Re WebCentral Group Ltd (No 2)

[2006] FCA 1203

FEDERAL COURT OF AUSTRALIA

WebCentral Group Limited, in the matter of WebCentral Group Limited
(No 2) [2006] FCA 1203

CORRIGENDUM

IN THE MATTER OF WEBCENTRAL GROUP LIMITED (ACN 063 963 039), WEBCENTRAL GROUP LIMITED

NSD 1326 of 2006

LINDGREN J
12 SEPTEMBER 2006 (CORRIGENDUM 25 SEPTEMBER 2006)
SYDNEY (HEARD IN ADELAIDE VIA VIDEO LINK TO SYDNEY)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1326 OF 2006

IN THE MATTER OF WEBCENTRAL GROUP LIMITED (ACN 063 963 039)

WEBCENTRAL GROUP LIMITED
(ACN 063 963 039)
Plaintiff

JUDGE:	LINDGREN J
DATE OF ORDER:	25 AUGUST 2006
WHERE MADE:	ADELAIDE (VIA VIDEO LINK TO SYDNEY)

CORRIGENDUM

1. In paragraph [1], omit “s 411(6)” and substitute “s 411(4)(b) and s 411(6)”.

I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the
Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate:

Dated:            25 September 2006

FEDERAL COURT OF AUSTRALIA

WebCentral Group Limited, in the matter of WebCentral Group Limited
(No 2) [2006] FCA 1203

CORPORATIONS – compromise or arrangement – “no encumbrances” clause in scheme – whether Court should approve Scheme containing a provision that shares will be transferred free of all encumbrances.  Held: Scheme approved subject to deletion of the “no encumbrances” clause.

Corporations Act 2001 (Cth) s 411

IN THE MATTER OF WEBCENTRAL GROUP LIMITED (ACN 063 963 039), WEBCENTRAL GROUP LIMITED

NSD 1326 of 2006

LINDGREN J
12 SEPTEMBER 2006
SYDNEY (HEARD IN ADELAIDE VIA VIDEO LINK TO SYDNEY)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1326 OF 2006

IN THE MATTER OF WEBCENTRAL GROUP LIMITED (ACN 063 963 039)

WEBCENTRAL GROUP LIMITED
(ACN 063 963 039)

Plaintiff

JUDGE:	LINDGREN J
DATE OF ORDER:	25 AUGUST 2006
WHERE MADE:	ADELAIDE (VIA VIDEO LINK TO SYDNEY)

THE COURT ORDERS THAT:

1. Pursuant to ss 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth) (“the Act”), the scheme of arrangement between the Plaintiff and its members (other than any person holding fully paid ordinary shares in the Plaintiff on behalf of, or for the benefit of, Melbourne IT Ltd or any of its Related Entities, as defined in the scheme of arrangement) in the form annexed hereto and marked “A” [Annexure A comprises 15 pages and is not attached to this copy, but is available electronically], having been duly agreed to in accordance with s 411(4)(a)(i) of the Act at a meeting of the members of the Plaintiff, be approved, subject to the following alterations, namely:

(i)the deletion of the words: “Date: 14 July 2006” from the first page;

(ii)the amendment of the definition of “Deed Poll” in clause 1.1 to read:

“Deed Poll means the Deed Poll dated 11 July 2006 executed by MLB, as amended by Amendment to Deed Poll dated 18 August 2006, pursuant to which MLB has, amongst other things, covenanted in favour of Scheme Shareholders to perform the obligations contemplated of it under this Scheme.”; and

(iii)the deletion of clause 9.3(b) and the re-lettering of clause 9.3(c) as clause 9.3(b);

so that the scheme of arrangement so approved and altered is in the form annexed hereto and marked “B” [Annexure B comprises 15 pages and is not attached to this copy, but is available electronically].

2. Pursuant to s 411(12) of the Act, the Plaintiff be exempted from compliance with s 411(11) of the Act in relation to the order at paragraph 1.

3.          These Orders to 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	NSD 1326 OF 2006

IN THE MATTER OF WEBCENTRAL GROUP LIMITED (ACN 063 963 039)

WEBCENTRAL GROUP LIMITED
(ACN 063 963 039)

Plaintiff

JUDGE:	LINDGREN J
DATE:	12 SEPTEMBER 2006
PLACE:	SYDNEY (HEARD IN ADELAIDE VIA VIDEO LINK TO SYDNEY)

REASONS FOR JUDGMENT No 2

(Second court hearing)

1 The plaintiff (“WCG”) applies under s 411(6) of the Corporations Act 2001 (Cth) (“the Act”) for an order approving a scheme of arrangement between WCG and its members (“the Scheme”). The first court hearing took place on 14 July 2006 (see WebCentral Group Limited, in the matter of WebCentral Group Limited [2006] FCA 937). I then made an order under s 411(1) of the Act that WCG convene a meeting (“Scheme Meeting”) of its shareholders (“WebCentral Shareholders”) for the purpose of their considering, and, if thought fit, agreeing (with or without modification) to the Scheme.

