NULLARBOR HOLDINGS LIMITED ABN

Transcription

1 NULLARBOR HOLDINGS LIMITED ABN NOTICE OF GENERAL MEETING PROXY FORM AND EXPLANATORY STATEMENT NOTICE IS INCLUDED FOR A MEETING OF SHAREHOLDERS Date and Time of Meeting Sunday 10 October am ADST Place of Meeting Woodpark Road, Smithfield, Sydney NSW Your Directors unanimously recommend that shareholders approve the proposal by voting in favour of all of the resolutions required for the proposal (on which you are eligible to vote) as it is likely that both Oakturn and the Company will be liquidated if the proposal is not approved. You are requested to complete and return the enclosed Proxy Form to Nullarbor Holdings Limited without delay.

2 2 NOTICE OF GENERAL MEETING NOTICE IS HEREBY GIVEN that a General Meeting of shareholders of Nullarbor Holdings Limited ABN (Company) (ASX: NLB) will be held at the premises of Oakturn Pty Limited at Woodpark Road, Smithfield NSW on Sunday, 10 October 2010 at am Australian Daylight Savings Time (ADST) (Shareholders' Meeting), for the purpose of transacting the following business. The Shareholders' Meeting will be asked to consider and vote on 5 resolutions that are set out below under the heading Agenda. Each of Resolutions 2 to 4 is conditional upon the passing of all of Resolutions 2 to 4 so that none of Resolutions 2 to 4 will have effect unless and until all of Resolutions 2 to 4 are passed. The other resolutions may be passed independently of the passing of Resolutions 2 to 4. Accompanying this notice of meeting is an Explanatory Statement (Statement) which provides you with information concerning the proposed resolutions to inform and assist you in assessing the merits of the proposal and to assist you on how to vote on the 5 resolutions contained in this Notice of Meeting. The Company proposes to change the nature and scale of its activities by acquiring the shares not already held by the Company in Oakturn Pty Limited ACN to gain full ownership control of the tyre processing plant owned by Oakturn (Oakturn recycling business) and to: dispose of the shares that the Company holds in Simultech Pte Limited (Simultech) in satisfaction of unsecured debt owed by the Company to Central Pathology Services Pty Limited (Central Pathology Services); and secure ownership of the property at Smithfield in Sydney from which the Oakturn recycling business is conducted (Smithfield Property). If the proposed resolutions are all approved and subsequently actioned, all of the following will occur: Action Resolution 1 Share Placement Resolution 2 Oakturn Share Acquisition & Company Share Issue Details The placement of 3,520,000 fully paid ordinary shares in the capital of the Company at $0.25 per share increasing the issued capital of the Company from 74,388,909 fully paid ordinary shares to 77,908,909 fully paid ordinary shares will be approved for the purposes of Listing Rule 7.4 (see Part 6.1 of the Statement). The Company will: acquire 100 ordinary shares in Oakturn, being 50% of the Issued capital of Oakturn, from the shareholders of Oakturn other than the Company (Other Oakturn Shareholders), so that Oakturn will then become a wholly owned subsidiary of the Company and the Company will thereby secure full ownership control of the Oakturn recycling business; and issue 30 million shares to the Other Oakturn Shareholders in the numbers that are set out in Resolution 2 in the Notice of Meeting with the result that the Company s issued capital will be increased by 30,000,000 fully paid ordinary shares in the Company (FPO shares) to 107,908,909 FPO shares and the shareholdings of current shareholders of the Company, who are not associated with the Other Oakturn Shareholders being diluted from the current 39.42% to 28.47% of the FPO shares as a consequence of the issue of the 30,000,000 FPO shares in exchange for the increased ownership of Oakturn referred to above (see Part 6.2 of the Statement).

3 3 Resolution 3 Simultech Share Sale Resolution 4 Smithfield Property Acquisition Resolution 5 Company Name Change Resolutions 2,3 & 4 Related Party Resolutions The Company will cease to be a shareholder in Simultech on the transfer all its shares in Simultech to Central Pathology Services (the largest shareholder in the Company that is controlled by Dr C K Wong a former director of the Company) in exchange and satisfaction of indebtedness of the Company to Central Pathology Services. The Oakturn recycling business as conducted through Oakturn will then be the Company s sole business activity and the debt currently owed by the Company to Central Pathology Services will be eliminated (see Part 6.3 of the Statement). The Company will be authorised to purchase of the Smithfield Property under the Smithfield Options. The Company will gain ownership control of the Smithfield Property subject to the assumption of the current debt of WDG Investments Pty Limited of $4,595, secured on the Smithfield Property (see Part 6.4 of the Statement). The Company will change its name to Carbon Polymers Limited: see Part 6.5 of the Statement. Approval of Resolutions 2, 3 and 4 (Related Party Resolutions) will result in the provision by the Company of financial benefits to related parties (within the meaning of Chapter 2E of the Corporations Act), being Mr P De Prima (a current director) and his associated company, Moveforward Pty Limited, and Dr C K Wong and his associated companies Central Pathology Services and Fekila Pty Limited. The financial benefits to be provided to each related party are set out in Part 7.3 of the Statement. In the opinion of Directors if all the Related Party Resolutions are not approved it is likely that both Oakturn and the Company will be liquidated, in which case the Company: will not recover any value from its investment in Oakturn and shareholders may not receive any return on their investment in the Company; would also suffer the loss of State and Federal research and development grants, estimated by the Directors to be up to $7 million, which will only be available if the Oakturn plant is completed and becomes operational. The only Directors that have an interest in the approval of the Related Party Resolutions and the other resolutions are Mr P S De Prima (as a current Director) and Dr KC Wong (as a former Director) in relation to the financial benefits to be provided by the Company referred to above as set out in Part 7.3 of the Statement. On 17 June 2010 an agreement was entered into between the Company, the Other Oakturn Shareholders and others (June 2010 Agreement). The principal features of the June 2010 Agreement were proposed to the parties to the June 2010 Agreement by Mr A D Howard in mediation of the disputes before Mr A D Howard became a Director on 17 June 2010 on the execution of the June 2010 Agreement. The purpose of those principal features was to secure an outcome for the Company where: (c) the control of Dr C K Wong and Central Pathology Services of the Company (through Dr C K Wong as a Director and the status of Central Pathology Services as a shareholder and a creditor of the Company (holding convertible notes and other unsecured debt)) was reduced; conflicting interests of Dr C K Wong through Fekila Pty Limited (a company controlled by Dr C K Wong) being one of the Other Oakturn Shareholders; and conflicting interests concerning the Smithfield Property through its the ownership by WDG Investments Pty Limited and its leasing by Oakturn where (see Part 6.4 of the Statement): (i) Dr C K Wong and Mr P S De Prima are shareholders in WDG Investments Pty Limited which acts as the trustee of the WDG Unit Trust;

