ARRANGEMENT AGREEMENT
81
THIS ARRANGEMENT AGREEMENT dated as of the __2__ day of November, 2009.
BETWEEN:
ARRIS RESOURCES INC., a corporation existing under the laws of British
Columbia, with a head office at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx X0X 0X0
("Arris")
AND:
CLI Resources Inc., a corporation existing under the laws of British Columbia,
with a head office at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
("CLI")
AND:
QMI Seismic Inc., a corporation existing under the laws of British Columbia,
with a head office at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
("QMI")
AND:
ARRIS Holdings Inc., a corporation existing under the laws of British
Columbia, with a head office at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx X0X 0X0
("AHI")
WHEREAS:
X.
Xxxxx and CLI, QMI and AHI have agreed to proceed with a corporate restructuring by way of a statutory
plan of arrangement pursuant to which:
(i)
the Assets will be transferred to CLI, QMI and AHI in exchange for common shares of CLI and
QMI;
(ii)
Arris will reorganize its capital; and
(iii)
Arris will distribute the common shares of CLI, QMI and AHI which it receives in exchange for
the Assets to the Arris Shareholders;
X.
Xxxxx proposes to convene a meeting of the Arris Shareholders to consider the Arrangement pursuant to the
Arrangement Provisions of the BCBCA, on the terms and conditions set forth in the Plan of Arrangement attached
as Exhibit II hereto; and
C.
Each of the parties to this Agreement has agreed to participate in and support the Arrangement.
82
NOW THEREFORE, in consideration of the promises and the respective covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION AND EXHIBITS
1.1
Definitions: In this Agreement, including the recitals hereto, unless there is something in the subject matter
or context inconsistent therewith, the following capitalized words and terms shall have the following meanings:
(a)
"Agreement" means this agreement including the exhibits attached hereto as same may be
amended or restated from time to time;
(b)
"Arrangement" means the arrangement pursuant to the Arrangement Provisions of the BCBCA as
contemplated by the provisions of this Agreement and the Plan of Arrangement;
(c)
"Arrangement Provisions" means Division 5 – "Arrangements" of Part 9 – "Company
Alterations" of the BCBCA;
(d)
"Arris Class A Shares" means the renamed and redesignated Arris Shares as described in
§3.1(b)(i) of the Plan of Arrangement;
(e)
"Arris Class A Preferred Shares" means the Class "A" preferred shares without par value which
Arris will create and issue pursuant to §3.1(b)(iii) of the Plan of Arrangement;
(f)
"Arris Meeting" means the special meeting of the Arris Shareholders to be held on November
24th, 2009, and any adjournment(s) or postponement(s) thereof, to consider, among other things,
and if deemed advisable approve, the Arrangement;
(g)
"Arris Options" means share purchase options issued pursuant to the Arris Stock Option Plan
which are outstanding on the Effective Date;
(h)
"Arris Share Commitments" means an obligation of Arris to issue New Shares and to deliver
CLI, QMI or AHI Shares to the holders of Arris Options and Arris Warrants which are outstanding
on the Effective Date, upon the exercise of such stock options and warrants;
(i)
"Arris Shareholder" has the meaning ascribed to such term in §3.3 of the Plan of Arrangement;
(j)
"Arris Shares" means the common shares without par value in the authorized share structure of
Arris, as constituted on the date hereof;
(k)
"Arris Stock Option Plan" means the Stock Option Plan of Arris dated May 21, 2008;
(l)
"Arris Warrants" means share purchase warrants of Arris which are outstanding on the Effective
Date;
(m)
"Assets" means the assets of Arris to be transferred to CLI, QMI and AHI pursuant to the
Arrangement as described in further detail in Exhibit I hereto;
(n)
"BCBCA" means the Business Corporations Act (British Columbia), S.B.C. 2002, c.57, as may be
amended or replaced from time to time.
