Michelago Limited ACN 057 816 609, in the matter of Michelago Limited; ACN 057 816 609 (No 3)
[2006] FCA 1845
•13 DECEMBER 2006
FEDERAL COURT OF AUSTRALIA
Michelago Limited ACN 057 816 609, in the matter of Michelago Limited
ACN 057 816 609 (No 3) [2006] FCA 1845MICHELAGO LIMITED ACN 057 816 609, IN THE MATTER OF MICHELAGO LIMITED ACN 057 816 609
NSD2091 OF 2006
EMMETT J
13 DECEMBER 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD2091 OF 2006
IN THE MATTER OF MICHELAGO LIMITED ACN 057 816 609
MICHELAGO LIMITED ACN 057 816 609
ApplicantJUDGE:
EMMETT J
DATE OF ORDER:
13 DECEMBER 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 411(4)(b) of the Corporations Act 2001 the scheme of arrangement between the Plaintiff and holders of its ordinary shares in the form annexed hereto and marked “A” be approved.
2.Pursuant to section 411(4)(b) of the Corporations Act 2001 the scheme of arrangement between the Plaintiff and its listed optionholders in the form annexed hereto and marked “B” be approved.
3.Pursuant to section 411(12) of the Corporations Act 2001, the Plaintiff be exempted from compliance with section 411(11) of the Corporations Act 2001 in relation to the order at paragraphs 1 and 2.
4.These orders be entered forthwith.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD2091 OF 2006
IN THE MATTER OF MICHELAGO LIMITED ACN 057 816 609
MICHELAGO LIMITED ACN 057 816 609
ApplicantJUDGE:
EMMETT J
DATE:
13 DECEMBER 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 27 October 2006, the Court ordered the applicant, Michelago Limited (‘the Company’), to convene meetings of its members and optionholders for the purpose of considering schemes of arrangement. The general purpose of the schemes and their effect is to provide for the merger of Michelago with Golden China in the manner briefly described in my reasons of 27 October 2006 (see [2006] FCA 1490). The meetings have now been held and the Company has applied to the Court for approval of the schemes pursuant to s 411 of the Corporations Act 2001 (Cth) (‘the Act’).
I am satisfied from the evidence filed in the proceeding, consisting of affidavits of Rebecca Mary White sworn 12 December 2006 and a statement in Form 530 by Mr Ian Keith White, the secretary of Michelago Limited, that the explanatory booklet in the form that I considered on 27 October 2006 and a supplementary disclosure document were sent to members and optionholders.
At the meetings held on 6 December 2006, the shareholders passed a resolution agreeing to the scheme involving them. The resolution was passed by a majority of 97.11 per cent of shareholders present and by a majority of 99.23 per cent of the votes cast in the resolution. The optionholders also passed a resolution that the scheme involving them be agreed to. The resolution was passed by a majority of 94.44 per cent of optionholders present and voting, being a majority whose claims against the Company’s optionholders amount in the aggregate to 98.64 per cent of the total amount of the claims of the optionholders present and voting.
Those facts are proved by affidavits of Allan Alexander Nicol and John Patrick Horan. That evidence, together with an affidavit of Ian Keith White, indicate that the members and optionholders were given the opportunity of voting by proxy and that all valid proxies were taken into account in the vote.
The proposed application today, for approval of the schemes, was advertised in accordance with directions that I gave. When the matter was called today there was no appearance except by senior counsel for the Company, and no person has indicated to the solicitors for the Company any intention of appearing in the hearing of the application for approval of the schemes.
By letter of 8 December 2006, the Australian Securities and Investments Commission (‘the Commission’) has confirmed, in accordance with s 411(17) of the Act, that the Commission has no objection to either of the schemes and has no intention of appearing in the hearing of this application.
The schemes were expressed to be conditional upon a number of matters. I am satisfied, from certificates signed on behalf of both the Company and Golden China, that all of the conditions precedent to the operation of the schemes have been satisfied or waived, save for the condition of Court approval. The consideration for the acquisition by Golden China of shares in the Company was the allotment of shares in Golden China. The shares to be allotted were to be new consolidated shares.
I am satisfied from the evidence of Gary Quedado and Alexander James Robson Grieve, that the proposed consolidation of Golden China shares has occurred and that approval for admission to Toronto Stock Exchange has been given in respect of those shares. In addition, the Australian Securities Exchange (‘ASX’) has also admitted Golden China shares to quotation on the ASX. Arrangements are in place for transfers of interests in shares in Golden China to be dealt with electronically by means of CHESS depositary interests. The effect of the arrangements is that shareholders who wish to deal with interests in Golden China on ASX do not have legal ownership, but have an equitable interest in shares which are registered in the name of CHESS Depositary Nominees Pty Ltd.
Having regard to the resolutions of members and optionholders agreeing to the terms of the schemes and having regard to the fact that on 27 October 2006 I was satisfied that the schemes are schemes that reasonable shareholders, properly informed, might agree to, I am satisfied that it is appropriate now to approve both schemes.
“A”
SHARE SCHEME
Scheme of ArrangementPARTIES
1.MICHELAGO LIMITED ACN 057 816 609 of Suite 5, Level 14, 189 Kent Street, Sydney, New South Wales 2000 (“Michelago”); and
2.EACH HOLDER OF ORDINARY SHARES ISSUED IN THE CAPITAL OF MICHELAGO LIMITED
RECITALS
A.Michelago is a public company incorporated in New South Wales and its shares are quoted on ASX.
B.Michelago and Golden China Resources Corporation ARBN 119 827 851 (“Golden China”), a corporation existing under the laws of Canada, have entered into the Business Combination Agreement pursuant to which, among other things, Michelago has agreed to propose this Scheme to the Michelago Shareholders and Michelago and Golden China have agreed to take all action necessary to implement the Scheme.
C. Upon this Scheme becoming Effective:
(a) the Scheme Shares will be transferred to the Golden China Subsidiary in consideration for the issue by Golden China to each Scheme Shareholder of that number of CDIs calculated by applying the Share Exchange Ratio to the Michelago Shares held by Scheme Shareholders; and
(b) on the transfer of all of the Scheme Shares to the Golden China Subsidiary, Michelago will become a wholly owned subsidiary of the Golden China Subsidiary.
D.Golden China has entered into the Deed Poll pursuant to which it has covenanted to perform its obligations under this Scheme.