4 4 (ii) (iii) Fekila Pty Limited and Moveforward Pty Limited (a company controlled by Mr P S De Prima) hold one unit each in the WDG Unit Trust; and Central Pathology Services is a secured creditor of WDG Investments Pty Limited being part of the Agreed WDG Liability (see Part 7.3 of the Statement), could be reconciled in the context of the existing disputes and by substitution of those various disparate interests for shareholding in the Company by undertaking the Related Party Transactions whilst enabling the Oakturn recycling plant to be brought into production to provide revenue for the continued operation of the Company. The various disparate interests of those persons and companies (interested parties) are set out in more detail in the Statement. The June 2010 Agreement, which sets out the ultimate resolution of those issues, is conditional on shareholder approval of all of the Related Party Resolutions on the basis that the interested parties are disqualified from voting on the Related Party Resolutions (and other resolutions) to the extent that is set out below in this notice of meeting under the heading Voting Restrictions. Before entry into the June 2010 Agreement and the Placement, the voting power of Central Pathology Services (on an associate inclusive basis) was 59.02% (with voting power over 43,902,575 FPO shares). The parties to the June 2010 Agreement became associates for the purposes of the Takeovers Exemption (see Part 4 of the Statement) by their agreement in the June 2010 Agreement for the reconstitution of the Board, by the resignation of Dr C K Wong and the appointment of Mr A D Howard and Mr P S De Prima as directors of the Company on 17 June It was a requirement of the Other Oakturn Shareholders (other than Fekila Pty Limited, a company associated with Dr C K Wong) that Dr C K Wong resign as a director of the Company for those Other Oakturn Shareholders to enter into the June 2010 Agreement and agree to undertake the consolidation of the activities of the Company and Oakturn as is now proposed by the passing of the Related Party Resolutions. Central Pathology Services and Dr C K Wong are associates with the Other Oakturn Shareholders (June 2010 Agreement Associates) with voting power of 71.54% in the Company. If the proposal is approved the voting power of Central Pathology Services (on an associate inclusive basis, ignoring the technical associate relationship arising by the agreement for the reconstitution of the Board under the June 2010 Agreement) will be reduced from 59.02% to 49.02% (despite an increase in voting power over 52,902,575 FPO shares due to the proposed issue of a further 9,000,000 FPO shares to Fekila Pty Limited under Resolution 2). The approval of the Related Party Resolutions will result in a maximum voting power of the June 2010 Agreement Associates of 71.54% in the Company. The June 2010 Agreement further provides for the reduction of the control of Central Pathology Services and Dr C K Wong over the Company by Central Pathology Services disposing of 3,000,000 convertible notes issued by the Company and exercisable at 30 cents. If the Related Party Resolutions are approved Central Pathology Services has also agreed to the possible disposal 10,798,792 FPO shares to Reefgully Pty Limited and 11,798,792 FPO shares to Moveforward Pty Limited under call options that may be exercised by those companies. Also Moveforward Pty Limited has agreed to the possible disposal 1,000,000 FPO shares to Ron Medich Properties Pty Limited and 3,300,000 FPO shares to Gordon Reef Pty Limited. However, going forward no agreement exists between the June 2010 Agreement Associates to increase or continue the exercise of that voting power nor as to any common intentions they may have as to the future of the Company other than as disclosed in this notice of meeting and the Statement except that the parties to the June 2010 Agreement have agreed that they will agree to an encumbrance (Permitted Encumbrance) being granted over Oakturn and/or the equipment of Oakturn (Oakturn Assets) to secure the provision of financial accommodation to Oakturn solely for the purpose of enabling Oakturn to complete the coordination of the supply, fitting, installation and customisation of equipment for use in the operation of the Oakturn s recycling business (Oakturn Finance) on the basis that the Oakturn Finance may be provided by the Company subject to the

