Blaine Young"

Associate Director, Corporate Finance