THIS SCHEME OF ARRANGEMENT WITNESSES:
1.DEFINITIONS AND INTERPRETATION
1.1Definitions
“ASIC” means the Australian Securities and Investments Commission.
“ASX” means Australian Stock Exchange Limited.
"Business Combination Agreement" means the business combination agreement between Michelago and Golden China dated 14 December 2005 as amended by agreements between Michelago and Golden China dated 28 March 2006, 21 April 2006, 10 May 2006, 7 June 2006 and 15 August 2006.
“Business Day” has the same meaning given to that expression in the Listing Rules.
“CDIs” means CHESS Depositary Interests, units of beneficial ownership, in Golden China Shares registered in the name of CDN.
“CDN” means CHESS Depositary Nominees Pty Ltd.
“CHESS” means Clearing House Electronic Subregister System.
"Close of Trading" means 7.00 pm Sydney time on the Effective Date.
“Consolidation” means the consolidation of Golden China Shares to be implemented before the Effective Date on a five for one basis.
"Corporations Act" means the Corporations Act 2001 (Cth).
"Corporations Regulations" means the Corporations Regulations 2001 (Cth).
"Court" means a court of competent jurisdiction under the Corporations Act.
"Deed Poll" means the deed poll dated 9 October 2006, executed by Golden China in favour of the Scheme Shareholders.
"Effective" when used in relation to the Scheme, means the coming into effect, pursuant to section 411(10) of the Corporations Act, of the Final Order.
"Effective Date" means the date, on or before the Outside Date, on which the Scheme becomes Effective.
“Effective Time” means the time on the Effective Date that the Scheme becomes Effective.
"Eligible Scheme Shareholder" means a Scheme Shareholder other than a Foreign Shareholder.
“Final Order” means the final order of the Court approving the Scheme and the Option Scheme, as such order may be amended by the Court at any time before the Effective Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or amended on appeal.
"Foreign Shareholder" means a Scheme Shareholder whose address in the Register is a place outside Australia and New Zealand.
“Golden China” means Golden China Resources Corporation ARBN 119 827 851 of Suite 1400, 8 King Street East, Toronto, Ontario, Canada, a corporation existing under the laws of Canada.
"Golden China Shares" means fully paid common shares in the capital of Golden China.
“Golden China Subsidiary” means a newly incorporated, wholly owed Australian subsidiary of Golden China.
“Interim Order” means an interim order of the Court, as may be amended, providing for, among other things, the calling and holding of the Scheme Meeting.
“Implementation Date” means the Business Day after the Record Date or such later date as notified to ASX by Golden China, being a date no later than the tenth Business Day after the Effective Date.
"Listing Rules" means the official Listing Rules of ASX.
“Michelago” means Michelago Limited ACN 057 816 609 of Suite 5, Level 14, 189 Kent Street, Sydney, New South Wales 2000.
"Michelago Optionholders" means each person who is registered in the register of optionholders from time to time as the holder of a Michelago Option.
“Michelago Options” means options each to subscribe to one Michelago Share exercisable at a price of $0.15 on or before 10 January 2007, which are listed on ASX.
"Michelago Share" means a fully paid ordinary share in Michelago.
"Michelago Shareholders" means each person who is registered in the Register from time to time as the holder of a Michelago Share.
“Option Scheme Meeting” means the meeting of Michelago Optionholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Option Scheme.
“Option Scheme” means the scheme of arrangement pursuant to Part 5.1 of the Corporations Act to be made between Michelago and Michelago Optionholders in relation to the Michelago Options.
“Outside Date” means 31 December 2006, or such later date to which each of Michelago and Golden China may agree in writing.
"Record Date" means the fifth Business Day after the Effective Date.
"Register" means the register of Michelago Shareholders maintained by Registries Limited, Level 2, 28 Margaret Street, Sydney, New South Wales, Australia.
"Registrar" means the person for the time being responsible for the maintenance of the Register.
"Requisite Majority" means a resolution passed by:
(a)a majority in number (more than 50 per cent) of Michelago Shareholders or Michelago Optionholders (as the case may be) who are present and voting, either in person or by proxy, attorney or in the case of a corporation its duly appointed corporate representative; and
(b)at least 75 per cent of the votes cast on the resolution in the meeting to approve this Scheme and at least 75 per cent of the total amount of the debts and claims of Michelago Option holders voting at the meeting to approve the Option Scheme.
“Sale CDIs” means the CDIs issued to the Sale Holder pursuant to clause 0
"Sale Facility Price" means an amount equal to the Sale Price multiplied by the number of CDIs issued to the Sale Holder with respect to a Foreign Shareholder, calculated by applying the Share Exchange Ratio to the number of Michelago Shares held by that Foreign Shareholder.
“Sale Holder” means Taycol Nominees Pty Limited of Level 2, 55 Hunter Street, Sydney in the State of New South Wales.
"Sale Price" means the average price (net of transaction costs) at which Sale CDIs are sold by the Sale Holder.
"Scheme" means this scheme of arrangement subject to any alterations or conditions made or required to be made by the Court and agreed or consented to by Michelago and Golden China.
"Scheme Consideration" means the Golden China Shares to be issued to CDN on trust for the Eligible Scheme Shareholders and the Sale Holder and in respect of which CDN is to issue CDIs to the Eligible Scheme Shareholders and the Sale Holder in consideration for the transfer of all Michelago Shares, being that number of Golden China Shares calculated in accordance with the Share Exchange Ratio and in accordance with this Scheme.
"Scheme Meeting" means the meeting of Michelago Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Scheme.
"Scheme Shareholder" means each person who is registered in the Register as the holder of a Michelago Share as at 7.00 pm on the Record Date, as determined in accordance with clause 0.
“Scheme Shares” means the Michelago Shares on issue as at the Record Date.
“Share Exchange Ratio” means 1:37.5 (representing 1 Golden China Share for every 37.5 Michelago Shares held at 7.00 pm Sydney time on the Record Date).
"TSX" means The Toronto Stock Exchange.
1.2Interpretation
Unless expressed to the contrary:
(a) the singular includes the plural and vice versa;
(b) each gender includes each other gender;
(c) a reference to a statute or to any section or provision thereof shall include any statutory amendment, modification or re-enactment thereof or any statutory provision substituted therefore;
(d) references to “dollar” or “$” means the lawful currency of the Commonwealth of Australia at any time;
(e) references to clauses are references to clauses of this Scheme;
(f) terms binding more than one person shall be construed as binding them jointly and severally;
(g) references to persons include references to corporations;
(h) headings and sub-headings shall not affect the construction of the substantive provisions of this document; and
(i) terms defined in the Corporations Act shall bear their defined meaning where used in this Scheme.