2           On the second court hearing on 25 August 2006, I made the attached orders approving the Scheme.  The following are my reasons for the making of those orders.

3           The nature of the Scheme was described in my earlier Reasons for Judgment.  The Scheme provides for the acquisition of all of the issued shares in WCG by Melbourne IT Ltd (“MLB”).

4 The Scheme Meeting was held on 21 August 2006 in accordance with the orders of 14 July 2006. A total of 32,274,813 votes were cast. Of these, 32,041,443 votes (99.28% of all votes cast) representing 321 shareholders (93.31% of WebCentral Shareholders) favoured agreeing to the Scheme, 233,370 votes (0.72% of all votes cast) representing 23 shareholders (6.69% of all WebCentral Shareholders) were cast against the motion to agree to it, and no “abstain” votes were recorded on the motion. Accordingly, the motion was passed by the majority referred to in s 411(4)(a) of the Act.

5 There was in evidence a letter dated 24 August 2006 from the Australian Securities and Investments Commission (“ASIC”) advising that under para 411(17)(b) of the Act, ASIC had no objection to the Scheme, and did not propose to appear to make submissions, or to intervene to oppose the Scheme.

6           Only three matters call for special mention in these reasons:  first, a competing “indicative   proposal” that was put to WCG on behalf of NetRegistry Pty Ltd (“NetRegistry”); secondly, the “no encumbrances issue” to which I referred at [13]–[16] of my earlier reasons; and thirdly, the form of order proposed.

NetRegistry’s competing indicative proposal

7           While the proposal for the Scheme was in train, Sydney Capital Partners, on behalf of its client, NetRegistry, advised that NetRegistry was interested in making an offer for the business of, or shares in, WCG.  NetRegistry was, of course, aware of the proposal by MLB which had received the support of WCG’s board of directors.

8           NetRegistry indicated the possibility of an offer of $1.65 per share, payable in cash, contingent on a number of conditions precedent being satisfied, including confirmation of funding.  The facts relating to the NetRegistry approach are conveyed in detail in an affidavit sworn on 24 August 2006 of Grant Chamberlain, Director and Deputy Head of Mergers and Acquisitions, Deutsche Bank AG, which had been retained by WCG to advise it in relation to the Scheme, and in the documents constituting the Exhibit to Mr Chamberlain’s affidavit.

9           The initial approach by NetRegistry was in a face to face meeting on 14 July 2006.  This was followed by a letter dated 18 July 2006 from Sydney Capital Partners.

10          The directors of WCG did not regard NetRegistry’s indicative proposal as constituting a material change of circumstances in relation to the Scheme or as enlivening WCG’s continuing disclosure of obligation.  However, because of rumours in relation to NetRegistry’s indicative proposal, on Wednesday 16 August 2006 WCG announced to the Australian Stock Exchange (“ASX”) the approach from NetRegistry.  The announcement referred to the “unsolicited indicative proposal” that had been made to WCG on behalf of NetRegistry and set out reasons why the board of directors of WCG had determined that the interests of WebCentral Shareholders would be better served by the board’s continuing to pursue the well advanced proposed merger with MLB.  The ASX notice stated that NetRegistry’s proposal was conditional and at an early stage of development, and did not yet represent an offer capable of acceptance.

11          Subsequently, NetRegistry expressed its disappointment over the decision of WCG’s board not to pursue discussions with NetRegistry.  As well, NetRegistry issued a press release disagreeing with certain aspects of WCG’s ASX announcement.

12          If the board of WCG had “stalled” the MLB proposal in the hope of grasping an offer from NetRegistry, WCG may have released the MLB “bird in the hand” and finished up with nothing.  It was a business judgment for the directors of WCG whether to run that risk.

13          The conditional approach from NetRegistry and the WCG board’s decision to proceed with the Scheme Meeting on 21 August 2006 notwithstanding it, are not reasons why the Court should withhold its approval of the Scheme.

The “no encumbrances” issue

14 In relation to the “no encumbrances issue”, I have decided to follow the course allowed by s 411(6) of the Act of approving the Scheme subject to the alteration of the Scheme, by the deletion of clause 9.3(b) (and the re-lettering of clause 9.3(c) as clause 9.3(b)). As noted in my earlier Reasons for Judgment at [15], this was an alternative course which Mr M B Oakes, senior counsel for WCG, suggested if the course which he primarily supported, namely, that of the Court’s approving the Scheme containing clause 9.3(b), should not find favour.

15          Clause 9.3(b) was set out at [13] of my earlier reasons and is as follows:

“The Scheme Shares transferred to MLB under the Scheme will be transferred free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind, whether legal or otherwise, that will bind MLB.”

16          Mr Oakes made a detailed written submission in favour of approval of the Scheme containing this clause.  To summarise his submission would not adequately reflect it, but I think it fair to say that he seeks to call in aid, with reference to authorities, the following propositions:

· that a shareholder holds its shares subject to the risk of disposition under the Act, including a transfer pursuant to a Court-approved scheme of arrangement;

·     that the holder of a security interest in shares does not obtain an interest higher than that of the registered holder of the shares; and

·     that a transfer pursuant to a Court-approved scheme of arrangement will “override the proprietary interest of the holder of a security interest in the shares, although not in the scheme consideration”.