5 5 provision of the Permitted Encumbrance, and if required by a financier the Company will provide a guarantee of the Oakturn Finance provided that the Company is provided with security over Oakturn and the Oakturn Assets second only to the Permitted Encumbrance granted to the provider of the Oakturn Finance. Resolution 1 Share Placement Approval AGENDA Ordinary Resolutions To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, the issue and allotment by the Company on 13 July 2010, of 3,520,000 fully paid ordinary shares in the capital of the Company at $0.25 per share to be held by institutional and professional investor clients of MDS Financial Services Pty Limited, on the same terms as other fully paid ordinary shares of the Company, be approved under Listing Rule 7.4 of ASX Limited Resolution 2 Oakturn Share Acquisition & Company Share Issue Approval To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, subject to the passing of Resolution 3 and 4, the acquisition of the number of ordinary shares in Oakturn Pty Limited listed in the column headed Oakturn Shares Sold in the table below opposite the name of each company listed in the column headed Allottee in the table below (Allottee) in exchange for the issue to each Allottee of fully paid ordinary shares in the Company in the numbers opposite the name of the Allottee in the column headed Company Shares Issued in the table below (being the provision by the Company of financial benefits to related parties of the Company within the meaning of Chapter 2E of the Corporations Act 2001 for the shares to be issued to Fekila Pty Limited and Moveforward Pty Limited), 5 Business Days after the passing of Resolutions 2, 3 and 4, be approved for the purposes of Listing Rules 7.1, 10.1, and of ASX Limited, section 611 Item 7 of the Corporations Act 2001 (Cth) and Chapter 2E of the Corporations Act 2001 (Cth)." Allottee Oakturn Shares Sold Company Shares Issued Fekila Pty Limited ACN Gordon Reef Pty Limited ACN Moveforward Pty Limited ACN Reefgully Pty Limited ACN ordinary shares in Oakturn 9,000,000 ordinary shares in the Company 10 ordinary shares in Oakturn 3,000,000 ordinary shares in the Company 30 ordinary shares in Oakturn 9,000,000 ordinary shares in the Company 30 ordinary shares in Oakturn 9,000,000 ordinary shares in the Company Resolution 3 Simultech Share Sale Approval To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, subject to the passing of Resolution 2 and 4, the sale of all the shares held by the Company in Simultech Pte Limited to Central Pathology Services Pty Limited (being the

6 6 provision by the Company of a financial benefit to a related party of the Company within the meaning of Chapter 2E of the Corporations Act 2001) in consideration of: the cancellation of the obligations of the Company under: (i) the 6,666,667 convertible notes issued by the Company, exercisable at 27 cents, under the document titled Convertible Note Subscription Deed dated 15 December 2008; and (ii) 3,000,000 of the convertible notes issued by the Company, exercisable at 30 cents under the document titled Convertible Note Subscription Deed dated 26 June 2009; and the release of the Company by Central Pathology Services Pty Limited from the unsecured debt owing by the Company to Central Pathology Services Pty Limited, be approved under Listing Rules 10.1,and 11.2 of ASX Limited and Chapter 2E of the Corporations Act 2001 (Cth). Resolution 4 Smithfield Property Acquisition Approval To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, subject to the passing of Resolution 2 and 3: (c) the entry by the Company into the agreements dated 17 June 2010 referred to in the table below; the grant and exercise of options under those agreements by the Company; and the performance of all obligations of the Company arising on the exercise of any option under those agreements, (including the provision by the Company of financial benefits to related parties of the Company within the meaning of Chapter 2E of the Corporations Act 2001 set out in Part 7.3 of the accompanying Explanatory Statement) be approved under Listing Rule 10.1, 10.5 and of ASX Limited and Chapter 2E of the Corporations Act 2001 (Cth) Agreement title Call Option Deed Non Residential Real Estate Put Option Deed Non Residential Real Estate Call Option Deed Unlisted Issued Shares & Units WDG Investments Pty Limited & The WDG Unit Trust Put Option Deed Unlisted Issued Shares & Units WDG Investments Pty Limited & The WDG Unit Trust Agreement parties WDG Investments Pty Limited and the Company. WDG Investments Pty Limited and the Company. Fekila Pty Limited ACN , Gordon Reef Pty Limited ACN , Moveforward Pty Limited ACN , Choon Kee Wong, Phillip Salvatore De Prima, Jerry Robert Gordon and the Company. Fekila Pty Limited ACN , Gordon Reef Pty Limited ACN , Moveforward Pty Limited ACN , Choon Kee Wong, Phillip Salvatore De Prima, Jerry Robert Gordon and the Company.