2.CONDITIONS PRECEDENT
2.1Conditions
This Scheme is conditional on each of the following conditions precedent:
(a) the Consolidation taking effect;
(b) the Business Combination Agreement and the Deed Poll being and remaining at all times in full force and effect;
(c) the conditions set out in section 3 of the Business Combination Agreement having been satisfied, waived or released in accordance with the terms of the Business Combination Agreement before the Final Order is made by the Court;
(d) this Scheme being approved by the Requisite Majority at the Scheme Meeting;
(e) the Option Scheme being approved by the Requisite Majority at the Option Scheme Meeting;
(f) approval for the admission of Golden China to the official list of ASX and for the quotation of CDIs on the official list of ASX being obtained, subject only to the Scheme being approved by the Court under section 411 of the Corporations Act, the Scheme taking effect and such other conditions as are acceptable to the boards of Michelago and Golden China;
(g) approval for the admission of Golden China to the official list of TSX being obtained, subject only to the Scheme being approved by the Court under section 411 of the Corporations Act, the Scheme taking effect and such other conditions as are acceptable to the boards of Michelago and Golden China;
(h) approval by the Court of the Scheme pursuant to section 411 of the Corporations Act; and
(i) lodgement with the ASIC of an office copy of the Final Order.
2.2Certificate
At the hearing by the Court of the application for the Final Order, Michelago and Golden China will each provide to the Court a certificate confirming whether or not all of the conditions precedent in the Business Combination Agreement and all of the conditions precedent in clause 2.1 of this Scheme (with the exception of the conditions in paragraphs 0 and 0), have been satisfied, waived or released (as applicable).
2.3Non-fulfilment of conditions precedent
The conditions in clause 0 are conditions precedent to the binding effect of this Scheme to the extent that, unless all of those conditions are satisfied, or, in the case of the conditions in paragraphs 0 to 0 inclusive, waived or released before the Final Order is made by the Court, the Scheme shall have no effect and shall not be binding on the Michelago Shareholders.
3.THE SCHEME
3.1Scheme
Subject to the conditions in clause 0 being satisfied and on this Scheme becoming binding in accordance with clause 0, the following will occur to give effect to this Scheme:
(a) On the Implementation Date, Golden China shall issue to CDN, to be held on trust, that number of Golden China Shares that will enable CDN to issue CDIs in accordance with paragraphs 0 and 0.
(b) On the Implementation Date, Golden China shall procure CDN to issue to each Eligible Scheme Shareholder the number of CDIs calculated:
(i) by applying the Share Exchange Ratio to the number of Michelago Shares held by each Eligible Scheme Shareholder; and
(ii) otherwise in accordance with this Scheme.
(c) On the Implementation Date, Golden China shall procure CDN to issue to the Sale Holder the number of CDIs calculated:
(i) by applying the Share Exchange Ratio to the number of Michelago Shares held by each Foreign Shareholder; and
(ii) otherwise in accordance with this Scheme; and
the Sale Holder will become the legal and beneficial owner of the CDIs issued to it without the need for any further acts by the relevant Foreign Shareholder. For the avoidance of doubt, the Sale Holder will not be acting as a trustee, custodian, nominee or agent in respect of those CDIs, whether for the purpose of distributions to be paid on those CDIs or any sale or transfer of those CDIs or otherwise.
(d) Forthwith upon Golden China issuing the Golden China Shares and procuring the issue of CDIs pursuant to paragraphs 0, 0 and 0, ownership of all the Scheme Shares will be transferred to and vest in the Golden China Subsidiary without the need for any further act by any Scheme Shareholder.
3.2Transfer of Scheme Shares
For the purposes of clause 00, not later than three Business Days after the Record Date, but with effect from the Implementation Date, Michelago shall:
(a) procure the delivery of a transfer in respect of all Scheme Shares to ASX Settlement and Transfer Corporation Pty Ltd by a broker nominated in writing by Golden China to effect a valid transfer of all Scheme Shares to the Golden China Subsidiary pursuant to section 1074D of the Corporations Act, or if such a procedure is not available for any reason, to deliver to Golden China a duly completed and executed instrument of transfer for the purposes of section 1071B of the Corporations Act which may be a master transfer transferring all Scheme Shares to the Golden China Subsidiary; and
(b) subject to Golden China having executed that transfer and issued the Golden China Shares and procured the issue of the CDIs pursuant to clause 0, enter the name of the Golden China Subsidiary in the Register as the holder of the Scheme Shares.
3.3Sale Holder to sell Sale CDIs
Michelago shall procure that the Sale Holder:
(a) on, or as soon as reasonably practicable after, the Implementation Date, sells the Sale CDIs; and
(b) pays the Sale Facility Price to each Foreign Shareholder within 30 days of the Implementation Date, in consideration for the Scheme Shares transferred to the Golden China Subsidiary on behalf of the Foreign Shareholder. The Sale Holder’s obligation to make such payment will be satisfied upon it paying the Sale Facility Price to Michelago, to be held on trust for payment to the relevant Foreign Shareholder.
4.SUSPENSION OF MICHELAGO SHARES, ISSUE AND TRADING OF GOLDEN CHINA SHARES AND CDIS
4.1Suspension
Michelago shall apply to ASX for suspension of trading on ASX as from the Close of Trading.
4.2Issue of CDIs
The obligation of Golden China to issue CDIs to the Eligible Scheme Shareholders and the Sale Holder shall be satisfied by Golden China, on the Implementation Date:
(a) causing CDN's name to be entered on the list of shareholders maintained by Golden China as the holder of the Golden China Shares issued to CDN pursuant to clause 0;
(b) procuring the dispatch to CDN of a certificate in the name of the CDN representing the Golden China Shares issued to CDN;
(c) procuring the name of each Eligible Scheme Shareholder to be entered on the records maintained by CDN as the holder of the CDIs issued to that Eligible Scheme Shareholder;
(d) procuring the name of the Sale Holder to be entered on the records maintained by CDN as the holder of the CDIs issued to the Sale Holder;
(e) procuring the dispatch to each Eligible Scheme Shareholder by ordinary mail, to the address of that Eligible Scheme Shareholder recorded in the Register as at 7.00 pm Sydney time on the Record Date, of an uncertificated holding statement in the name of the Eligible Scheme Shareholder representing the number of CDIs issued to that Eligible Scheme Shareholder; and
(f) procuring the dispatch to the Sale Holder by ordinary mail of a holding statement in the name of the Sale Holder representing the number of CDIs issued to the Sale Holder.