(o)
"Business Day" means a day which is not a Saturday, Sunday or statutory holiday in Vancouver,
(p)
"Closing Date" means the date on which the CLI, QMI and AHI Shares are listed on the CNSX;
83
(q)
"Court" means the Supreme Court of British Columbia;
(r)
"CNSX" means the Canadian National Stock Exchange;
(s)
"Effective Date" shall be the Closing Date;
(t)
"Exchange Factor" means the number arrived at by dividing 17,583,372 by the number of issued
Arris Shares as of the Share Distribution Record Date;
(u)
"Final Order" means the final order of the Court approving the Arrangement;
(v)
"CLI, QMI and AHI Commitment" means the covenant of CLI, QMI and AHI described in §4.4
whereby CLI or QMI or AHI is obligated to issue CLI or QMI or AHI Shares to the holders of
Arris Share Commitments who exercise their rights thereunder after the Effective Date, and who
are entitled pursuant to the corporate reorganization terms thereof to receive New Shares and CLI,
QMI and AHI Shares upon such exercise;
(w)
"CLI, QMI and AHI Shareholders" means the shareholders of the CLI, QMI and AHI Shares;
(x)
"CLI, QMI and AHI Shares" means the common shares without par value in the authorized
share structure of CLI, QMI and AHI as constituted on the date hereof;
(y)
"Information Circular" means the management information circular of Arris to be sent to the
Arris Shareholders in connection with the Arris Meeting;
(z)
"Interim Order" means the interim order of the Court providing advice and directions in
connection with the Arris Meeting and the Arrangement;
(aa)
"Listing Date" means the date the CLI, QMI and AHI Shares are listed on the CNSX;
(bb)
"New Shares" means the new class of common shares without par value which Arris will create
pursuant to §3.1(b)(ii) of the Plan of Arrangement and which, immediately after the Effective
Date, will be identical in every relevant respect to the Arris Shares;
(cc)
"Person" means and includes an individual, sole proprietorship, partnership, unincorporated
association, unincorporated syndicate, unincorporated organization, trust, body corporate, a
trustee, executor, administrator or other legal representative and the Crown or any agency or
instrumentality thereof;
(dd)
"Plan of Arrangement" means the plan of arrangement attached to this Agreement as Exhibit II,
as amended or restated from time to time;
(ee)
"Registrar" means the Registrar of Companies under the BCBCA; and
(ff)
"Share Distribution Record Date" means the close of business on the day which is four Business
Days after the date of the Arris Meeting or such other date as approved by Arris, and CLI, and
QMI, and AHI, which date establishes the Arris Shareholders who will be entitled to receive CLI
QMI and AHI Shares pursuant to the Plan of Arrangement.
1.2
Currency: All amounts of money which are referred to in this Agreement are expressed in lawful money of
Canada unless otherwise specified.
1.3
Interpretation Not Affected by Headings: The division of this Agreement into articles, sections,
subsections, paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of the provisions of this Agreement. The terms "this Agreement",
"hereof", "herein", "hereunder" and similar expressions refer to this Agreement and the exhibits hereto as a whole
and not to any particular article, section, subsection, paragraph or subparagraph hereof and include any agreement or
instrument supplementary or ancillary hereto.
84
1.4
Number and Gender: In this Agreement, unless the context otherwise requires, words importing the
singular shall include the plural and vice versa and words importing the use of either gender shall include both
genders and neuter, and words importing a person shall include a partnership or corporation.
1.5
Date for any Action: In the event that any date on which any action is required to be taken hereunder by
Arris or CLI or QMI or AHI is not a Business Day, such action shall be required to be taken on the next succeeding
day which is a Business Day.
1.6
Meaning: Words and phrases used herein (and not otherwise defined) and defined in the BCBCA shall
have the same meaning herein as in the BCBCA unless the context otherwise requires.
1.7
Exhibits: Attached hereto and deemed to be incorporated into and forming part of this Agreement is
Exhibit 1, being a description of the Assets, Exhibit II, being the Plan of Arrangement and Exhibit III, being the
special rights and restrictions for the Arris Class A Preferred Shares.
ARTICLE 2
ARRANGEMENT
2.1
Arrangement: The parties agree to effect the Arrangement pursuant to the Arrangement Provisions on the
terms and subject to the conditions contained in this Agreement and the Plan of Arrangement.
2.2
Effective Date of Arrangement: The Arrangement shall become effective on the Effective Date as set out
in the Plan of Arrangement.
2.3
Filing of Final Material with the Registrar: Subject to the rights of termination contained in Article 6
hereof, upon the Arris Shareholders approving the Arrangement by special resolution in accordance with the
provisions of the Interim Order and the BCBCA, Arris obtaining the Final Order and the other conditions contained
in Article 5 hereof being complied with or waived, Arris on its behalf and on behalf of CLI, QMI and AHI shall file
the records and information required by the Registrar pursuant to the Arrangement Provisions in order to effect the
Arrangement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties: Each of the parties hereby represents and warrants to the other that:
(a)
it is a corporation duly incorporated and validly subsisting under the laws of its jurisdiction of
existence and has full capacity and authority to enter into this Agreement and to perform its
covenants and obligations hereunder;
(b)
it has taken all corporate actions necessary to authorize the execution and delivery of this
Agreement and this Agreement has been duly executed and delivered by it;
(c)
neither the execution and delivery of this Agreement nor the performance of any of its covenants
and obligations hereunder will constitute a material default under, or be in any material
contravention or breach of: (i) any provision of its constating or governing corporate documents,
(ii) any judgment, decree, order, law, statute, rule or regulation applicable to it or (iii) any
agreement or instrument to which it is a party or by which it is bound; and
(d)
no dissolution, winding up, bankruptcy, liquidation or similar proceedings have been commenced
or are pending or proposed in respect of it.
ARTICLE 4
COVENANTS
4.1
Commitment to Effect: Subject to termination of this Agreement pursuant to Article 6, the parties shall
each use all reasonable efforts and do all things reasonably required to cause the Plan of Arrangement to become
85
effective as soon as possible after approval of the Arrangement by the Arris Shareholders at the Arris Meeting, or by
such other date as Arris and CLI, QMI and AHI may determine, and in conjunction therewith to cause the conditions
described in §5.1 to be complied with or waived, as the case may be, prior to the Effective Date.