17          For the first proposition, senior counsel referred to several authorities, including Cambridge Gas Transport Corporation v The Official Committee of Unsecured Creditors (of Navigator Holdings Plc and others) [2006] UKPC 26, especially at [26]. For the proposition that the security attaches to the scheme consideration, he referred to In re General Exchange Bank (1871) LR 6 Ch App 818.

18 In substance, a scheme of arrangement approved by the Court supplies the agreement to be bound by the scheme of all members or creditors, as the case may be, of the company, including those who in fact did not vote in favour of the scheme. The effect of the Court’s approval, and of the operation of s 411(4) of the Act, is that all members or creditors, as the case may be, are bound by the compromise or arrangement.

19 I referred to s 1072E(10) of the Act at [15] of my earlier reasons. That subsection provides:

“Except as provided in this section and section 169:

(a)no notice of a trust, whether express, implied or constructive, must be entered on a register kept in this jurisdiction or be receivable by ASIC; and

(b)      no liabilities are affected by anything done under a preceding subsection of this section or under section 169; and
(c)       nothing so done affects the body corporate concerned with notice of a trust.”

As noted also in [15] of my earlier Reasons, cl 2.5 of WCG’s constitution provides:

“Except as permitted or required by the Corporations Law, the Company shall not recognise a person as holding a Share or Share Option upon any trust”.

and cl 2.6 of the constitution provides that WCG is:

“not bound by or compelled in any way to recognise any equitable, contingent, future or partial right or interest in any Share or Share Option (whether or not it has notice of the interest or right concerned) unless otherwise provided by [the] Constitution or by law, except an absolute right of ownership in the registered holder of the Share or Share Option.”

20          The Scheme, and the Court’s approval of it, cannot affect the interests of a holder of security over shares the subject of the Scheme.  Two opposed rhetorical questions can therefore be asked:

“Why retain the ‘no encumbrances’ clause in the Scheme?”

“Why not retain the ‘no encumbrances’ clause in the Scheme?”

21          The reason why I think that the ‘no encumbrances’ clause should not remain is that its presence may give the impression that the interests of the holders of security over shares are being adversely affected. In my view, it is no answer to this objection to say that a security holder’s fears would be immediately allayed upon its being informed that clause 9.3(b) did not go beyond describing the position that prevails at law, in any event, and that in relation to the security interest the clause might just as well have been omitted.  The security holder would reply, I think with justification: “Then why cause me concern (and the cost of obtaining legal advice) by having the clause in the Scheme?”.

22          The preferable course is to omit cl. 9.3(b).

23          Two further matters remain to be noted.  The first is that it is arguable that cl 9.3(b) purports to extinguish any security interest so that the security interest would not in fact attach to the Scheme consideration.  Anticipating this further possible objection to the clause, Mr Oakes SC said that his instructions were to agree to a modification of cl 9.3(b) so as to make it clear that this was not intended.  In the light of the view which I have reached in relation to the clause generally, any question of amendment does not arise.

24 The other matter is that I have no doubt that it is within the Court’s power under s 411(6) to approve the Scheme subject to an alteration consisting of deletion of cl 9.3(b). It is inconceivable that any shareholder who voted in favour of the Scheme would have done otherwise if it had lacked cl 9.3(b).

Form of order

25          It is proposed that there be set out as attachments to the form of orders:

· the Scheme of Arrangement as approved at the Scheme Meeting, with the alterations now made pursuant to s 411(6) highlighted; and

·     the Scheme of Arrangement as approved by the Court, incorporating those alterations, but without highlighting.

In this way, as senior counsel says, what has occurred can be readily identified.  I followed this course, which I consider to be commendable, in the form of order made on 25 August 2006.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate:

Dated:            12 September 2006

Counsel for the Plaintiff:	Mr M B Oakes SC
Solicitor for the Plaintiff:	Addisons Lawyers
Date of Hearing:	25 August 2006 (via video link from Adelaide to Sydney)
Date of Judgment:	12 September 2006

“B”

Scheme of Arrangement

WebCentral Group Limited (ABN 85 063 963 039)

The holders of fully paid ordinary shares in WebCentral Group Limited (other than any person holding fully paid ordinary shares in WebCentral Group Limited on behalf of, or for the benefit of, Melbourne IT Ltd or any of its Related Entities)

Level 12

60 Carrington Street
SYDNEY  NSW  2000
DX 262 SYDNEY  NSW
Tel: [phone]
Fax: [phone]
MVR:WEB022/3

151683_1

Table of Contents

1. Definitions and interpretation  1

2. Preliminary  5
3. Conditions Precedent  6
4. Implementation of the Scheme  6
5. Scheme Consideration  7
6. Provision Of Scheme Consideration  8
7. Quotation Of Mlb Shares   11
8. Dealings In Wcg Shares   11
9. General Scheme Provisions   12

Scheme of Arrangement

Details

Parties

1.         WebCentral Group Limited (“WCG”)
ABN	85 063 963 039
Address	Level 14, 111 Elizabeth Street, Sydney NSW 2000
Fax	[phone]
Attention	Company Secretary
2.         The holders of fully paid ordinary shares in WebCentral Group Limited (other than any person holding fully paid ordinary shares in WebCentral Group Limited on behalf of, or for the benefit of, Melbourne IT Ltd or any of its Related Entities)

Operative Parts

1.     Definitions and interpretation

1.1Definitions

In this document, the following definitions apply unless the context requires otherwise.

