H &S Vision Holdings Pty Ltd (Receivers and Managers

© 2013 Grant Thornton | H & S Vision Holdings Pty Ltd | 23 September 2013

H & S Vision Holdings Pty Ltd

(Receivers and Managers Appointed)

(Administrators Appointed)

ACN 107 554 370 (the Company)

Administrators' Report to Creditors

23 September 2013

Shaun McKinnonAdministrator

T +61 7 3222 0336E [email protected]

Michael McCannAdministrator

T +61 7 3222 0327E [email protected]

© 2013 Grant Thornton | H & S Vision Holdings Pty Ltd | 23 September 2013 2

Glossary

Administrators Shaun McKinnon and Michael McCann, Joint and Several Voluntary

Administrators of the Company appointed under Part 5.3A of the

Corporations Act 2001

APAP All Present and after Acquired Property

ASIC

ANZ

Australian Securities and Investments Commission

Australian and New Zealand Banking Group

ATO Australian Taxation Office

Childcare Entities Pelicans in the Park Pty Ltd and H & S Vision Childcare Pty Ltd

Deed/DOCA Deed of Company Arrangement under Part 5.3A of the Act

DEEWR Department of Education, Employment and Workplace Relations

DIRRI Declaration of Independence, Relevant Relationships and Indemnities

Director(s) Peter Thomas Hopkins, Ross Anthony Straguszi and Rose-Marie Rita

Dash

Eligible Employee

Creditor

Meaning given by Section 9 of the Act

ERV Estimated realisable value

FEG Fair Entitlements Guarantee Scheme

GST Goods and Services Tax

k Thousands

m Millions

MLR Management and Letting Rights

Non-Childcare

Entities

The Group excluding Pelicans in the Park Pty Ltd and H & S Vision

Childcare Pty Ltd

Non-circulating Fixed charge security interest

PAYG Pay As You Go

PPSR Personal Property Securities Register

Prospective

Financial

Information

Financial information based on assumptions about events that may

occur in the future and possible action by an entity. It is highly

subjective in nature and its preparation requires the exercise of

considerable judgement.

ROT Retention of Title

Section 439A Report • A report on the Company's business, properties, affairs and

financial circumstances required to be given to creditors pursuant

to Subsection 439A(4) of the Act; and

• A statement pursuant to paragraph 439A(4)(b) of the Act, setting

out the Administrators' opinion and reasons as to each of the

options available under Section 439C in respect of the Company's

future.

Statutory priorities The priority for the payment of unsecured creditor claims set down in

Subsection 553, 560 and 561 of the Act

the Act

The Group


Beachmore Pty Ltd ACN 054 453 851;

H & S Vision Childcare Pty Ltd ACN 117 350 928;

H & S Vision Holdings Pty Ltd ACN 107 554 370;

H & S Vision Pty Ltd ACN 102 250 911;

Paradise Palms (NQ) Pty Ltd ACN 112 797 261;

Pelicans in the Park Pty Ltd ACN 068 884 560;

PTH Vision Pty Ltd ACN 102 250 804;

RAS Vision Pty Ltd ACN 102 250 877;

The Lakes Management Company Pty Ltd ACN 065 156 381;

T.L.D.C. Pty Ltd ACN 068 761 900; and

Uscon Pty Ltd ACN 058 849 479.

WIP Work in Progress


Contents

Section Page

1. Update to creditors 4

2. Proposal for a Deed of Company Arrangement 7

3. Administrators' recommendation 12

4. Remuneration 14

5. Meeting 17

Appendices

A. Proposed Deed of Company Arrangement

B. Administrators' remuneration report

C. Charge out rates

D. Notice of reconvened second meeting of creditors

E. Proof of debt form

F. Proxy form


Section 1 Update to creditors

01. Update to creditors

02. Proposal for a Deed of Company Arrangement

03. Administrators' recommendation

04. Remuneration

05. Meeting


Update to creditors

Update to creditors

Update

This report is to be read in conjunction with the Administrators' Section 439A

Report dated 5 September 2013 ("Section 439A Report"). We note that we have no

material changes or subsequent matters to report to creditors other than those

detailed in this circular.

As discussed in the Section 439A Report, the Directors of the core H&S Vision

Group entities have been attempting to facilitate a refinance/debt sale of the debt

owed to the secured creditor. This would be via a substantial Hong Kong

commercial entity which we will refer to as the Hong Kong Refinancier ("HKR') for

the purposes of this report. Should the refinance/debt sale occur, the Directors were proposing that this would be the basis of, or form part of a proposal for a Deed of

Company Arrangement (“Deed”) which would include a repayment of unsecured

creditors (potentially in full). At the time of releasing the Section 439A Report, no

Deed proposal had been received from the Directors or any other party.

On Friday, 13 September 2013 we received correspondence from the solicitor representing the Directors advising that negotiations had been ceased by the HKR.