4.2
Obligation to Execute Documents: Each of the parties' covenants with the other that it will do and
perform all such acts and things, and execute and deliver all such agreements, assurances, notices and other
documents and instruments, as may reasonably be required to facilitate the carrying out of the intent and purpose of
this Agreement.
4.3
Giving Effect to the Arrangement: The Arrangement shall be effected as follows:
(a)
the parties shall proceed forthwith to apply for the Interim Order providing for, among other
things, the calling and holding of the Arris Meeting for the purpose of, among other things,
considering and, if deemed advisable, approving and adopting the Arrangement;
(b)
the CLI, QMI and AHI Shareholder(s) shall approve the Arrangement by a consent resolution;
(c)
upon obtaining the Interim Order, Arris shall call the Arris Meeting and mail the Information
Circular and related notice of meeting and form of proxy to the Arris Shareholders;
(d)
if the Arris Shareholders approve the Arrangement as set out in §5.1(b) hereof, Arris shall
thereafter (subject to the exercise of any discretionary authority granted to Arris' directors by the
Arris Shareholders) take the necessary actions to submit the Arrangement to the Court for
approval and grant of the Final Order; and
(e)
upon receipt of the Final Order, Arris shall, subject to compliance with any of the other conditions
provided for in Article 5 hereof and to the rights of termination contained in Article 6 hereof, file
the material described in §2.3 with the Registrar in accordance with the terms of the Plan of
Arrangement.
4.4
Arris Stock Options and Warrants: CLI, QMI and AHI covenants and agrees, upon the exercise after the
Effective Date of any Arris Share Commitments, to issue to the holder of the Arris Share Commitments that number
of CLI, QMI and AHI Shares that is equal to the number of New Shares acquired upon the exercise of the Arris
Share Commitments multiplied by the Exchange Factor, and Arris covenants and agrees to act as agent for CLI,
QMI and AHI to collect and pay to CLI, QMI and AHI a portion of the proceeds received for each Arris Share
Commitment so exercised, with the balance of the exercise price to be retained by Arris determined in accordance
with the following formula:
A = B x C/D
Where:
A
is the portion of the proceeds to be received by CLI or QMI or AHI for each Arris Share
Commitment exercised after the Effective Date;
B
is the exercise price of the Arris Share Commitment;
C
is the fair market value of the Assets to be transferred to CLI, QMI and AHI under the
Arrangement, such fair market value to be determined as at the Effective Date by
resolution of the board of directors of Arris; and
D
is the total fair market value of all of the assets of Arris immediately prior to completion
of the Arrangement on the Effective Date, which total fair market value shall include, for
greater certainty, the Assets.
Fractions of CLI, QMI or AHI Shares resulting from such calculation shall be cancelled as provided for in the Plan
of Arrangement.
86
ARTICLE 5
CONDITIONS
5.1
Conditions Precedent: The respective obligations of the parties to complete the transactions contemplated
by this Agreement shall be subject to the satisfaction of the following conditions:
(a)
the Interim Order shall have been granted in form and substance satisfactory to Arris and CLI,
QMI and AHI;
(b)
the Arrangement and this Agreement, with or without amendment, shall have been approved at the
Arris Meeting by the Arris Shareholders in accordance with the Arrangement Provisions, the
constating documents of Arris, the Interim Order and the requirements of any applicable
regulatory authorities;
(c)
the Arrangement and this Agreement, with or without amendment, shall have been approved by
the CLI, QMI and AHI Shareholders to the extent required by, and in accordance with, the
Arrangement Provisions and the constating documents of CLI, QMI and AHI;
(d)
the Final Order shall have been obtained in form and substance satisfactory to Arris and CLI and
QMI and AHI;
(e)
the CNSX shall have conditionally approved the Arrangement, including the listing of the Arris
Class A Shares in substitution for the Arris Shares, the delisting of the Arris Class A Shares, the
listing of the New Shares and the Arris Class A Preferred Shares, the delisting of the Arris Class A
Preferred Shares upon their redemption and the listing of the CLI, QMI and AHI Shares, as of the
Effective Date, subject to compliance with the requirements of the Exchange;
(f)
all other consents, orders, regulations and approvals, including regulatory and judicial approvals
and orders required or necessary or desirable for the completion of the transactions provided for in
this Agreement and the Plan of Arrangement shall have been obtained or received from the
Persons, authorities or bodies having jurisdiction in the circumstances, each in form acceptable to
Arris and CLI, QMI and AHI;
(g)
there shall not be in force any order or decree restraining or enjoining the consummation of the
transactions contemplated by this Agreement and the Arrangement; and
(h)
this Agreement shall not have been terminated under Article 6.
Except for the conditions set forth in this §5.1 which, by their nature, may not be waived, any of the other conditions
in this §5.1 may be waived, either in whole or in part, by either Arris or CLI or QMI or AHI, as the case may be, at
its discretion.