4.3Trading
Golden China will use its best endeavours to procure that:
(a) the Golden China Shares to be listed on the TSX will be listed for quotation with effect from the Business Day following the Effective Date; and
(b) the CDIs to be listed on ASX will be listed for quotation on a deferred settlement basis with effect from the Business Day following the Effective Date.
4.4Appointment of Golden China as attorney
Each Scheme Shareholder shall be deemed to have irrevocably appointed Golden China and each of its directors and officers (jointly and severally) as its attorneys for the purpose of executing any document necessary or taking any other act necessary to give effect to this Scheme including, but not limited to executing a master share transfer form on behalf of all Foreign Shareholders under which all Scheme Shares held by Foreign Shareholders will be transferred to the Sale Holder.
5.DEALING IN MICHELAGO SHARES
5.1No dealing after Close of Trading
Other than any transfer in accordance with this Scheme, no Michelago Shareholder shall dispose of or purport or agree to dispose of any Michelago Shares or any interest therein after the Close of Trading and any dealing in Michelago Shares after the Close of Trading shall not be recognised by Michelago.
5.2Dealings which will be recognised
For the purpose of establishing who are the Scheme Shareholders as at 7.00 pm on the Record Date, dealings in Michelago Shares will only be recognised if:
(a) in the case of dealings of the type to be effected using CHESS, the dealing is effected on or before Close of Trading and the transferee is registered in the Register as the holder of the relevant Michelago Shares by 7.00 pm Sydney time on the Record Date; and
(b) in all other cases, if registrable transmission applications or transfers in respect of dealings effected on or before Close of Trading are received on or before 5.00 pm Sydney time on the Record Date at the place where the Register is kept.
5.3Transfer or transmission after Record Date
Michelago shall not recognise any other transfer or transmission application in respect of Scheme Shares received after the relevant time specified in clause 5.2, other than a transfer in accordance with this Scheme.
5.4Maintenance of the Register
For the purpose of determining entitlements to the Scheme Consideration and other interests under the Scheme, Michelago will, until the Scheme Consideration has been issued, maintain the Register in accordance with the provisions of this clause 5 and the Register in this form will solely determine entitlements to the Scheme Consideration, and any other interests under this Scheme.
6.IMPLEMENTATION OF THE SCHEME
6.1Golden China Shares
The Golden China Shares to be allotted and issued to CDN pursuant to this Scheme will be fully paid common shares.
6.2Fractional Entitlements
If a fractional entitlement to a CDI arises from the calculation of the Scheme Consideration in respect of a Scheme Shareholder, then any such entitlement to a CDI shall be rounded down to the nearest whole number of CDIs.
6.3Holding Statements for Michelago Shares
After the Effective Date, holding statements for Michelago Shares will cease to be valid other than as evidence of entitlement to Golden China Shares or CDIs.
6.4Michelago to notify Golden China of Michelago Shareholders
Michelago shall advise Golden China immediately after the Record Date of each Scheme Shareholder and shall provide Golden China with all the information including addresses in its possession necessary to enable Golden China to notify the Scheme Shareholders and to issue to the Scheme Shareholders the CDIs to which that Scheme Shareholder is entitled pursuant to this Scheme.
6.5Joint holders
In the case of joint holders of Michelago Shares who are Eligible Scheme Shareholders, Michelago shall advise Golden China of the address of the joint holder whose name appears first in the Register, and Golden China shall issue Golden China Shares and procure the issue of CDIs in accordance with this Scheme to the joint holders as joint holders, but shall only be required to forward the holding statements for the CDIs in favour of the joint holders to the person whose name appears first in the Register.
7.WHEN SCHEME BECOMES BINDING
7.1Court order
The Scheme will become binding on Michelago and each Michelago Shareholder only if the Court makes the Final Order and that order becomes effective under section 411(10) of the Corporations Act by the lodgment with ASIC of an office copy of the Final Order in accordance with clause 7.2.
7.2Lodgement
Michelago shall lodge with ASIC an office copy of the Final Order by 5.00 pm on the first Business Day after the day on which the Final Order is obtained.
7.3Assigning, transferring and dealing with Michelago Shares
A holder of Michelago Shares (and any person claiming through that holder) may only assign, transfer or otherwise deal with those Michelago Shares on the basis that the rights so assigned, transferred or dealt with are limited in the manner described in clause 5 where the Scheme becomes binding as provided in clause 7.1.
8.GENERAL
8.1Amendments to Scheme
Michelago by its counsel or solicitors, but with the approval of Golden China by its counsel or solicitors, may consent on behalf of all persons concerned to any modification of or addition to this Scheme or to any condition which the Court may think fit to approve or impose.
8.2Notice
Where a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to Michelago, it shall not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Michelago’s registered office or at the Michelago share registry.
8.3Accidental omission to give notice
The accidental omission to give notice of the Scheme Meeting to any Michelago Shareholder or the non-receipt of such notice by any Michelago Shareholder shall not, unless so ordered by the Court, invalidate the Scheme Meeting or the proceedings of the Scheme Meeting.
8.4Scheme binding
The Scheme Shareholders agree to the transfer of their Michelago Shares to Golden China in accordance with the terms of this Scheme and this Scheme binds Michelago and all Scheme Shareholders (including those who do not attend the Scheme Meeting or do not vote at that meeting).
8.5Scheme overrides Michelago's constitution
This Scheme overrides Michelago's constitution and binds Michelago and the Scheme Shareholders.
8.6Michelago Shares warranted to be free from mortgages, charges etc
The Michelago Shareholders are deemed to have warranted to Golden China that all their Michelago Shares (including any rights attaching to those Shares) which are transferred to Golden China under this Scheme will, at the date of the transfer of them to Golden China, be fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to sell and to transfer their Michelago Shares together with any rights attaching to such shares.
8.7Golden China beneficially entitled to Michelago Shares
Subject to Golden China issuing the Golden China Shares and procuring the issue of CDIs pursuant to clause 0, Golden China will be beneficially entitled to the Michelago Shares transferred to it under this Scheme and will remain beneficially entitled pending registration by Michelago of the Golden China Subsidiary in the Register as the holder of the Michelago Shares.