7 7 Resolution 5 Company Name Change Special Resolution To consider and, if thought fit, to pass the following resolution as a special resolution: "That the Company change its name from Nullarbor Holdings Limited to Carbon Polymers Limited." Voting Exclusion Statement Voting Restrictions The following voting exclusion statements apply under the following Listing Rules of ASX Limited to the following persons (Excluded Person) in relation to the following resolutions: Resolution Listing Rule Voting Exclusion Statement Resolution 1 Resolution 2 Resolution 3 Resolution 4 Listing Rule (for the approval under Listing Rule 7.4) Listing Rule (for the approval under Listing Rule 7.1) Listing Rule (for the approval under Listing Rule 10.1) Listing Rule (for the approval under Listing Rule 10.11) Listing Rule (for the approval under Listing Rule ) Listing Rule (for the approval under Listing Rule 10.1) Listing Rule 11.2 (for the approval under Listing Rule 11.2) Listing Rule (for the approval under Listing Rule 10.1) Listing Rule (for the approval under Listing Rule 10.5) Listing Rule (for the approval under Listing Rule ) A person who participated in the issue. A person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed. A party to the transaction. A person who is to receive securities in relation to the entity. A person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed. A party to the transaction. A person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed. A party to the transaction. A party to the transaction. A person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the resolution is passed. Resolution 5 Nil Not applicable.

8 8 Voting Exclusion Statement The Company will disregard any votes cast on a relevant resolution by: an Excluded Person; and an associate of Excluded Person. However, the Company need not disregard a vote if: it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. Additional Voting Exclusions In addition to the above voting restrictions section 611 Item 7 of the Corporations Act provides that no votes may be cast in favour of Resolution 2 by: the person proposing to make the acquisition and their associates; and the persons (if any) from whom the acquisition is to be made and their associates. Additional Voting Exclusion Applicable to Related Party Resolutions A vote on a Related Party Resolution must not be cast (in any capacity) by or on behalf of: a related party of the public company to whom the resolution would permit a financial benefit to be given; or an associate of such a related party. That does not prevent the casting of a vote if: it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and it is not cast on behalf of a related party or associate of a kind referred to in paragraphs and of the immediately preceding paragraph. By Order of the Board C A Grady Company Secretary 7 September 2010

9 9 PROXIES Votes at the general meeting may be given personally or by proxy, attorney or representative. A shareholder entitled to attend and vote at the above meeting may appoint not more than two proxies to attend and vote at this meeting. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder's voting rights. A proxy may, but need not be a shareholder of the Company. The instrument appointing the proxy must be in writing, executed by the appointor or his attorney duly authorised in writing or, if such appointor is a corporation, either under seal or under hand of an officer of his attorney duly authorised. The instrument of proxy (and the power of attorney or other authority, if any, under which it is signed) must be lodged by person, post, courier or facsimile and reach the Registered Office of the Company at least 48 hours prior to the meeting. For the convenience of shareholders a Proxy Form is enclosed. ENTITLEMENT TO VOTE In accordance with Regulation of the Corporations Regulations, the Directors have set a date to determine the identity of those entitled to attend and vote at the Meeting. The date is a.m. (ADST) on Friday, 8 October 2010.

10 10 NULLARBOR HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN UNAUDITED PROFORMA STATEMENT OF FINANCIAL POSITION June Note Transaction Post 2010 # Adjustments Transaction $ $ $ ASSETS Current Assets Cash and cash equivalents 80,588 80,588 Trade and other receivables 128, ,451 Other financial assets 29,463 29,463 Total current assets 238, ,502 Non-current Assets Other financial assets 4,866, ,866,894 - Plant and equipment 3,649, ,610,000 15,259,339 Freehold Property - 3 4,595,000 4,595,000 Total Non-current assets 8,516,233 19,854,339 TOTAL ASSETS 8,754,735 20,092,841 LIABILITIES Current liabilities Trade and other payables 2,667, ,148, ,991 Interest bearing liabilities 6 360, ,000 Total current liabilities 2,667, ,991 Non-current liabilities Other long-term provisions 49, ,690 - Interest bearing liabilities - 6 4,235,000 4,235,000 Total non-current liabilities 49,690 4,235,000 TOTAL LIABILITES 2,716,986 5,113,991 NET ASSETS 6,037,749 14,978,850 EQUITY Issued capital - ordinary shares 17,669, ,610,000 29,279,883 Convertible Notes 3,600, ,700, ,000 Reserves 410, ,205 Accumulated losses - 15,642,439 31,201-15,611,238 Parent interest 6,037,649 14,978,850 Minority equity interest TOTAL EQUITY 6,037,749 14,978,850

11 11 Notes: 1 The removal of the book value of the Simultech Shares 2 The acquisition value of the remaining 50% of the plant and equipment. 3 The acquisition value of the Freehold land and buildings. 4 Represents the removal of the payables to associated entities of $1,998,305, namely Central Pathology Services Pty Limited, a company controlled by Dr C K Wong, and payables of employee entitlements of $150,000 due to Dr C K Wong. 5 Removal of employee provisions owing to Dr C K Wong. 6 Represents the bank loan debt raised to acquire the Freehold land and buildings. The expected loan reduction in the first year of $360,000 is shown as a current interest bearing liability with the remainder shown as non-current. 7 30,000,000 shares issued to acquire the remaining equity interest in Oakturn Pty Limited 8 Cancellation of 9,666,667 convertible Notes 9 Book value of the original minority equity interest in Oakturn Pty Limited This Proforma Statement Of Financial Position has been prepared by Mr C A Grady a Director 10 and Company Secretary of the Company.