5.2
Closing: Unless this Agreement is terminated earlier pursuant to the provisions hereof, the parties shall
meet at the offices of Arris Resources Inc, 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0, at
10:00 a.m. (Vancouver time) on the Closing Date, or at such other time or on such other date as they may mutually
agree, and each of them shall deliver to the other of them:
(a)
the documents required to be delivered by it hereunder to complete the transactions contemplated
hereby, provided that each such document required to be dated the Effective Date shall be dated as
of, or become effective on, the Effective Date and shall be held in escrow to be released upon the
occurrence of the Effective Date; and
(b)
written confirmation as to the satisfaction or waiver by it of the conditions in its favour contained
in this Agreement.
5.3
Merger of Conditions: The conditions set out in §5.1 hereof shall be conclusively deemed to have been
satisfied, waived or released upon the occurrence of the Effective Date.
87
5.4
Merger of Representations and Warranties: The representations and warranties in §3.1 shall be
conclusively deemed to be correct as of the Effective Date and each shall accordingly merge in and not survive the
effectiveness of the Arrangement.
ARTICLE 6
AMENDMENT AND TERMINATION
6.1
Amendment: Subject to any restrictions under the Arrangement Provisions or the Final Order, this
Agreement, including the Plan of Arrangement, may at any time and from time to time before or after the holding of
the Arris Meeting, but prior to the Effective Date, be amended by agreement of the parties hereto without, subject to
applicable law, further notice to or authorization on the part of the Arris Shareholders.
6.2
Termination: Subject to §6.3, this Agreement may at any time before or after the holding of the Arris
Meeting, and before or after the granting of the Final Order, but in each case prior to the Effective Date, be
terminated by direction of the board of directors of Arris without further action on the part of the Arris Shareholders,
or by the board of directors of CLI, QMI and AHI without further action on the part of the CLI, QMI or AHI
Shareholder(s), and nothing expressed or implied herein or in the Plan of Arrangement shall be construed as
fettering the absolute discretion by the board of directors of Arris or CLI, QMI or AHI, respectively, to elect to
terminate this Agreement and discontinue efforts to effect the Arrangement for whatever reasons it may consider
appropriate.
6.3
Cessation of Right: The right of Arris or CLI or QMI or AHI or any other party to amend or terminate the
Plan of Arrangement pursuant to §6.1 and §6.2 shall be extinguished upon the occurrence of the Effective Date.
ARTICLE 7
GENERAL
7.1
Notices: All notices which may or are required to be given pursuant to any provision of this Agreement
shall be given or made in writing and shall be delivered or telecopied, addressed as follows:
88
7.2
in the case of Arris:
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Facsimile: (000) 000-0000
in the case of CLI:
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Facsimile: (000) 000-0000
in the case of QMI:
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Facsimile: (000) 000-0000
in the case of AHI:
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Facsimile: (000) 000-0000
7.3
Assignment: None of the parties may assign its rights or obligations under this Agreement or the
Arrangement without the prior consent of the other party.
7.4
Binding Effect: This Agreement and the Arrangement shall be binding upon and shall enure to the benefit
of the parties and their respective successors and permitted assigns.
7.5
Waiver: Any waiver or release of the provisions of this Agreement, to be effective, must be in writing and
executed by the party granting such waiver or release.
7.6
Governing Law: This Agreement shall be governed by and be construed in accordance with the laws of the
Province of British Columbia and the laws of Canada applicable therein and shall be treated in all respects as a
British Columbia contract.
7.7
Counterparts: This Agreement may be executed in one or more counterparts and by facsimile or email
transmission, each of which shall be deemed to be an original and all of which together shall constitute one and the
same agreement.
7.8
Expenses: All expenses incurred by a party in connection with this Agreement, the Arrangement and the
transactions contemplated hereby and thereby shall be borne by the party that incurred the expense.
89
7.9
Entire Agreement: This Agreement constitutes the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.
7.10
Time of Essence: Time is of the essence of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.
ARRIS RESOURCES INC.
CLI RESOURCES INC.
Per:
/s/ "Xxxxxxx Xxxxxx
Per:
/s/ "Lucky Xxxxx"
Authorized Signatory
Authorized Signatory
QMI SEISMIC INC. &
ARRIS HOLDINGS INC.
Per:
/s/ "Navchand Xxxxxx"
Per:
/s/ "Xxxxx Xxxxx"
Authorized Signatory
Authorized Signatory
EXHIBIT I
ARRIS ASSETS TO BE TRANSFERRED
TO CLI
1.
All of Arris' interest in the five (5) mineral claims, known as the Xxxxxx Xxxx Property north of Atlin BC.
ARRIS ASSETS TO BE TRANSFERRED
TO QMI
2.
All of Arris interest in the Distribution Agreement for seismic products of QMI Manufacturing Inc. for all
of India.
ARRIS ASSETS TO BE TRANSFERRED
TO AHI
3.
All of Arris Interest in an Equity portfolio containing shares in two small cap companies – Maxtech Inc and
ONA Power Inc.