8.8All things necessary for implementation
The Michelago Shareholders consent to Michelago doing all things necessary for the implementation and performance of its obligations under this Scheme. Michelago shall execute all deeds and other documents and do all acts and things as may be necessary or expedient on its part to implement this Scheme in accordance with its terms.
8.9Appointment of Michelago as attorney and agent
Each Michelago Shareholder, without the need for any further act, irrevocably appoints Michelago, and all of its directors and officers (jointly and severally) as its attorney and agent for the purpose of executing any documents and doing such acts as are necessary to give effect to this Scheme including, without limitation, executing a proper instrument of transfer of its Michelago Shares for the purposes of section 1071B of the Corporations Act which may be a master transfer of all the Michelago Shares.
8.10Notifications
Except for a Michelago Shareholder's tax file number, any instruction or notification between a Michelago Shareholder and Michelago relating to Michelago Shares at the Record Date (including, without limitation, any instruction relating to the payment of dividends or to communications from Michelago) will from the Implementation Date be deemed to be a similar instruction or notification to Golden China with respect to CDIs issued to Michelago Shareholders until that instruction or notification is revoked or amended in writing and addressed to Golden China. A Michelago Shareholder's tax file number will be notified by Michelago to Golden China and may be used by Golden China where permitted by law or a regulatory authority.
8.11Governing law
The proper law of this Scheme is the law of the State of New South Wales.
“B”
LISTED OPTION SCHEME
Scheme of Arrangement
PARTIES1.MICHELAGO LIMITED ACN 057 816 609 of Suite 5, Level 14, 189 Kent Street, Sydney, New South Wales 2000 (“Michelago”); and
2.EACH HOLDER OF LISTED OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES ISSUED IN THE CAPITAL OF MICHELAGO LIMITED
RECITALS
A.Michelago is a public company incorporated in New South Wales and its shares are quoted on ASX.
B.Michelago and Golden China Resources Corporation ARBN 119 827 851 (“Golden China”), a corporation existing under the laws of Canada, have entered into the Business Combination Agreement pursuant to which, among other things, Michelago has agreed to propose this Scheme to the Michelago Optionholders and Michelago and Golden China have agreed to take all action necessary to implement the Scheme.
C.Upon this Scheme becoming Effective, the Scheme Options will be cancelled in consideration for the issue by Golden China to each Scheme Optionholder of that number of Option CDIs calculated by applying the Option Exchange Ratio to the number of Michelago Options held by Scheme Optionholders and exercisable at the Exercise Price.
D.Golden China has entered into the Deed Poll pursuant to which it has covenanted to perform its obligations under this Scheme.
THIS SCHEME OF ARRANGEMENT WITNESSES:
1.DEFINITIONS AND INTERPRETATION
1.1Definitions
“ASIC” means the Australian Securities and Investments Commission.
“ASX” means Australian Stock Exchange Limited.
"Business Combination Agreement" means the business combination agreement between Michelago and Golden China dated 14 December 2005 as amended by agreements between Michelago and Golden China dated 28 March 2006, 21 April 2006, 10 May 2006, 7 June 2006 and 15 August 2006.
“Business Day” has the same meaning given to that expression in the Listing Rules.
“CDIs” means CHESS Depositary Interests, units of beneficial ownership, in Golden China Shares registered in the name of CDN.
“CDN” means CHESS Depositary Nominees Pty Ltd.
“CHESS” means Clearing House Electronic Subregister System.
"Close of Trading" means 7.00 pm Sydney time on the Effective Date.
“Consolidation” means the consolidation of Golden China Shares to be implemented before the Effective Date on a five for one basis.
"Corporations Act" means the Corporations Act 2001 (Cth).
"Corporations Regulations" means the Corporations Regulations 2001 (Cth).
"Court" means a court of competent jurisdiction under the Corporations Act.
"Deed Poll" means the deed poll dated 9 October 2006, executed by Golden China in favour of the Scheme Optionholders.
"Effective" when used in relation to the Scheme, means the coming into effect, pursuant to section 411(10) of the Corporations Act, of the Final Order.
"Effective Date" means the date, on or before the Outside Date, on which the Scheme becomes Effective.
“Effective Time” means the time on the Effective Date that the Scheme becomes Effective.
"Eligible Scheme Optionholder" means a Scheme Optionholder other than a Foreign Optionholder.
“Exercise Price” means the price determined by multiplying $0.15 by the Option Exchange Ratio and as converted from Australian dollars to Canadian dollars based on the Inter-bank foreign exchange rate on the Effective Date and rounded up to the nearest whole cent.
“Final Order” means the final order of the Court approving this Scheme and the Share Scheme, as such order may be amended by the Court at any time before the Effective Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or amended on appeal.
"Foreign Optionholder" means a Scheme Optionholder whose address in the Register is a place outside Australia and New Zealand.
“Golden China” means Golden China Resources Corporation ARBN 119 827 851 of Suite 1400, 8 King Street East, Toronto, Ontario, Canada, a corporation existing under the laws of Canada.
"Golden China Shares" means fully paid common shares in the capital of Golden China.
“Golden China Options” means options, each to acquire one Golden China Share or CDI, exercisable at the Exercise Price each on or before 10 January 2007, and otherwise on the terms and conditions set out the Annexure to this Scheme.
“Interim Order” means an interim order of the Court, as may be amended, providing for, among other things, the calling and holding of the Scheme Meeting.
“Implementation Date” means the Business Day after the Record Date of such later date as notified to ASX by Golden China, being a date no later than the tenth Business Day after the Effective Date.
“Last Exercise Date” means the second Business Day after the Effective Date.
"Listing Rules" means the official Listing Rules of ASX.
“Michelago” means Michelago Limited ACN 057 816 609 of Suite 5, Level 14, 189 Kent Street, Sydney, New South Wales 2000.
“Michelago Optionholders” means each person who is registered in the Register from time to time as a holder of a Michelago Option.
“Michelago Options” means options, each to subscribe for one Michelago Share, exercisable at a price of $0.15 on or before 10 January 2007, which are listed on ASX.
"Michelago Share" means a fully paid ordinary share in Michelago.
"Michelago Shareholders" means each person who is registered in Michelago’s register of members from time to time as the holder of a Michelago Share.