ASIC means the Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).

ASX Listing Rules means the official listing rules of ASX.

Business Day has the meaning given in the ASX Listing Rules.

Cash Consideration means the Option A Cash Consideration or the Option B Cash Consideration, as defined in clause 5.

CHESS means the Clearing House Electronic Subregister System for the electronic transfer of securities, operated by ASX Settlement and Transfer Corporation Pty Limited (ABN 49 008 504 532).

Conditions Precedent means the conditions precedent set out or referred to in clause 3.1.

Corporations Act means the Corporations Act 2001 (Cth).

Court means the Federal Court of Australia.

Deed Poll means the Deed Poll dated 11 July 2006 executed by MLB, as amended by Amendment to Deed Poll dated 18 August 2006, pursuant to which MLB has, amongst other things, covenanted in favour of Scheme Shareholders to perform the obligations contemplated of it under this Scheme.

Effective Date means the date on which the Scheme Order comes into effect pursuant to section 411(10) of the Corporations Act.

Eligible Scheme Shareholder means a Scheme Shareholder other than an Ineligible Overseas Shareholder.

Excluded Share means any WCG Ordinary Share held by any person on behalf of, or for the benefit of, MLB or any of its Related Entities.

Implementation Date means the third Business Day after the Record Date.

Ineligible Overseas Shareholder means a Scheme Shareholder whose address as shown in the WCG Share Register at the Record Date is in a jurisdiction other than Australia or its external territories, except where in the case of the issue of MLB Shares, MLB is reasonably satisfied that such issue to that Scheme Shareholder is not prohibited, not unduly onerous and not unduly impracticable in that jurisdiction.

Merger Implementation Deed means the Merger Implementation Deed dated 22 May 2006 between MLB and WCG.

MLB means Melbourne IT Ltd (ACN 073 716 793).

MLB Share means a fully paid ordinary share in the capital of MLB.

MLB Share Register means the register of members of MLB maintained pursuant to the Corporations Act.

MLB Share Registry means Link Market Services Limited, Level 4, 333 Collins Street, Melbourne, Victoria.

Option A Cash Consideration has the meaning given in clause 5(a)(i).

Option A Consideration means:

(a)         $0.63; and

(b)         0.5 MLB Shares,

per Scheme Share.

Option A Scrip Consideration has the meaning given in clause 5(a)(ii).

Option B Cash Consideration has the meaning given in clause 5(b)(i).

Option B Consideration means

(a)         $0.93; and

(b)         1/3 of a MLB Share,

per Scheme Share.

Option B Scrip Consideration has the meaning given in clause 5(b)(ii).

Record Date means 5.00pm on the fifth Business Day after the Effective Date.

Registered Address means, in relation to a WCG Shareholder, the address shown in the WCG Share Register.

Related Entity means, in relation to a person, any entity which is related to that person within the meaning of section 50 of the Corporations Act or which is an economic entity (as defined in any approved Australian accounting standard) that is controlled by that person.

Sale Agent means the person nominated by MLB and approved by WCG to sell the MLB Shares that are attributable to Ineligible Overseas Shareholders under the terms of this Scheme.

Scheme means this scheme of arrangement, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act.

Scheme Booklet means the information dispatched to WCG Shareholders and approved by the Court, including this Scheme, an explanatory statement in relation to this Scheme issued pursuant to section 412 of the Corporations Act and registered with ASIC, an independent expert's report, copies or summaries of each of the Merger Implementation Deed and the Deed Poll, and a notice convening the Scheme Meeting (together with proxy forms).

Scheme Consideration means the consideration to be provided to Scheme Shareholders for the transfer to MLB of their Scheme Shares, ascertained in accordance with clause 5.

Scheme Meeting means the meeting ordered by the Court to be convened pursuant to section 411(1) of the Corporations Act in relation to this Scheme.

Scheme Order means the order of the Court made for the purposes of section 411(4)(b) of the Corporations Act in relation to this Scheme.

Scheme Shareholder means each person registered in the WCG Share Register as the holder of Scheme Shares as at the Record Date.

Scheme Shares means the WCG Shares on issue at the Record Date other than the Excluded Shares (if any).

Scrip Consideration means the Option A Scrip Consideration or the Option B Scrip Consideration, as defined in clause 5.1.