EXHIBIT II
TO THE ARRANGEMENT AGREEMENT
DATED AS OF THE 2nd DAY OF NOVEMBER, 2009 BETWEEN
ARRIS HOLDING INC. AND
CLI RESOURCES INC. AND
QMI SEISMIC INC
PLAN OF ARRANGEMENT
UNDER DIVISON 5 OF PART 9 OF
THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
S.B.C. 2002, c.57
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1
Definitions: In this plan of arrangement, unless there is something in the subject matter or context
inconsistent therewith, the following capitalized words and terms shall have the following meanings:
(a)
"Arrangement" means the arrangement pursuant to the Arrangement Provisions on the terms and
conditions set out herein;
(b)
"Arrangement Agreement" means the arrangement agreement dated effective November 2,
2009, between Arris and CLI, QMI and AHI to which this Exhibit is attached, as may be
supplemented or amended from time to time;
(c)
"Arrangement Provisions" means Division 5 of Part 9 of the BCBCA;
(d)
"Arris" means Arris Resources Inc., a company existing under the BCBCA;
(e)
"Arris Class A Shares" means the renamed and redesignated Arris Shares as described in
§3.1(b)(i) of this Plan of Arrangement;
(f)
"Arris Class A Preferred Shares" means the Class A preferred shares without par value which
Arris will create and issue pursuant to §3.1(b)(iii) of this Plan of Arrangement;
(g)
"Arris Meeting" means the special meeting of the Arris Shareholders and any adjournment(s) or
postponement(s) thereof to be held to consider, among other things, and if deemed advisable
approve, the Arrangement;
(h)
"Arris Share Commitments" means an obligation of Arris to issue New Shares and to deliver
CLI, QMI and AHI Shares to the holders of Arris Stock Options and Arris Warrants which are
outstanding on the Effective Date, upon the exercise of such stock options and warrants;
(i)
"Arris Shareholder" has the meaning ascribed to such term in §3.3;
(j)
"Arris Shares" means the common shares without par value in the authorized share structure of
Arris, as constituted on the date hereof;
(k)
"Arris Stock Option Plan" means the stock option plan of Arris dated May 21, 2008;
(l)
"Arris Stock Options" means share purchase options issued pursuant to the Arris Stock Option
Plan which are outstanding on the Effective Date;
(m)
"Arris Warrants" means share purchase warrants of Arris that are outstanding on the Effective
Date;
(n)
"Assets" means the assets of Arris described in Exhibit I to the Arrangement Agreement;
(o)
"BCBCA" means the Business Corporations Act (British Columbia), S.B.C 2002, c.57, as may be
amended or replaced from time to time.
(p)
"Business Day" means a day which is not a Saturday, Sunday or statutory holiday in Vancouver,
(q)
"Company" means Arris Resources Inc., a company existing under the BCBCA;
(r)
"Court" means the Supreme Court of British Columbia;
(s)
"Depositary" means Sangra Moller LLP, solicitors for Arris and CLI, QMI and AHI;
(t)
"Distributed CLI, QMI and AHI Shares" means the CLI, QMI and AHI Shares that are to be
distributed to the Arris Shareholders pursuant to §3.1(a);
(u)
"Effective Date" means the date on which the CLI, QMI and AHI Shares are listed on the CNSX;
(v)
"Exchange Factor" means the number arrived at by dividing 17,583,372 by the number of issued
Arris Shares as of the Share Distribution Record Date;
(w)
"Final Order" means the final order of the Court approving the Arrangement;
(x)
"Interim Order" means the interim order of the Court providing advice and directions in
connection with the Arris Meeting and the Arrangement;
(y)
"CLI" means CLI Resources Inc., a company incorporated under the BCBCA, "QMI" means
QMI Seismic Inc., a company incorporated under the BCBCA and "AHI" means Arris Holdings
Inc., a company incorporated under the BCBCA;
(z)
"CLI, QMI and AHI Commitments" means the obligation of CLI, QMI and AHI described in
§4.4 of the Arrangement Agreement, whereby CLI, QMI and AHI are obligated to issue CLI, QMI
and AHI Shares to the holders of Arris Share Commitments who exercise their rights thereunder
after the Effective Date, and who are entitled pursuant to the corporate reorganization terms
thereof to receive New Shares and CLI, QMI and AHI Shares upon such exercise;
(aa)
"CLI, QMI and AHI Shareholders" means the holders of CLI, QMI and AHI Shares;
(bb)
"CLI, QMI and AHI Shares" means the common shares without par value in the authorized
share structure of CLI, QMI and AHI as constituted on the date hereof;
(cc)
"New Shares" means the new class of common shares without par value which Arris will create
pursuant to §3.1(b)(ii) of this Plan of Arrangement and which, immediately after the Effective
Date will be identical in every relevant respect to the Arris Shares;
(dd)
"Plan of Arrangement" means this Plan of Arrangement, as may be amended or restated from
time to time;
(ee)
"Registrar" means the Registrar of Companies under the BCBCA;
(ff)
"Share Distribution Record Date" means the close of business on the day which is four Business
Days after the date of the Arris Meeting or such other date as agreed to by Arris and CLI and QMI
and AHI, which date establishes the Arris Shareholders who will be entitled to receive CLI and
QMI and AHI Shares pursuant to this Plan of Arrangement;
(gg)
"Tax Act" means the Income Tax Act (Canada), as amended; and
(hh)
"Transfer Agent" means Computershare Trust Company of Canada at its principal office in
Vancouver, British Columbia.