“Option CDIs” means CHESS Depositary Interests, units of beneficial ownership, in Golden China Options registered in the name of CDN.
“Option Exchange Ratio” means 1:37.5 (representing one Option CDI for every 37.5 Michelago Options held at 7.00 pm Sydney time on the Record Date).
“Outside Date” means 31 December 2006, or such later date to which each of Michelago and Golden China may agree in writing.
"Record Date" means the fifth Business Day after the Effective Date.
"Register" means the register of Michelago Optionholders maintained by Registries Limited, Level 2, 28 Margaret Street, Sydney, New South Wales, Australia.
"Registrar" means the person for the time being responsible for the maintenance of the Register.
"Requisite Majority" means a resolution passed by:
(a)a majority in number (more than 50 per cent) of Michelago Optionholders or Michelago Shareholders (as the case may be) who are present and voting, either in person or by proxy, attorney or in the case of a corporation its duly appointed corporate representative; and
(b)at least 75 per cent of the votes cast on the resolution to approve the Share Scheme and at least 75 per cent of the total amounts of the debts and claims of Michelago Optionholders voting on the resolution to approve this Scheme.
"Sale Facility Price" means an amount equal to the Sale Price multiplied by the number of Option CDIs issued to the Sale Holder with respect to a Foreign Optionholder, calculated by applying the Option Exchange Ratio to the number of Michelago Options held by that Foreign Optionholder.
“Sale Holder” means Taycol Nominees Pty Limited of Level 2, 55 Hunter Street, Sydney in the State of New South Wales.
“Sale Option CDIs” means the Option CDIs issued to the Sale Holder pursuant to clause 0.
"Sale Price" means the average price (net of transaction costs) at which Sale Option CDIs are sold by the Sale Holder.
"Scheme" means this scheme of arrangement subject to any alterations or conditions made or required to be made by the Court and agreed or consented to by Michelago and Golden China.
"Scheme Consideration" means the Golden China Options to be issued to CDN on trust for the Eligible Scheme Optionholders and the Sale Holder and in respect of which CDN is to issue Option CDIs to the Eligible Scheme Optionholders and the Sale Holder in consideration for the cancellation of all Michelago Options, being that number of Option CDIs calculated in accordance with the Option Exchange Ratio and in accordance with this Scheme and exercisable at the Exercise Price.
"Scheme Meeting" means the meeting of Michelago Optionholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Scheme.
"Scheme Optionholder" means each person who is registered in the Register as the holder of a Michelago Option as at 7.00 pm on the Record Date, as determined in accordance with clause 0.
“Scheme Options” means the Michelago Options on issue as at the Record Date.
“Share Scheme” means the scheme of arrangement pursuant to Part 5.1 of the Corporations Act to be made between Michelago and the Michelago Shareholders in relation to the Michelago Shares.
“Share Scheme Meeting” means the meeting of Michelago Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Share Scheme.
"TSX" means The Toronto Stock Exchange.
1.2Interpretation
Unless expressed to the contrary:
(a) the singular includes the plural and vice versa;
(b) each gender includes each other gender;
(c) a reference to a statute or to any section or provision thereof shall include any statutory amendment, modification or re-enactment thereof or any statutory provision substituted therefore;
(d) references to “dollar” or “$” means the lawful currency of the Commonwealth of Australia at any time;
(e) references to clauses and annexures are references to clauses and annexures of this Scheme;
(f) terms binding more than one person shall be construed as binding them jointly and severally;
(g) references to persons include references to corporations;
(h) headings and sub-headings shall not affect the construction of the substantive provisions of this document;
(i) terms defined in the Corporations Act shall bear their defined meaning where used in this Scheme.
2.CONDITIONS PRECEDENT
2.1Conditions
This Scheme is conditional on each of the following conditions precedent:
(a) the Consolidation taking effect;
(b) the Business Combination Agreement and the Deed Poll being and remaining at all times in full force and effect;
(c) the conditions set out in section 3 of the Business Combination Agreement having been satisfied, waived or released in accordance with the terms of the Business Combination Agreement before the Final Order is made by the Court;
(d) this Scheme being approved by the Requisite Majority at the Scheme Meeting;
(e) the Share Scheme being approved by the Requisite Majority at the Share Scheme Meeting;
(f) approval for the admission of Golden China to the official list of ASX and for the quotation of Option CDIs on the official list of ASX being obtained subject only to the Scheme being approved by the Court under section 411 of the Corporations Act, the Scheme taking effect and such other conditions as are acceptable to the boards of Michelago and Golden China;
(g) approval for the admission of Golden China to the official list of TSX being obtained subject only to the Scheme being approved by the Court under section 411 of the Corporations Act, the Scheme taking effect and such other conditions as are acceptable to the boards of Michelago and Golden China;
(h) approval by the Court of the Scheme pursuant to section 411 of the Corporations Act; and
(i) lodgement with the ASIC of an office copy of the Final Order.
2.2Certificate
At the hearing by the Court of the application for the Final Order, Michelago and Golden China will each provide to the Court a certificate confirming whether or not all of the conditions precedent in the Business Combination Agreement and the conditions precedent in clause 2.1 of this Scheme (with the exception of the conditions in paragraphs 0 and 0), have been satisfied, waived or released (as applicable).
2.3Non-fulfilment of conditions precedent
The conditions in clause 2.1 are conditions precedent to the binding effect of this Scheme to the extent that, unless all of those conditions are satisfied, or, in the case of the conditions in paragraphs 0 to 0 inclusive, waived or released before the Final Order is made by the Court, the Scheme shall have no effect and shall not be binding on the Michelago Optionholders.
3.THE SCHEME
3.1Scheme
Subject to the conditions in clause 2.1 being satisfied and on this Scheme becoming binding in accordance with clause 7.1, the following will occur to give effect to this Scheme:
(a) On the Implementation Date, Golden China will issue to CDN to be held on trust, that number of Golden China Options that will enable CDN to issue Option CDIs in accordance with paragraphs 0 and 0;
(b) On the Implementation Date, Golden China Shall procure CDN to issue to each Eligible Scheme Optionholder the number of Option CDIs calculated:
(i) by applying the Option Exchange Ratio to the number of Michelago Options held by each Eligible Scheme Optionholder; and
(ii) otherwise in accordance with this Scheme.