Second Court Date means the first day on which an application made to the Court for the Scheme Order is heard or, if the application is adjourned for any reason, the first day on which the adjourned application is heard.

WCG means WebCentral Group Limited (ACN  063 963 039).

WCG Share means a fully paid ordinary share in the capital of WCG.

WCG Shareholder means each person registered in the WCG Share Register as the holder of WCG Shares.

WCG Share Register means the register of members of WCG maintained pursuant to the Corporations Act.

WCG Share Registry means Computershare Investor Services Pty Limited (ABN 48 078 279 277) of Level 3, 60 Carrington Street, Sydney.

1.2Interpretation

Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise.

(a)The singular includes the plural and conversely.

(b)           A gender includes all genders.

(c)           If a word or phrase is defined, its other grammatical forms have a corresponding meaning.

(d)           A reference to a person, corporation, trust, partnership, unincorporated body, government agency or other entity includes any of them,

(e)           A reference to a clause is a reference to a clause of this document.

(f)A reference to a person includes a reference to the person's executors, administrators, successors, substitutes (including, without limitation, persons taking by novation) and assigns.

(g)           A reference to an agreement or document (including, without limitation, a reference to this document) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this document or that other agreement or document.

(h)           A reference to any legislation or to a provision of any legislation includes a modification or re-enactment of it, any legislative provision substituted for it and all regulations and statutory instruments issued under it.

(i) Words and phrases not specifically defined in this document have the same meanings (if any) given to them in the Corporations Act.

(j)            A reference to time is a reference to time in Sydney, Australia,

(k)           A reference to $ is to the lawful currency of Australia.

2.     Preliminary

2.1WCG

(a)WCG is a public company incorporated in Australia and registered in New South Wales and is a company limited by shares.  Its registered office is at Level 14, 111 Elizabeth Street, Sydney, NSW, AUSTRALIA, 2000.

(b)           WCG has been admitted to the official list of ASX and WCG Shares have been granted official quotation on the stock market conducted by ASX.

(c)As at 14 July 2006, 42,036,123 WCG Shares were on issue.

2.2MLB

(a)MLB is a public company incorporated in Australia and registered in Victoria and is a company limited by shares. Its registered office is at Level 2, 120 King Street, Melbourne, VIC, AUSTRALIA, 3000.

(b)MLB has been admitted to the official list of ASX and MLB Shares have been granted official quotation on the stock market conducted by ASX.

(c)As at 14 July 2006, 55,086,994 MLB Shares were on issue.

2.3Summary of the Scheme

(a)If the Scheme becomes effective (by virtue of the Scheme Order coming into effect in accordance with section 411(10) of the Corporations Act) then:

(i)all the Scheme Shares will be transferred to MLB in accordance with clause 4.2 and (if required) MLB will provide the Scheme Consideration to Scheme Shareholders in accordance with clause 6 of this Scheme;

(ii)WCG will enter the name and address of MLB in the WCG Share Register as the holder of the Scheme Shares.

(b)MLB has executed the Deed Poll in favour of the Scheme Shareholders, pursuant to which it has covenanted to perform the obligations contemplated of it under this Scheme.

3.     Conditions Precedent

3.1Conditions

The Scheme is conditional on each of the following conditions precedent:

(a)as at 8.00am on the Second Court Date, all of the conditions set out in clause 3.1 of the Merger Implementation Deed have been satisfied or waived in accordance with the terms of the Merger Implementation Deed;

(b)such other conditions made or required by the Court under section 411(8) of the Corporations Act in relation to the Scheme as are acceptable to MLB and WCG have been satisfied,

and the Scheme will be of no force or effect unless and until the Conditions Precedent are satisfied.

3.2Certificate

At the hearing by the Court of the application for the Scheme Order, WCG and MLB will provide to the Court a certificate confirming whether or not all of the conditions set out in clause 3.1 of the Merger Implementation Deed have been satisfied or waived in accordance with the terms of the Merger Implementation Deed.

4.Implementation of the Scheme

4.1Lodgement

WCG must lodge with ASIC an office copy of the Scheme Order promptly after, and in any event by 5.00pm on the first Business Day after, the date on which the Court makes that order.

4.2Transfer of Scheme Shares

On the Implementation Date, following satisfaction of MLB’s obligations under clause 6.1(a), all of the Scheme Shares (together with all rights and entitlements attaching to the Scheme Shares) will be transferred to MLB, without the need for any further act by any Scheme Shareholder, by WCG effecting a valid transfer or transfers of the Scheme Shares to MLB under section 1074D of the Corporations Act or, if that procedure is not available for any reason, by:

(a)WCG delivering to MLB duly completed and executed share transfer forms (which may be a master transfer of all or part of the Scheme Shares) to transfer all of the Scheme Shares to MLB;

(b)           MLB executing and delivering the share transfer forms to WCG for registration; and

(c)           WCG entering the name and address of MLB in the WCG Share Register as the holder of all of the Scheme Shares.