However, the Directors further advised that they understood that "major

concessions" were then offered by the secured creditor which they believe could

revive negotiations, however a "key decision maker" from the HKR was unavailable

until 16 September 2103. The Directors were therefore still pursuing this avenue and were hopeful that an agreement could be reached that would enable the proposal of

a Deed to be submitted to creditors for their consideration. The Directors sought to

speak at the meeting of creditors to this point and seek an adjournment of the

meetings.

At the concurrent second meeting of creditors on 16 September 2013, the solicitor

representing the Directors appraised the meeting of the current understanding of the

Directors with regards to the negotiations and requested that an adjournment of the meetings be sought so as to allow additional time for those negotiations to progress

to a stage whereby the Directors were in a position to submit a Deed for

consideration. The solicitor advised that the Directors believed that they should

know very soon whether negotiations can be continued and that a two week

adjournment would be sufficient.

At the concurrent second meeting of creditors on 16 September 2013, the

Administrators then noted that while they were supportive in principal of any future

proposal which would result in a greater return to creditors than a liquidation, that in

the interests of balance the creditors also needed to consider the impacts of an

adjournment when considering the request for an adjournment, including:

� No actual Deed proposal currently exists and the Administrators have enquired

of the secured creditor as to the status of negotiations between them and the

HKR and have been advised that post the "major concessions" being offered by

the secured creditor, the HKR issued correspondence via their legal

representative that they were no longer interested in proceeding. No further correspondence has since been issued;

� An adjournment would result in additional costs of the administration;

� An adjournment will potentially impact the timing of a sale of the assets of the

companies (both in receivership and administration) which may result in those

assets having to be held over the unprofitable Christmas trading periods and hence further increase costs of the administration; and

� An adjournment will delay the ability for employees to access the FairWork

Employee Guarantee ("FEG"). Please refer to our Section 439A Report dated 5

September 2013 for further information.


Update to creditors

Update to creditors

Update continued

The motion to adjourn the concurrent meeting to 30 September 2013 was then put

to the meeting and passed by those creditors attending. It is noted that no creditors

voted against the motion.

Ahead of the reconvened meeting we wrote to the Directors, via their solicitor, requesting that if a Deed was to be proposed that it be submitted by close of

business, Friday, 20 September 2013, to allow sufficient time for the proposal to be

properly evaluated and details reported to creditors prior to the continuance of the

second meeting of creditors. This time is required to allow the Administrators to

determine if any such proposal warrants a change of the Administrators' recommendation as per the Section 439A Report (i.e. that the companies be wound

up).

We have also enquired with the secured creditor as to whether negotiations for a

refinance/debt sale have been re-engaged. Our understanding from those

discussions is that at the time of this notice there were no negotiations ongoing with the HKR.

At approximately 5.25pm on Friday 20 September 2013, we received a letter from

the Directors via our legal representatives which provided an update on the issues

they raised at the meeting of 13 September 2013 and included a Deed proposal. The

letter and Deed proposal are attached in full at Appendix A.

Please refer to Section 2 for further discussion regarding the Deed proposal.

Second meeting of creditors reconvened

At the second meeting of creditors of the Companies, convened concurrently at

11.00am, Monday 16 September 2013, it was determined by those creditors present

to adjourn the meeting. The continuance of this meeting is now convened as

follows:

Time : 11.00am

Date : Monday, 30 September 2013

Place : Pullman Reef Hotel Casino, 35-41 Wharf Street, Cairns, Qld

Further details of this meeting is provided at Section 5.


Section 2: Proposal for a Deed of Company Arrangement




04. Remuneration

05. Meeting


Proposal for a Deed of Company Arrangement


Proposal for a Deed of Company Arrangement ("Deed")

We refer to our previously issued Section 439A Report to creditors which provided

details of correspondence with the Directors regarding a proposed Deed.

In Section 2 of this report we further outlined the Directors communication to the

Administrators and to the creditors generally at the meeting of 16 September 2013 in regards to their on-going attempts to facilitate a refinance of the secured creditors

debts, which they in turn expect would result in a Deed being proposed which would

result in unsecured creditors being paid in full.

As mentioned in Section 2 of this report the Directors provided a letter and Deed

proposal (attached in full at Annexure A) on 20 September 2013.

The Directors noted in their 20 September 2013 letter the following key issues:

� The Directors advise that they believe there is a genuine willingness between the

secured creditor and the HKR to execute an assignment of securities but there

are impediments to the progress of such an agreement due to "communication

problems" which both parties are working to resolve;

� The Directors advised that the two key elements of the Deed proposal that

require the HKR's agreement (release of certain real estate security and agreement

to pay certain proceeds of assets sales to a trust for the benefit of creditors) have

been discussed and agreed in principal; and

� The Directors have requested the HKR's legal representative to confirm that their client agrees to the above (two key issues) by Monday 23 September 2013.