(c) On the Implementation Date, Golden China shall procure CDN to issue to the Sale Holder the number of Option CDIs calculated:
(i) by applying the Option Exchange Ratio to the number of Michelago Options held by each Foreign Optionholder; and
(ii) otherwise in accordance with this Scheme; and
the Sale Holder will become the legal and beneficial owner of the Option CDIs issued to it without the need for any further acts by the relevant Foreign Optionholder. For the avoidance of doubt, the Sale Holder will not be acting as a trustee, custodian, nominee or agent in respect of the those Option CDIs, whether for the purpose of distributions to be paid on those Option CDIs or any sale or transfer of those Option CDIs or otherwise.
(d) Forthwith upon Golden China issuing the Golden China Options and procuring the issue of Option CDIs pursuant to paragraphs 0, 0 and 0, ownership of all the Michelago Options will be cancelled as at the Implementation Date without the need for any further act by any Scheme Optionholder.
3.2Sale Holder to sell Option CDIs
Michelago shall procure that the Sale Holder:
(a) on, or as soon as reasonably practicable after, the Implementation Date, sells the Sale Option CDIs; and
(b) pays the Sale Facility Price to each Foreign Optionholder within 30 days of the Implementation Date, in consideration for the cancellation of the Michelago Options. The Sale Holder’s obligation to make such payment will be satisfied upon it paying the Sale Facility Price to Michelago, to be held on trust for payment to the relevant Foreign Optionholder.
4.SUSPENSION OF MICHELAGO OPTIONS, ISSUE AND TRADING OF GOLDEN CHINA OPTIONS AND OPTION CDIS
4.1Suspension
Michelago shall apply to ASX for suspension of trading on ASX as from the Close of Trading.
4.2Issue of Option CDIs
The obligation of Golden China to issue Option CDIs to the Eligible Scheme Optionholders shall be satisfied by Golden China on the Implementation Date:
(a) causing CDN's name to be entered on the list of optionholders to be maintained by Golden China as the holder of the Golden China Options issued to CDN pursuant to clause 0;
(b) procuring the dispatch to CDN of a certificate in the name of the CDN representing the Golden China Options issued to CDN;
(c) procuring the name of each Eligible Scheme Optionholder to be entered on the records maintained by CDN as the holder of the Option CDIs issued to that Eligible Scheme Optionholder;
(d) procuring the name of the Sale Holder to be entered on the records maintained by CDN as the holder of the Option CDIs issued to the Sale Holder;
(e) procuring the dispatch to each Eligible Scheme Optionholder by ordinary mail to the address of that Eligible Scheme Optionholder recorded in the Register as at 7.00 pm Sydney time on the Record Date of an uncertificated holding statement in the name of the Eligible Scheme Optionholder representing the number of Option CDIs issued to that Eligible Scheme Optionholder; and
(f) procuring the dispatch to the Sale Holder by ordinary mail of a holding statement in the name of the Sale Holder representing the number of Option CDIs issued to the Sale Holder.
4.3Trading
Golden China will use its best endeavours to procure that:
(a) the Golden China Options will be listed for quotation on the TSX with effect from the Business Day following the Effective Date; and
(b) the Option CDIs to be listed on ASX will be listed for quotation on a deferred settlement basis with effect from the Business Day following the Effective Date.
4.4Appointment of Golden China as attorney
Each Scheme Optionholder shall be deemed to have irrevocably appointed Golden China and each of its directors and officers (jointly and severally) as its attorneys for the purpose of executing any document necessary or taking any other act necessary to give effect to this Scheme.
5.DEALING IN AND EXERCISE OF MICHELAGO OPTIONS
5.1No dealing after Close of Trading
Other than a transfer in accordance with this Scheme, no Michelago Optionholder shall dispose of or purport or agree to dispose of any Michelago Options or any interest therein after the Close of Trading and any dealing in Michelago Options after the Close of Trading shall not be recognised by the Michelago.
5.2No exercise after Last Exercise Date
No Michelago Optionholder shall exercise or purport to exercise any Michelago Options after 7.00 pm Sydney time on the Last Exercise Date and any purported exercise of Michelago Options after that time will be void and of no force or effect.
5.3Dealings which will be recognised
For the purpose of establishing who are the Scheme Optionholders as at 7.00 pm Sydney time on the Record Date, dealings in Michelago Options will only be recognised if:
(a) in the case of dealings of the type to be effected using CHESS, the dealing is effected on or before Close of Trading and the transferee is registered in the Register as the holder of the relevant Michelago Options by 7.00 pm Sydney time on the Record Date; and
(b) in all other cases, if registrable transmission applications or transfers in respect of dealings effected on or before Close of Trading are received on or before 5.00 pm Sydney time on the Record Date at the place where the Register is kept.
5.4Transfer or transmission after Record Date
Michelago shall not recognise any other transfer or transmission application in respect of Michelago Scheme Options received after the relevant time specified in clause 5.3.
5.5Maintenance of the Register
For the purpose of determining entitlements to the Scheme Consideration and other interests under the Scheme, Michelago will, until the Scheme Consideration has been issued, maintain the Register in accordance with the provisions of this clause 5 and the Register in this form will solely determine entitlements to the Scheme Consideration, and any other interests under this Scheme.
6.IMPLEMENTATION OF THE SCHEME
6.1Golden China Options
The Golden China Options to be allotted and issued to CDN pursuant to this Scheme will be issued on the terms set out in Annexure A to this Scheme.
6.2Fractional Entitlements
If a fractional entitlement to an Option CDI arises from the calculation of the Scheme Consideration in respect of a Scheme Optionholder, then any such entitlement to an Option CDI shall be rounded down to the nearest whole number of Option CDIs.
6.3Holding Statements for Michelago Options
After the Effective Date, holding statements for Michelago Options will cease to be valid other than as evidence of entitlement to Golden China Options or Option CDIs.
6.4Michelago to notify Golden China of Michelago Optionholders
Michelago shall advise Golden China immediately after the Record Date of each Scheme Optionholder and shall provide Golden China with all the information including addresses in its possession necessary to enable Golden China to notify the Scheme Optionholders and to issue to the Scheme Optionholders the Golden China Options or Option CDIs to which that Scheme Optionholder is entitled pursuant to this Scheme.
6.4Joint holders
In the case of joint holders of Michelago Options who are Eligible Scheme Optionholders, Michelago shall advise Golden China of the address of the joint holder whose name appears first in the Register, and Golden China shall issue Golden China Options and procure the issue of Option CDIs in accordance with this Scheme to the joint holders as joint holders, but shall only be required to forward the holding statements for the Option CDIs in favour of the joint holders to the person whose name appears first in the Register.