12 12 EXPLANATORY STATEMENT * 1 Overview of proposal The Company proposes to change the nature and scale of its activities by acquiring the shares not already held by the Company in Oakturn Pty Limited ACN to gain full ownership control of the tyre processing plant owned by Oakturn (Oakturn recycling business) and to: dispose of the shares that the Company holds in Simultech Pte Limited (Simultech) in satisfaction for unsecured debt owed by the Company to Central Pathology Services Pty Limited (Central Pathology Services); and secure ownership of the property at Smithfield in Sydney from which the Oakturn recycling business is conducted (Smithfield Property). 2 Principal features of the proposal If resolutions 2 to 4 in the accompanying notice for a shareholders meeting (Notice of Meeting) are approved by shareholders of the Company (proposal): the Company will, through it owning 100% of the issued shares of Oakturn, secure full ownership control of the Oakturn recycling business; the Oakturn recycling business as conducted through Oakturn will be the Company s sole business activity; (c) the shares that the Company holds in Simultech will be sold to Central Pathology Services (the largest shareholder in the Company that is controlled by Dr C K Wong a former director of the Company); (d) the debt of the Company will be restructured by the elimination of the debt owed by the Company to Central Pathology Services; (e) financial benefits will be provided by the Company to Mr P De Prima (a current director) and his associated company, Moveforward Pty Limited, and Dr C K Wong and his associated companies Central Pathology Services and Fekila Pty Limited; (f) the Company s issued capital will be increased by 30,000,000 fully paid ordinary shares (FPO shares) to 107,908,909 FPO shares; (g) the shareholdings of existing shareholders will be diluted as a consequence of the issue of those shares in exchange for the increased ownership of Oakturn and the elimination of the debt owed by the Company to Central Pathology Services; and (h) the Company will gain ownership control of the Smithfield Property subject to the assumption of the current debt of WDG Investments Pty Limited of $4,595, secured on the Smithfield Property. 3 Background In January 2010, significant disputes arose between the then Directors and Central Pathology Services, the major shareholder of the Company controlled by Dr C K Wong a former director of the Company, with the then other shareholders and directors of Oakturn. Those disputes revolved around representations taken to have been made in relation to the status of the tyre processing plant owned by Oakturn (Oakturn tyre processing plant) in the context of an agreement for the sale/purchase of the shares in Oakturn between those persons and the commissioning of the Oakturn tyre processing plant. That original acquisition agreement provided for the acquisition by the Company of the shares of Oakturn not held by the Company (Other Oakturn Shares) in exchange for the issue of 25 million fully paid ordinary shares in the Company. In May 2010, mediation of the dispute occurred and it was agreed to settle all disputed matters and enter into an agreement (June 2010 Agreement) that would allow the Company to move forward and finalise the recycling plant and avoid the prospect of several years of protracted litigation without the benefit of any operating cash flow if the disputes had not been settled. The June 2010 Agreement was entered into to resolve those disputes and to avoid the prospect of that litigation. In * Definitions of terms used in this Explanatory Statement are set out in the Glossary at page 30.

13 13 that context the then Board (which then included Dr C K Wong) agreed to modify the original acquisition agreement and issue 30 million (instead of 25 million) fully paid ordinary shares in the Company in exchange for the acquisition of the Other Oakturn Shares. The parties to the June 2010 Agreement became associates by their agreement in the June 2010 Agreement for the reconstitution of the Board, by the resignation of Dr C K Wong and the appointment of Mr A D Howard and Mr P S De Prima as directors of the Company on 17 June Central Pathology Services and Dr C K Wong became an associate of the Other Oakturn Shareholders due to that fact. It was a requirement of the Other Oakturn Shareholders (other than Fekila Pty Limited, a company associated with Dr C K Wong) that Dr C K Wong resign as a director of the Company for those Other Oakturn Shareholders to enter into the June 2010 Agreement and agree to undertake the consolidation of the activities of the Company and Oakturn as is now proposed by the passing of the proposed resolutions 2, 3 and 4. Before the placement of the 3,520,000 FPO shares to be approved under Resolution 1 (Placement) there were 74,388,909 FPO shares on issue in the Company. Currently, after the Placement, there are 77,908,909 FPO shares on issue in the Company. If the proposal is approved the Company will have on issue 107,908,909 FPO shares. Before entry into the June 2010 Agreement and the Placement, the voting power of Central Pathology Services (on an associate inclusive basis) was 59.02% (with voting power over 43,902,575 FPO shares). If the proposal is approved the voting power of Central Pathology Services (on an associate inclusive basis, ignoring the technical associate relationship arising by the agreement for the reconstitution of the Board under the June 2010 Agreement) will be reduced to 49.02% (despite an increase in voting power to 52,902,575 FPO shares due to the proposed issue of a further 9,000,000 FPO shares to Fekila Pty Limited under Resolution 2). A notice for a shareholders meeting (Notice of Meeting) is sent with this Explanatory Statement which is prepared for the purposes of sections 218 and 611 Item 7 of the Corporations Act and providing other information to shareholders for the purposes of the Listing Rules. You will also find explanations of each proposed resolution in Part 6 of this Statement. The following information should be noted in respect of the various matters contained in the Notice of Meeting and the accompanying Independent Expert s Report which has been prepared to for the purposes of the Listing Rules and provisions of the Corporations Act in relation to the proposal. The decision of each shareholder as to how to vote on the resolutions is a matter for the individual shareholder. Your decision should be based on your own views concerning various matters including value and future market conditions, risk profile, liquidity preferences, investment strategy, portfolio structure and tax position. Neither the Company nor any Directors nor any of the Company s advisers accepts any responsibility for decisions made by individual shareholders for any of those matters including the taxation consequences for individual shareholders. If in doubt, shareholders should consult an independent professional adviser. The Directors recommend shareholders read this Statement and the accompanying Independent Expert s Report in full before making any decision in relation to the proposed resolutions. 4 What law applies? This statement provides you with information concerning the proposal to inform and assist you in assessing the merits of the proposal and assist you on how to vote on the resolutions contained in the accompanying Notice of Meeting. The nature of the proposal requires that information be provided to shareholders in accordance with: The Corporations Act in particular:

14 14 - Section 611, Item 7 (Takeovers Exemption); and - Chapter 2E (Related Party Provisions). The ASX Listing Rules in particular: - Chapter 7 concerning changes in capital and new issues; - Chapter 10 concerning transactions with persons in a position to influence the Company; and - Chapter 11 concerning significant changes to the nature or scale of the activities of the Company. 5 What must be complied with? 5.1 Takeovers Exemption Shareholder approval is required under the Takeovers Exemption in relation to the issue of shares that is proposed under Resolution 2 (Company Share Issue), because the Company Share Issue constitutes an acquisition of relevant interests in voting shares, which will or may result in a shareholder s voting power (which is calculated on an associate inclusive basis) increasing from 20% or below to more than 20% or from a starting point that is above 20% and below 90%. As noted above the parties to the June 2010 Agreement technically became associates by their agreement under the June 2010 Agreement for the reconstitution of the Board, by the resignation of Dr C K Wong and the appointment of Mr A D Howard and Mr P S De Prima as directors of the Company. Central Pathology Services Dr C K Wong is an associate of all the Other Oakturn Shareholders due to that fact. Shareholder approval under the Takeovers Exemption permits a person to acquire relevant interests in issued voting shares of the Company without being required to make a takeover offer or takeover announcement in compliance with Chapter 6 of the Corporations Act. The Takeovers Exemption requires: shareholders to be provided with the information concerning the Company Share Issue that is in Part 7.1 (Company Share Issue) of this Statement; and shareholder approval of Resolution 2 to be obtained at the Shareholders Meeting. 5.2 Significant Change Transactions The Oakturn Share Acquisition and the Smithfield Property Acquisition will each result in a significant change to the scale and nature of the activities of the Company for the purposes of Listing Rules Given the amount of the investment of the Company in the Flight Focus business through the ownership of the Simultech Shares the Simultech Share Sale will constitute the disposal of a main undertaking of the Company for the purposes of Listing Rule ASX requires that the Company obtain the approval of holders of its ordinary securities to each of Oakturn Share Acquisition and the Smithfield Property Acquisition under Listing Rule and to the Simultech Share Sale under Listing Rule 11.2 (Significant Change Transactions). The Listing Rules concerning the Significant Change Transactions require:

15 15 shareholders to be provided with the information concerning the Significant Change Transactions that is in Part 7.2 (Significant Change Transactions) of this Statement; and shareholder approval of Resolutions 2, 3 and 4 to be obtained at the Shareholders Meeting. 5.3 Related Party Transactions The following aspects of the proposal result in the Company (or an entity that the Company controls) giving a financial benefit to a related party of the Company (Related Party Transaction) within the meaning of those terms in Chapter 2E of the Corporations Act (Related Party Provisions): the Oakturn Share Acquisition & Company Share Issue; the Simultech Share Sale; and the Smithfield Property Acquisition. The Related Party Provisions require: shareholders to be provided with the information concerning each Related Party Transaction that is in Part 7.3 (Related Party Transactions) of this Statement; and shareholder approval to each Related Party Transaction, by the passing of each Related Party Resolution, to be obtained at the Shareholders Meeting. 5.4 Influenced Transactions The following aspects of the proposal are subject to the shareholder approval requirements of Listing Rule 10.1 (Influenced Transactions) as they concern transactions with substantial assets: (c) Oakturn Share Acquisition: The Oakturn Share Acquisition constitutes the acquisition by the Company of a substantial asset from a related party. Simultech Share Sale: The Simultech Share Sale constitutes the disposal by the Company of a substantial asset to a related party. Smithfield Property Acquisition: The Smithfield Property Acquisition will, dependent on which Smithfield Option is exercised, constitute the acquisition by the Company of a substantial asset from a related party. As the Smithfield Property Acquisition is to be undertaken under the Smithfield Options, Listing Rule 10.5 requires shareholder approval. The Listing Rules applicable to Influenced Transaction require: shareholders to be provided with the information concerning the Influenced Transactions in Part 5.4 (Influenced Transactions) of this Statement; and shareholder approval to be obtained to each Influenced Transaction at the Shareholders Meeting (see Resolution 2, 3 and 4). 5.5 The resolutions There are 5 resolutions to be put to the Shareholders' Meeting. All resolutions are ordinary resolutions except resolution 5 which is a special resolution.