1.2
Interpretation Not Affected by Headings: The division of this Plan of Arrangement into articles,
sections, subsections, paragraphs and subparagraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this Plan of Arrangement. Unless otherwise
specifically indicated, the terms "this Plan of Arrangement", "hereof", "hereunder" and similar expressions refer to
this Plan of Arrangement as a whole and not to any particular article, section, subsection, paragraph or subparagraph
and include any agreement or instrument supplementary or ancillary hereto.
1.3
Number and Gender: Unless the context otherwise requires, words importing the singular shall include
the plural and vice versa, words importing the use of either gender shall include both genders and neuter, and words
importing a person shall include a partnership or corporation.
1.4
Meaning: Undefined words and phrases used herein that are defined in the BCBCA shall have the same
meaning herein as in the BCBCA unless the context otherwise requires.
ARTICLE 2
2.1
Arrangement Agreement: This Plan of Arrangement is made pursuant and subject to the Arrangement
Agreement.
ARTICLE 3
THE ARRANGEMENT
3.1
The Arrangement: On the Effective Date, the following shall occur and be deemed to occur in the
following chronological order without further act or formality, notwithstanding anything contained in the provisions
attaching to any of the securities of Arris or CLI, QMI or AHI, but subject to the provisions of Article 5:
(k)
the Company will transfer the Asset to CLI in consideration for 17,583,372 CLI Shares (the
"Distributed CLI Shares") and the Company will be added to the central securities register of
CLI in respect of such CLI Shares; and the Company will transfer the Asset to QMI in
consideration for 17,583,372 QMI Shares (the "Distributed QMI Shares") and the Company will
be added to the central securities register of QMI in respect of such QMI Shares; and the Company
will transfer the Asset to AHI in consideration for 17,583,372 AHI Shares (the "Distributed AHI
Shares") and the Company will be added to the central securities register of AHI in respect of
such AHI Shares;
(l)
the authorized share capital of the Company will be changed by:
(i)
altering the identifying name of the Arris Shares to class A common shares without par
value, being the Arris Class A Shares,
(ii)
creating a class consisting of an unlimited number of common shares without par value
(the "New Shares"), and
(iii)
creating a class consisting of an unlimited number of class A preferred shares without par
value, having the rights and restrictions described in Exhibit III to the Plan of
Arrangement, being the Arris Class A Preferred Shares;
(m)
each issued Arris Class A Share will be exchanged for one New Share and one Arris Class A
Preferred Share and, subject to the exercise of a right of dissent, the holders of the Arris Class A
Shares will be removed from the central securities register of the Company and will be added to
that central securities register as the holders of the number of New Shares and Arris Class A
Preferred Shares that they have received on the exchange;
(n)
all of the issued Arris Class A Shares will be cancelled with the appropriate entries being made in
the central securities register of the Company, and the aggregate paid–up capital (as that term is
used for purposes of the Tax Act) of the Arris Class A Shares immediately prior to the Effective
Date will be allocated between the New Shares and the Arris Class A Preferred Shares so that the
aggregate paid–up capital of the Arris Class A Preferred Shares is equal to the aggregate fair
market value of the Distributed CLI, QMI and AHI Shares as of the Effective Date, and each Arris
Class A Preferred Share so issued will be issued by the Company at an issue price equal to such
aggregate fair market value divided by the number of issued Arris Class A Preferred Shares, such
aggregate fair market value of the Distributed CLI, QMI and AHI Shares to be determined as at
the Effective Date by resolution of the board of directors of the Company;
(o)
the Company will redeem the issued Arris Class A Preferred Shares for consideration consisting
solely of the Distributed CLI, QMI and AHI Shares such that each holder of Arris Class A
Preferred Shares will, subject to the rounding of fractions and the exercise of rights of dissent,
receive that number of CLI, QMI or AHI Shares that is equal to the number of Arris Class A
Preferred Shares held by such holder multiplied by the Exchange Factor;
(p)
the name of each holder of Arris Class A Preferred Shares will be removed as such from the
central securities register of the Company, and all of the issued Arris Class A Preferred Shares will
be cancelled with the appropriate entries being made in the central securities register of the
Company;
(q)
the Distributed CLI, QMI and AHI Shares transferred to the holders of the Arris Class A Preferred
Shares pursuant to step §(e) above will be registered in the names of the former holders of Arris
Class A Preferred Shares and appropriate entries will be made in the central securities register of
CLI, QMI or AHI;
(r)
the Arris Class A Shares and the Arris Class A Preferred Shares, none of which will be allotted or
issued once the steps referred to in steps §(c) and §(e) above are completed, will be cancelled and
the authorized share structure of the Company will be changed by eliminating the Arris Class A
Shares and the Arris Class A Preferred Shares therefrom;
(s)
the Notice of Articles and Articles of the Company will be amended to reflect the changes to its
authorized share structure made pursuant to this Plan of Arrangement; and
(t)
after the Effective Date:
(i)
all Arris Share Commitments will be exercisable for New Shares and CLI, QMI and AHI
Shares in accordance with the corporate reorganization terms of such commitments,
whereby the acquisition of one Arris Share under a Arris Share Commitment will result
in the holder of the Arris Share Commitment receiving one New Share and such number
of CLI, QMI and AHI Shares equal to the number of New Shares so received multiplied
by the Exchange Factor,
(ii)
pursuant to the CLI, QMI and AHII Commitment, CLI, QMI and AHI will issue the
required number of CLI, QMI or AHI Shares upon the exercise of Arris Share
Commitments as is directed by the Company, and
(iii)
the Company will, as agent for CLI, QMI and AHI, collect and pay to CLI, QMI and AHI
a portion of the proceeds received for each Arris Share Commitment so exercised, with
the balance of the exercise price to be retained by Arris, as determined in accordance with
§4.4 of the Arrangement Agreement.