4.3Provision of Scheme Consideration

In consideration for the transfer to MLB of each Scheme Share on the Implementation Date:

(a)subject to clause 4.3(c), MLB will:

(i)            provide (in accordance with clause 6.1) the Option A Cash Consideration calculated in accordance with clause 5(a) to each Scheme Shareholder who has validly elected to receive the Option A Consideration in accordance with clause 4.3 of the Merger Implementation Deed; and

(ii)          MLB will issue (in accordance with clause 6.2) to each Eligible Scheme Shareholder who has validly elected to receive the Option A Consideration in accordance with clause 4.3 of the Merger Implementation Deed such number of MLB Shares as are due to that Eligible Scheme Shareholder under clause 5(a) as Option A Scrip Consideration;

(b)subject to clause 4.3(c), MLB will:

(i)            provide (in accordance with clause 6.1) the Option B Cash Consideration calculated in accordance with clause 5(b) to each Scheme Shareholder who has validly elected to receive the Option B Consideration in accordance with clause 4.3 of the Merger Implementation Deed; and

(ii)          MLB will issue (in accordance with clause 6.2) to each Eligible Scheme Shareholder who has validly elected to receive the Option B Consideration in accordance with clause 4.3 of the Merger Implementation Deed such number of MLB Shares as are due to that Eligible Scheme Shareholder under clause 5(b) as Option B Scrip Consideration;

(c)MLB will issue to the Sale Agent in accordance with clause 6.4 such number of MLB Shares as are attributable to Ineligible Overseas Shareholders under clause 5 as Option A Scrip Consideration or Option B Scrip Consideration; and

(d)           any Scheme Shareholder who has not made a valid election in accordance with clause 4.3 of the Merger Implementation Deed and the provisions of this Scheme, is for the purposes of this Scheme deemed to have validly elected to receive Option A Consideration.

5.          Scheme Consideration

Subject to clauses 6.2, 6.4, 6.5 and 6.6, the Scheme Consideration in respect of the Scheme Share held by a Scheme Shareholder at the Record Date comprises:

(a)for a Scheme Shareholder who has validly elected to receive the Option A Consideration in accordance with clause 4.3 of the Merger Implementation Deed:

(i)$0.63 in respect of each of Scheme Share (the Option A Cash Consideration); and

(ii)         0.5 MLB Shares in respect of each Scheme Share (the Option A Scrip Consideration); and

(b)for a Scheme Shareholder who has validly elected to receive the Option B Consideration in accordance with clause 4.3 of the Merger Implementation Deed:

(i)$0.93 in respect of each of Scheme Share (the Option B Cash Consideration); and

(ii)         1/3 of a MLB Share in respect of each Scheme Share (the Option B Scrip Consideration).

6.     Provision Of Scheme Consideration

6.1    Payment Of Cash Amounts

(a)After the Effective Date but before the Implementation Date, MLB must deposit an amount equal to the aggregate amount of the Cash Consideration payable to all Scheme Shareholders, in cleared funds in a trust account operated by WCG, to be held on trust for the Scheme Shareholders, except that any interest on the amount deposited shall be to MLB’s account.

(b)           On the Implementation Date and subject to MLB having complied with clause 6.1(a) and WCG having complied with clause 4.2, WCG must pay to each Scheme Shareholder the Cash Consideration for each WCG Share transferred to MLB on the Implementation Date on behalf of that Scheme Shareholder under clause 4.2.

(c)The amount referred to in clause 6.1(a) must be paid by WCG:

(i)sending or procuring the sending of a cheque drawn in Australian currency on the Implementation Date to each Scheme Shareholder by pre-paid post to their address recorded on the WCG Share Register at the Record Date; or

(ii)depositing or procuring the depositing of the relevant amount into an account with any ADI (as defined in the Banking Act 1959 (Cth)) in Australia notified to WCG (or WCG’s agent who manages the WCG Share Register) under an appropriate authority from the Scheme Shareholder.

(d)If WCG fails to complete its obligations under clause 4.2 on the Implementation Date, the monies deposited by MLB in accordance with clause 6.1(a) shall remain in the trust account described in clause 6.1(a) pending a court order or further agreement by MLB and WCG.

6.2    Provision Of Scrip Consideration

(a)The MLB Shares to be issued pursuant to the Scheme will be validly issued and fully paid and will rank pari passu in all respects with all other MLB Shares then on issue (other than in respect of any dividend already declared and not yet paid by MLB, where the record date for entitlements to that dividend has passed).

(b)The obligation of MLB to issue MLB Shares to an Eligible Scheme Shareholder entitled to be issued MLB Shares under the Scheme will be satisfied by MLB:

(i)on the Implementation Date, causing the name and Registered Address (as at the Record Date) of that Eligible Scheme Shareholder to be entered in the MLB Share Register as the holder of the MLB Shares issued to that Eligible Scheme Shareholder; and

(ii)within five Business Days after the Implementation Date, procuring the dispatch to that Eligible Scheme Shareholder, by pre-paid post to their Registered Address (as at the Record Date), of an uncertificated holding statement in the name of that Eligible Scheme Shareholder relating to the number of MLB Shares issued to that Eligible Scheme Shareholder.