16 16 Resolutions 2 to 4 are conditional upon the passing all of Resolutions 2 to 4 so that none of Resolutions 2 to 4 will have effect unless and until all of Resolutions 2 to 4 are passed. The other resolutions may be passed independently of the passing of Resolutions 2 to How the resolutions may be approved Approval of an ordinary resolution occurs when at least 50% of members entitled to vote on the resolution vote (in person or via proxy) in favour of the resolution. Approval of a special resolution occurs when at least 75% of members entitled to vote on the resolution vote (in person or via proxy) in favour of the resolution. 5.7 What Shareholders must do now The accompanying Notice of Meeting includes a proxy form. Shareholders are encouraged to attend and vote in favour of each of the resolutions (in relation to which they are eligible to vote) to be put at the Shareholders Meeting. If you are not able to attend and vote at the Shareholders Meeting you may complete the proxy form and return it to the registered office of the Company or to the address which appears on the Notice of Meeting, not later than 48 hours before the time specified for the commencement of the Shareholders Meeting. 6 Proposed Resolutions Explained 6.1 Resolution 1: Share Placement Approval Shareholder approval of the Placement has not previously been obtained and is required under Listing Rule 7.4. Resolution 1 is an ordinary resolution that if passed will provide shareholder approval of the Placement so as to refresh the effect of Listing Rule 7.1 on any further issues of securities in the next 12 months. On 13 July 2010, the Company announced the appointment of MDS Financial Services Pty Limited who had successfully placed 3,520,000 fully paid ordinary shares (FPO shares) at a price of $0.25 each, to institutional and other investors exempt pursuant to Chapter 6D of the Corporations Act. Listing Rule 7.1 provides that without shareholder approval, the Company must not issue or agree to issue more securities if the issue, when aggregated with the number of securities issued by the Company during the previous 12 months, would exceed 15% of the number of issued shares at the commencement of that 12 month period. Listing Rule 7.4 allows the Company to obtain subsequent shareholder approval of a security issue and thereby have the issue treated for the purposes of Listing Rule 7.1 as if it had received prior approval, so that in the calculations under Listing Rule 7.1 the securities issued under a security issue so approved are excluded from of securities which have already been issued in the 12 month period and therefore are not counted in the ion of how many further securities may be issued in the 12 month period within the 15% limit imposed by Listing Rule 7.1. The issue of 3,520,000 shares under the Placement was under that 15% prescribed limit when issued. Listing Rule 7.4 therefore treats the shares issued under the Placement without approval under Listing Rule 7.1, as having been made with approval for the purposes of the calculations under Listing Rule 7.1 as that issue under the Placement did not breach Listing Rule 7.1 and if shareholder approval is subsequently obtained under Listing Rule 7.4.

17 17 Under Resolution 1, the Company therefore seeks the required shareholder approval under Listing Rule 7.1 of the issue of the shares under the Placement, so as to refresh the effect of Listing Rule 7.1 on any further issues of securities in the next 12 months. MDS Financial Services Pty Limited was engaged to make the Placement to its institutional and other investors exempt pursuant to Chapter 6D of the Corporations Act on a fully underwritten basis and is entitled (for its services rendered) to a capital raising fee of 5% of the capital raised by issue of the FPO shares in the Company and a 5% fee payable on invoice of the total value of all funds raised pursuant to the Placement. Details of Placement For the purposes of the Listing Rule 7.5, the following further information is given to Shareholders: Issue Date: 13 July Allottees (basis): Sophisticated, professional and wholesale investors exempt pursuant to Chapter 6D of the Corporations Act identified and recommended to the Company by MDS Financial Services Pty Limited. Number of securities: 3,520,000 fully paid ordinary shares. Issue Price: $0.25 per ordinary share. Terms of the securities: The shares issued under the Placement are fully paid ordinary shares and are on the same terms as existing fully paid ordinary shares in the Company. Use or intended use of the funds raised: Funds from the Placement will be used to finalise commissioning of the Oakturn tyre processing plant owned by Oakturn for use in the operation of the Oakturn recycling business, payment of outstanding liabilities and to provide working capital for the Oakturn recycling business. The directors believe that the working capital will be sufficient to cover the Company s medium term needs. 6.2 Resolution 2: Oakturn Share Acquisition & Company Share Issue Approval Resolution 2 is an ordinary resolution that if passed will provide shareholder approval for the purposes of Listing Rules 7.1, 10.1, and (see Parts 7.4 and 7.2 respectively of this Statement), the Takeovers Exemption (see Part 7.1 of this Statement) and the Related Party Provisions (see Part 7.3 of this Statement) to permit the Oakturn Share Sale and the Company Share Issue to be undertaken. The parties to the June 2010 Agreement have agreed that the Company Share Issue will occur 5 Business Days after the passing of Resolutions 2, 3 and 4. Listing Rule 7.1 provides that without shareholder approval, the Company must not issue or agree to issue more securities if the issue, when aggregated with the number of securities issued by the Company during the previous 12 months, would exceed 15% of the number of issued shares at the commencement of that 12 month period. The application to Resolution 2 of: Listing Rules 10.1 and is explained in Parts 7.4 of this Statement; and Listing Rule is explained in Part 7.2 of this Statement. Your Directors consider that if approved, the acquisition of the Other Oakturn Shares, by exchange of the shares to be issued under the proposed Company Share Issue, will represent approximately a 50% discount to the Company from the acquisition cost to the Company of its initial 50% interest in Oakturn and also securing complete ownership of the Oakturn recycling business by Oakturn becoming a wholly owned subsidiary of the Company.