7. WHEN SCHEME BECOMES BINDING
7.1Court order
The Scheme will become binding on Michelago and each Michelago Optionholder only if the Court makes the Final Order and that order becomes effective under section 411(10) of the Corporations Act by the lodgment with ASIC of an office copy of the Final Order in accordance with clause 7.2.
7.2Lodgement
Michelago shall lodge with ASIC an office copy of the Final Order by 5.00 pm on the first Business Day after the day on which the Final Order is obtained.
7.3Assigning, transferring and dealing with Michelago Options
A holder of Michelago Options (and any person claiming through that holder) may only assign, transfer or otherwise deal with those Michelago Options on the basis that the rights so assigned, transferred or dealt with are limited in the manner described in clause 5 where the Scheme becomes binding as provided in clause 7.1.
8.GENERAL
8.1Amendments to Scheme
Michelago by its counsel or solicitors, but with the prior written approval of Golden China, may consent on behalf of all persons concerned to any modification of or addition to this Scheme or to any condition which the Court may think fit to approve or impose.
8.2Notice
Where a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to Michelago, it shall not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Michelago’s registered office or at the Michelago share registry.
8.3Accidental omission to give notice
The accidental omission to give notice of the Scheme Meeting to any Michelago Optionholder or the non-receipt of such notice by any Michelago Optionholder shall not, unless so ordered by the Court, invalidate the Scheme Meeting or the proceedings of the Scheme Meeting.
8.4Scheme binding
The Scheme Optionholders agree to the cancellation of their Michelago Options in accordance with the terms of this Scheme and this Scheme binds Michelago and all Scheme Optionholders (including those who do not attend the Scheme Meeting or do not vote at that meeting).
8.5Scheme overrides Michelago's constitution
This Scheme overrides Michelago's constitution and binds Michelago and the Scheme Optionholders.
8.6All things necessary for implementation
The Michelago Optionholders consent to Michelago doing all things necessary for the implementation and performance of its obligations under this Scheme. Michelago shall execute all deeds and other documents and do all acts and things as may be necessary or expedient on its part to implement this Scheme in accordance with its terms.
8.7Appointment of Michelago as attorney and agent
Each Michelago Optionholder, without the need for any further act, irrevocably appoints Michelago, and all of its directors and officers (jointly and severally) as its attorney and agent for the purpose of executing any documents and doing such acts as are necessary to give effect to this Scheme.
8.8Notifications
Except for a Michelago Optionholder's tax file number, any instruction or notification between a Michelago Optionholder and Michelago relating to Michelago Options at the Record Date (including, without limitation, any instruction relating to communications from Michelago) will from the Implementation Date be deemed to be a similar instruction or notification to Golden China with respect to Option CDIs issued to Michelago Shareholders until that instruction or notification is revoked or amended in writing and addressed to Golden China. A Michelago Optionholder's tax file number will be notified by Michelago to Golden China and may be used by Golden China where permitted by law or a regulatory authority.
8.9Governing law
The proper law of this Scheme is the law of the State of New South Wales.
ANNEXURE A
TERMS AND CONDITIONS OF GOLDEN CHINA OPTIONS
Register
Golden China Resources Corporation (“Company”) will maintain a list of holders of options in accordance with section 50 of the Canada Business Corporation Act.
Transfer/Transmission
An option may be transferred or transmitted in any manner approved by the applicable stock exchange.
Exercise
An option may be exercised by delivery to Computershare Trust Company of Canada, of a notice of exercise in writing to Golden China, signed by the registered holder of the option, together with payment to the Company of $[option exercise price] (“Exercise Price”) per option being exercised.
An option may be exercised on any business day from the date of grant to 10 January 2007 (inclusive), but not thereafter. A Notice of Exercise of Options is only effective when the Company has received the full amount of the exercise price in cash or cleared funds.
Dividend Entitlement
Options do not carry any dividend entitlement, Shares issued on exercise are entitled to dividends declared on or after the date of issue of the shares. Shares issued on exercise of options in all other respects rank equally with other issued fully paid common shares of the Company from the date of issue.
Participating rights
An optionholder may only participate in new issues of securities to holders of common shares in the Company if the option has been exercised and shares allotted in respect of the option before the record date for determining entitlements to the issue. The options themselves do not give a participation right. The Company must give at least 7 business days’ notice to optionholders of any new issue to common shareholders before the record date for determining entitlements to the issue in accordance with the Listing Rules of Australian Stock Exchange Limited.
If between the date of issue and the date of exercise of an option the Company makes one or more rights issues (being a pro rata issue of ordinary shares in the capital of the Company that is not a bonus issue), the exercise price of options on issue will be reduced in respect of each rights issue according to the following formula:
NE = OE - E [P-(S + D)] N + 1
where:
NE is the new exercise price of the option;
OEis the old exercise price of the option;
E is the number of underlying fully paid common shares into which one option is exercisable;
Pis the average closing sale price per common share (weighted by reference to volume) recorded on the stock market of the Australian Stock Exchange Limited during the 5 trading days ending on the day before the ex rights date or ex entitlements date (excluding special crossings and overnight sales);
Sis the subscription price for an ordinary share under the rights issue;
Dis the dividend due but not yet paid on each ordinary share at the relevant time; and
Nis the number of ordinary shares that must be held to entitle holders to receive a new common share in the rights issue.
If there is a bonus issue to the holders of common shares in the capital of the Company, the number of common shares over which the option is exercisable will be increased by the number of common shares which the holder of the option would have received if the option had been exercised before the record date for the bonus issue.
Reconstructions and Alteration of Capital
Upon a consolidation, sub-division, reduction or other reorganisation or alteration of the capital of the Company, the number of outstanding options and the Exercise Price must be made in accordance with the Listing Rules of Australian Stock Exchange Limited.
Stock Exchange Listing
The Company must make application for quotation of shares issued on exercise of the options on Australian Stock Exchange Limited and/or Toronto Stock Exchange in accordance with the Listing Rules of each of those stock exchanges. Shares so issued will rank equally with other issued and outstanding fully paid common shares of the Company.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 24 January 2007
Counsel for the Applicant: Mr M. Oakes SC Solicitor for the Applicant: Kemp Strang Date of Hearing: 13 December 2006 Date of Judgment: 13 December 2006
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