(c)Each Scheme Shareholder to whom MLB Shares are to be issued pursuant to the Scheme agrees:

(i)to become a member of MLB for the purposes of section 231 of the Corporations Act;

(ii)to have their name and address entered in the MLB Share Register; and

(iii)to be bound by the constitution of MLB as in force from time to time in respect of the MLB Shares.

(d)Except for a Scheme Shareholder's tax file number, any binding instruction or notification between a Scheme Shareholder and WCG relating to Scheme Shares at the Record Date (including, without limitation, any instructions relating to payment of dividends or to communications from WCG) will from the Record Date be deemed (except to the extent determined otherwise by MLB in its sole discretion) to be a similarly binding instruction or notification to, and accepted by, MLB in respect of the MLB Shares issued to the Scheme Shareholder until that instruction or notification is revoked or amended in writing addressed to MLB at the MLB Share Registry.  Any such instructions or notifications accepted by MLB will apply to and in respect of the issue of MLB Shares as part of the Scheme Consideration only to the extent that they are not inconsistent with the other provisions of the Scheme.

(e)Each Scheme Shareholder, without the need for any further act, irrevocably appoints MLB and each of its directors and officers, jointly and severally, as that Scheme Shareholder's attorney and agent for the purpose of executing any form or application required for MLB Shares to be issued to that Scheme Shareholder pursuant to the Scheme.

6.3    Joint Holders

In the case of Scheme Shares held in joint names:

(a)any cheque required to be paid to Scheme Shareholders will be payable to the joint holders; and

(b)any uncertificated holding statements for MLB Shares to be issued to Scheme Shareholders will be issued in the names of the joint holders,

and will be forwarded to the holder whose name appears first in the WCG Share Register at the Record Date.

6.4    Ineligible Overseas Shareholders

MLB will be under no obligation under the Scheme to issue, and will not issue, any MLB Shares to an Ineligible Overseas Shareholder, and instead:

(a)the MLB Shares which would otherwise be required to be issued to the Ineligible Overseas Shareholder under the Scheme will be issued to the Sale Agent;

(b)           MLB will procure that, as soon as reasonably practicable (and in any event not more than 15 Business Days after the Implementation Date), the Sale Agent sells on the stock market conducted by ASX all of the MLB Shares issued to the Sale Agent pursuant to clause 6.4(a) in such manner, at such price and on such other terms as the Sale Agent determines in good faith (and at the risk of the Ineligible Overseas Shareholder), and remits to MLB the proceeds of sale (after deduction of any applicable brokerage and other selling costs, taxes and charges) (the Proceeds); and

(c)           MLB will pay to the Ineligible Overseas Shareholder such fraction of the Proceeds as is equal to the number of MLB Shares which would have been issued to the Ineligible Overseas Shareholder but for the application of this clause 6.4, divided by the total number of MLB Shares issued to the Sale Agent under this clause 6.4 in respect of all Ineligible Overseas Shareholders, promptly after the last sale of MLB Shares by the Sale Agent,

in full satisfaction of MLB's obligations to the Ineligible Overseas Shareholder under the Scheme in respect of the Scrip Consideration.

6.5Fractional entitlements

If a fractional entitlement to a MLB Share arises from the calculation of the total Scrip Consideration in respect of a Scheme Shareholder, then any such fractional entitlement:

(a)of less than 0.5 will be rounded down to the nearest whole number of MLB Shares; and

(b)of 0.5 or more will be rounded up to the nearest whole number of MLB Shares.

6.6Shareholding splitting or division

If MLB is of the opinion that two or more Scheme Shareholders, each of whom holds a number of Scheme Shares which results in rounding in accordance with clause 6.5 have, before the Record Date, been party to shareholding splitting or division in an attempt to obtain unfair advantage by reference to such rounding, MLB may give notice to those Scheme Shareholders:

(a)setting out the names and Registered Addresses of all of them;

(b)stating that opinion; and

(c)attributing to one of them specifically identified in the notice the Scheme Shares held by all of them,

and, after the notice has been so given, the Scheme Shareholder specifically identified in the notice will, for the purposes of the other provisions of this clause 6, be taken to hold all those Scheme Shares and each of the other Scheme Shareholders whose names and Registered Addresses are set out in the notice will, for the purposes of the other provisions of this clause 6, be taken to hold no Scheme Shares.  MLB, in complying with the other provisions of this clause 6 relating to it in respect of the Scheme Shareholder specifically identified in the notice as the deemed holder of all the specified Scheme Shares, will be taken to have satisfied and discharged its obligations to the other Scheme Shareholders named in the notice under the terms of the Scheme.

7.     Quotation Of Mlb Shares

MLB will use its best endeavours to procure that the MLB Shares to be issued pursuant to the Scheme will be quoted on the stock market conducted by ASX with effect as soon as practicable after the Effective Date, taking into account the requirements of ASX.