3.2
No Fractional shares: Notwithstanding §3.1(e) and §3.1(j), no fractional CLI, QMI and AHI Shares shall
be distributed to the Arris Shareholders or the holders of Arris Share Commitments and as a result all fractional
share amounts arising under such sections shall be rounded down to the next whole number. Any Distributed CLI
QMI and AHI Shares not distributed as a result of this rounding down shall be dealt with as determined by the board
of directors of Arris in its absolute discretion.
3.3
Arris Shareholder: The holders of the Arris Class A Shares and the holders of New Shares and Arris Class
A Preferred Shares referred to in §3.1(c), and the holders of the Arris Class A Preferred Shares referred to in §3.1(e),
§3.1(f) and §3.1(g), shall mean in all cases those persons who are Arris Shareholders at the close of business on the
Share Distribution Record Date, subject to Article 5.
3.4
Deemed Time for Redemption: In addition to the chronological order in which the transactions and events
set out in §3.1 shall occur and shall be deemed to occur, the time on the Effective Date for the redemption of the
Arris Class A Preferred Shares set out in §3.1(e) shall occur and shall be deemed to occur immediately after the time
of listing of the Arris Class A Preferred Shares on the CNSX on the Effective Date.
3.5
Deemed Fully Paid and Non-Assessable Shares: All New Shares, Arris Class A Preferred Shares and
CLI and QMI Shares issued pursuant to this Plan of Arrangement shall be deemed to be validly issued and
outstanding as fully paid and non-assessable shares for all purposes of the BCBCA.
3.6
Arrangement Effectiveness: The Arrangement shall become final and conclusively binding on the Arris
Shareholders, the CLI Shareholders, the QMI Shareholders, the AHI shareholders and Arris and CLI and QMI and
AHI on the Effective Date.
3.7
Supplementary Actions: Notwithstanding that the transactions and events set out in §3.1 shall occur and
shall be deemed to occur in the chronological order therein set out without any act or formality, each of Arris and
CLI, QMI and AHI shall be required to make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may be required to give
effect to, or further document or evidence, any of the transactions or events set out in §3.1, including, without
limitation, any resolutions of directors authorizing the issue, transfer or redemption of shares, any share transfer
powers evidencing the transfer of shares and any receipt therefore, and any necessary additions to or deletions from
share registers.
ARTICLE 4
CERTIFICATES
4.1
Arris Class A Shares: Recognizing that the Arris Shares shall be renamed and redesignated as Arris Class
A Shares pursuant to §3.1(b)(i) and that the Arris Class A Shares shall be exchanged partially for New Shares
pursuant to §3.1(c), Arris shall not issue replacement share certificates representing the Arris Class A Shares.
4.2
Arris' CLI, QMI and AHI Shares: Recognizing that the Distributed CLI, QMI and AHI Shares shall be
transferred to the Arris Shareholders as consideration for the redemption of the Arris Class A Preferred Shares
pursuant to §3.1(e), CLI, QMI and AHI shall issue one share certificate representing all of the Distributed CLI, QMI
and AHI Shares registered in the name of Arris, which share certificate shall be held by the Depositary until the
Distributed CLI, QMI and AHI Shares are transferred to the Arris Shareholders and such certificate shall then be
cancelled by the Depositary. To facilitate the transfer of the Distributed CLI, QMI and AHI Shares to the Arris
Shareholders as of the Share Distribution Record Date, Arris shall execute and deliver to the Depositary and the
Transfer Agent an irrevocable power of attorney authorizing them to distribute and transfer the Distributed CLI,
QMI or AHI Shares to such Arris Shareholders in accordance with the terms of this Plan of Arrangement and CLI,
QMI or AHI shall deliver a treasury order or such other direction to effect such issuance to the Transfer Agent as
requested by it.
4.3
Arris Class A Preferred Shares: Recognizing that all of the Arris Class A Preferred Shares issued to the
Arris Shareholders pursuant to §3.1(c) will be redeemed by Arris as consideration for the distribution and transfer of
the Distributed CLI, QMI or AHI Shares under §3.1(e), Arris shall issue one share certificate representing all of the
Arris Class A Preferred Shares issued pursuant to §3.1(e) in the name of the Depositary, to be held by the
Depositary for the benefit of the Arris Shareholders until such Arris Class A Preferred Shares are redeemed, and
such certificate shall then be cancelled.