18 18 If the proposal is implemented the only business of the Company will be the Oakturn tyre processing plant. Details of Agreement For the purposes ASX Listing Rules 7.3 and 10.13, the following information is given to Shareholders: Agreement Date: June Allotted (basis): 9,000,000 FPO shares to Fekila Pty Limited (an associated company of Dr C K Wong). 9,000,000 FPO shares to Moveforward Pty Limited (an associated company of Mr P S De Prima). 9,000,000 FPO shares to Reef Gully Pty Limited (an associated company of Mr J R Gordon). 3,000,000 FPO shares to Gordon Reef Pty Limited (an associated company of Mr J R Gordon). Number of FPO shares: 30,000,000. Terms of the securities: The issued shares are FPO shares and are on the same terms as existing FPO shares in the Company. 6.3 Resolution 3: Simultech Share Sale Approval Resolution 3 is an ordinary resolution that if passed will provide shareholder approval under Listing Rules and 11.2 (see Parts 7.4 and 7.2 respectively of this Statement) and the Related Party Provisions (see Part 7.3 of this Statement) to permit the sale of the Simultech Shares to Central Pathology Services. Central Pathology Services is a company controlled by Dr C K Wong which before entry into the June 2010 Agreement and the Placement had voting power in the Company (on an associate inclusive basis) of 59.02% (with voting power over 43,902,575 FPO shares). The Company is the sole shareholder in Simultech Pte Ltd (Simultech), a Singapore incorporated company that holds a minority shareholding in Flight Focus Pte Limited (Flight Focus) that is developing software for use in the aviation industry. Central Pathology Services also holds shares in Flight Focus Pte Limited independently of Simultech. Before entry into the June 2010 Agreement the then Board, other than Dr. Choon Kee Wong, expressed reservations about the Flight Focus business. Those concerns were referred to in the auditor s comments in the 2009 Annual Report. The new Board, constituted when the June 2010 Agreement was entered into, has determined a strategy of selling non-core nonperforming assets to enable the Company to focus solely on the Oakturn recycling business. At the time of agreeing to the acquisition of the Other Oakturn Shares, to secure full control of the Oakturn recycling business, it was also agreed that Central Pathology Services would acquire all the shares held by the Company in Simultech (Simultech Shares) for the consideration referred to in Resolution 3 in the Notice of Meeting, being the cancellation of the 9,666,667 convertible notes issued by the Company and the release of the Company from the unsecured debt owed by the Company to Central Pathology Services in the amount of $1,508, as at 17 June The directors of the Company consider the Simultech Shares to be a non-core investment that is likely to require additional working capital to be raised as either debt or equity from Flight Focus shareholders for the continuation of the Flight Focus business. Your Directors

19 19 consider that the sale of the Simultech Shares will eliminate a non-core business, place the Company in a stronger financial position by significantly reducing the company s debt and relieve the Company of any further equity contribution to Flight Focus whilst securing under the June 2010 Agreement cancellation of debt of $4,898, owed by the Company to Central Pathology Services and eliminating recurring interest on that debt of currently over $344, per annum. Additionally if the Company was able to dispose of the Simultech Shares at the cost of the original investment and repatriate the sale proceeds in Australian dollars the total realised would be A$4,804, being a $60, loss (approximately dependent on currency exchange rates) against book value. Delay in effecting the sale of the Simultech Shares will result in the annual holding charges of $344, (approximately) before taking into account any further equity contribution to Simultech. On 4 August 2010 Fight Focus notified shareholders of the convening of an Extraordinary general meeting of Fight Focus on 26 August 2006 for the purpose of discussion the Appraisal of [the] Company s [Fight Focus ] status and financial outlook and to Resolve and ratification of final funding option available following consideration by the directors of Fight Focus of the funding of Fight Focus and in particular: (c) reviewing the current status of various funding activities of Fight Focus; discussion on finalising the last available funding option(s) of Fight Focus; and recommendation of funding proposal to Fight Focus shareholders and further ratification. Other than on the initial investment in Flight Focus the Company has not participated in any further funding of Fight Focus and is not intending, to fund any further funding of Fight Focus via Simultech or otherwise. As the Company has agreed to sell the Simultech Shares to Central Pathology Services under the June 2010 Agreement the maintenance of the interest of Simultech in Flight Focus is considered to be a matter for Central Pathology Services which is a shareholder in Flight Focus otherwise. The Company has notified Central Pathology Services of its position. Details of Agreement For the purposes of the ASX Listing Rule 10.1, the following information is given to Shareholders: Agreement Date: June Total Liabilities removed: $4,898, Investment value of Simultech Shares: US$4,300, Book Value of Simultech Acquisition: A$4,866, Resolution 4: Smithfield Property Acquisition Approval Resolution 4 is an ordinary resolution that if passed will provide shareholder approval for the purposes of Listing Rules 10.1, 10.5 and and the Related Party Provisions (see Part 7.3 of this Statement) to permit the Company to secure ownership of the Smithfield Property under the Smithfield Options, either directly by acquisition of the Smithfield Property itself or indirectly by acquisition of the issued units of the WDG Unit Trust which is the beneficial owner of the Smithfield Property. The Oakturn recycling business is located at the Smithfield Property. WDG Investments Pty Ltd is the trustee of the WDG Unit Trust and the registered proprietor of the Smithfield