8.     Dealings In Wcg Shares

8.1    Entitlement To Participate

Every WCG Shareholder entered onto the WCG Register as the holder of a WCG Share on the Record Date is entitled to participate in this Scheme.

8.2    Dealings Prior To Record Date

(a)For the purpose of establishing the persons who are Scheme Shareholders, dealings in WCG Shares will only be recognised if:

(i)in the case of dealings of the type to be effected using CHESS, the transferee is registered in the WCG Share Register as the holder of the relevant WCG Shares by the Record Date; and

(ii)in all other cases, registrable transfers or transmission applications in respect of those dealings are received at the WCG Share Registry by the Record Date.

(b)WCG will register registrable transfers or transmission applications of the kind referred to in clause 8.2(a)(ii) by the Record Date.  WCG will not accept for registration, nor recognise for any purpose, any transfer or transmission application in respect of WCG Shares received after the Record Date (other than the transfers contemplated by clause 4.2).

8.3    Dealings After Record Date

(a)For the purpose of determining entitlements to the Scheme Consideration, WCG will, until the Scheme Consideration has been provided in accordance with the Scheme, maintain or procure the maintenance of the WCG Share Register in accordance with this  clause 8, and the WCG Share Register in this form will solely determine  entitlements to the Scheme Consideration. Each entry on the WCG Share Register at the Record Date relating to Scheme Shares will cease to have any effect other than as evidence of the entitlement to the Scheme Consideration.

(b)           From the Record Date, all certificates and holding statements for Scheme Shares existing as at the Record Date will cease to have effect as documents of title in respect of those Scheme Shares, other than for the purpose of registering dealings in WCG Shares in accordance with clause 8.2.

8.4    Provision Of Information

On or before 9.00am on the Implementation Date, WCG must give to MLB details of the names, Registered Addresses and holdings of Scheme Shares of every Scheme Shareholder as shown in the WCG Share Register at the Record Date, such details to be provided in such form as MLB may reasonably require.

9.     General Scheme Provisions

9.1    Scheme Alterations and Conditions

If the Court proposes to approve the Scheme subject to any alterations or conditions, WCG may, by its counsel or solicitors but subject to the prior approval of MLB, consent on behalf of all persons concerned to those alterations or conditions.

9.2    Covenants By Scheme Shareholders

Each Scheme Shareholder:

(a)agrees to the transfer of their Scheme Shares to MLB, in accordance with the Scheme;

(b)without the need for any further act, irrevocably appoints WCG and each of the directors and officers of WCG, jointly and severally, as the Scheme Shareholder's attorney and agent for the purpose of executing any document or doing any other act necessary to give full effect to the Scheme and the transactions contemplated by it (including, without limitation, the provision of a proper instrument of transfer of the Scheme Shareholder's Scheme Shares for the purposes of section 1071B of the Corporations Act (which may be a master transfer of all or part of the Scheme Shares)) and the communication of the Scheme Shareholder's instructions and notifications under clause 6.2(d); and

(c)           consents to WCG doing all things and executing all deeds, instruments, transfers and other documents as may be necessary or desirable to give full effect to the Scheme and the transactions contemplated by it.

9.3    Status Of Scheme Shares

(a)Each Scheme Shareholder is deemed to have warranted to MLB that all their Scheme Shares (including any rights and entitlements attaching to those shares) transferred to MLB under the Scheme will, as at the date of the transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind, whether legal or otherwise, and that they have full power and capacity to sell and to transfer their Scheme Shares (including any rights and entitlements attaching to those shares) to MLB under the Scheme.

(b)Pending registration by WCG of the name and address of MLB in the WCG Share Register as the holder of the Scheme Shares:

(i)MLB will be beneficially entitled to the Scheme Shares transferred to it under the Scheme; and

(ii)each Scheme Shareholder irrevocably appoints MLB as its sole proxy and, where appropriate, its corporate representative to attend shareholders' meetings of WCG, exercise the votes attached to the Scheme Shares registered in the name of the Scheme Shareholder and sign any shareholders' resolution of WCG, and the Scheme Shareholder may not itself attend or vote at any such meetings or sign any such resolutions, whether in person, by proxy or by corporate representative.

9.4    Effect Of Scheme

This Scheme binds WCG and all WCG Shareholders from time to time and, to the extent of any inconsistency, overrides the constitution of WCG.

9.5    Notices

Where a notice, transfer, transmission application, direction or other communication referred to in the Scheme is sent by post to WCG, it will 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 WCG's registered office or at the WCG Share Registry.

9.6    Further Assurances

WCG will do all things and execute all deeds, instruments, transfers and other documents as may be necessary or desirable to give full effect to the Scheme and the transactions contemplated by it.

9.7    Costs and Stamp Duty

WCG will pay the costs of the Scheme, except that MLB will pay any stamp duty payable on the transfer by Scheme Shareholders of the Scheme Shares to MLB.

9.8    Proper Law

The proper law of the Scheme is the law of New South Wales.