4.4
Delivery of CLI, QMI and AHI Share Certificates: As soon as practicable after the Effective Date, CLI
QMI and AHI shall cause to be issued to the registered holders of Arris Shares as of the Share Distribution Record
Date, share certificates representing the CLI, QMI and AHI Shares to which they are entitled pursuant to this Plan of
Arrangement and shall cause such share certificates to be mailed to such registered holders.
4.5
New Share Certificates: From and after the Effective Date, share certificates representing Arris Shares
immediately before the Effective Date, except for those deemed to have been cancelled pursuant to Article 5, shall
for all purposes be deemed to be share certificates representing New Shares, and no new share certificates shall be
issued with respect to the New Shares issued in connection with the Arrangement.
4.6
Interim Period: Arris Shares traded after the Share Distribution Record Date and prior to the Effective
Date shall represent New Shares, and shall not carry any right to receive a portion of the Distributed CLI, QMI and
AHI Shares.
ARTICLE 5
RIGHTS OF DISSENT
5.1
Dissent Right: Notwithstanding §3.1 hereof, holders of Arris Shares may exercise rights of dissent (the
"Dissent Right") in connection with the Arrangement pursuant to the Interim Order and in the manner set forth in
sections 237 - 247 of the BCBCA (collectively the "Dissent Procedures").
5.2
Dealing with Dissenting Shares: Arris Shareholders who duly exercise Dissent Rights with respect to their
Arris Shares ("Dissenting Shares") and who:
(a)
are ultimately entitled to be paid fair value for their Dissenting Shares, shall be deemed to have
transferred their Dissenting Shares to Arris for cancellation immediately before the Effective Date;
or
(b)
for any reason are ultimately not entitled to be paid fair value for their Dissenting Shares, shall be
deemed to have participated in the Arrangement on the same basis as a non-dissenting Arris
Shareholder and shall receive New Shares and CLI and QMI and AHI Shares on the same basis as
every other non-dissenting Arris Shareholder, and in no case shall Arris be required to recognize
such persons as holding Arris Shares on or after the Effective Date.
5.3
Reservation of CLI, QMI or AHI Shares: If an Arris Shareholder exercises the Dissent Right, Arris shall
on the Effective Date set aside and not distribute that portion of the Distributed CLI, QMI and AHI Shares that is
attributable to the Arris Shares for which the Dissent Right has been exercised. If the dissenting Arris Shareholder is
ultimately not entitled to be paid for their Dissenting Shares, Arris shall distribute to such Arris Shareholder his pro–
rata portion of the Distributed CLI, QMI and AHI Shares. If a Arris Shareholder duly complies with the Dissent
Procedures and is ultimately entitled to be paid for their Dissenting Shares, then Arris shall retain the portion of the
Distributed CLI, QMI and AHI Shares attributable to such Arris Shareholder (the "Non-Distributed CLI, QMI and
AHI Shares"), and the Non-Distributed CLI, QMI and AHI Shares shall be dealt with as determined by the board of
directors of Arris in its absolute discretion.
ARTICLE 6
REFERENCE DATE
6.1
Reference Date: This plan of arrangement is dated for reference the 2 day of November, 2009.
EXHIBIT III
SPECIAL RIGHTS AND RESTRICTIONS FOR ARRIS CLASS A PREFERRED SHARES
The class A preferred shares as a class shall have attached to them the following special rights and restrictions:
Definitions
(1)
In these Special Rights and Restrictions,
(a)
"Arrangement" means the arrangement pursuant to Division 5 of Part 9 of the Business
Corporations Act (British Columbia) S.B.C 2002, c.57 as contemplated by the Arrangement
Agreement,
(b)
"Arrangement Agreement" means the Arrangement Agreement dated as of November 2, 2009,
between Arris Resources Inc. (the "Company") and CLI, QMI and AHI,
(c)
"Old Common Shares" means the common shares in the authorized share structure of the
Company that have been re-designated as class A common shares without par value pursuant to
the Plan of Arrangement,
(d)
"Effective Date" means the date upon which the Arrangement becomes effective,
(e)
"New Shares" means the common shares without par value created in the authorized share
structure of the Company pursuant to the Plan of Arrangement, and
(f)
"Plan of Arrangement" means the Plan of Arrangement attached as Exhibit II to the Arrangement
Agreement.
(2)
The holders of the class A preferred shares are not as such entitled to receive notice of, nor to attend or vote
at, any general meeting of the shareholders of the Company.
(3)
Class A preferred shares shall only be issued on the exchange of Old Common Shares for New Shares and
class A preferred shares pursuant to and in accordance with the Plan of Arrangement.
(4)
The capital to be allocated to the class A preferred shares shall be the amount determined in accordance
with §3.1(d) of the Plan of Arrangement.
(5)
The class A preferred shares shall be redeemable by the Company pursuant to and in accordance with the
Plan of Arrangement.
(6)
Any class A preferred share that is or is deemed to be redeemed pursuant to and in accordance with the
Plan of Arrangement shall be cancelled and may not be reissued.