We note that the completion of a transaction between the secured creditor and the

HKR is required for the Directors proposed Deed to be capable of being

progressed.

Contents of the Proposed Deed

In broad terms the Deed proposes the following:

Assumed Pre-Conditions to the Deed

� A transaction can be completed between the secured creditor and the HKR in

regards to a refinance of the Group's debt;

� That once a refinance has been completed that the HKR agrees to the release of

a residential unit ("the unit") from the security currently provided and the HKR

further agrees to allow payments to the proposed creditors trust from the sale of

Group assets (not defined) in advance of the HKR's security.

Key Terms of the Deed

� Release of the security over the unit owned by Ross Straguzi (Director) and

currently secured by the secured creditor to the value of $2.5m without fresh

security being provided by the HKR;

� A Trust fund being created for the benefit of unsecured creditors;

� First mortgage security would be granted over the unit to the current Administrators as security for performance by the Directors/Group's obligations

under the Deed;

� Upon completion of the assignment of securities the administration would end

and Receivers and Managers would be retired and the Directors would retain

control of the Group companies;

� On sale of some of the Group properties some of those funds would be released

to satisfy the terms of the Deed and the Trust Fund with a total of $1.5mbe paid

into the Trust Fund;

� Unsecured creditors to be paid a distribution from the Trust Fund; and

� In the event the unsecured creditors do not receive the intended distribution in full within 12 months, the security over the residential unit could be enforced to

facilitate payment to the unsecured creditors from the sale proceeds of the unit.




In addition, RG82 identifies the following obligations of Administrators:

� 1.11 Before submitting any Deed proposal to creditors, Administrators should

specifically consider whether there is a proposal suitable for submission. For example, it will rarely be appropriate for an administrator to submit to creditors a

Deed proposal where the administrator does not have sufficient concrete details

to comply with all their disclosure obligations (see paragraphs 1.15-1.18 of

RG82);

� 1.12 Where the Deed proposal involves a creditors trust, Administrators should specifically consider whether such mechanism is appropriate in the company's

circumstances. We think this includes considering whether the Deed proposal (if

accepted) may be an abuse of Part5.3A or otherwise contrary to the public

interest. If so it may be appropriate for the administrator to seek directions from

the court before submitting the Deed proposal to creditors.

At "Section 2: Disclosing material information" of RG82 ASIC makes the following

comments that are also relevant to the Administrators considerations in this

circumstance:

� 2.3 Where the Deed proposal involves a creditors trust, we consider this

obligation means that information should be provided which enables creditors to understand the actual and potential implications and specific risks for them of the

proposed creditors trust arrangements. Creditors should be able to make a

realistic and informed assessment of the proposal and whether they should

approve it (including, but not limited to, whether they are likely to receive a better

return under the particular Deed proposal than under a Deed that does not involve a creditors trust, or under a winding up);

Administrators' considerations should a Deed be proposed

Standard Considerations

As advised in our Section 439A Report, upon receipt of a Deed the Administrators

will need to consider the proposal and provide a recommendation to creditors.

Please refer to the Section 439A report for a summary of the key issues which are generally considered when assessing a Deed proposal.

Considerations relevant to a Deed involving a Creditors Trust

In addition to the above, as the proposal issued by the Directors includes the use of

a "creditors trust" ("CT') then the contents of ASIC's Regulatory Guide 82 ("RG82")

also need to be considered. Creditors may view RG82 at http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/creditors_trusts_guide.p

df/$file/creditors_trusts_guide.pdf or alternatively on the Grant Thornton website.

In RG82 ASIC makes the following comments in its introduction to RG82 which

are relevant in understanding the consideration an Administrator must give to a

Deed in this circumstance:

� We consider that Deed proposals should not involve creditors trusts unless

Administrators have adequately considered the appropriateness of using a

creditors trust in the particular case, and the advantages and disadvantages for the

company, the creditors and the administrator;

� Deed's involving a creditors trust create special risks for creditors. Further, using a creditors trust in a Deed in some cases may be an abuse of the Part5.3A process

or be otherwise contrary to the public interest. As a result, our view is that while

the use of a creditors trust in a Deed may occasionally be justified by the

circumstances of a particular company, indiscriminate use of creditors' trusts in

Deed's is not appropriate;

� We will generally consider that an administrator has not adequately complied with

all their obligations under the Act and the general law if an administrator asks

creditors to vote on a Deed proposal involving a creditors trust and the

administrator has not followed this guide in a material respect.




Administrators considerations in regards to the proposed Deed terms

We make the following comments regarding the proposed Deed having regard to

our duties under the Corporations Act and with reference to RG82:

� The inclusion of a CT in the proposed Deed requires significant additional

information and analysis be collated and conducted and be presented to creditors

to assist them understand the impact of the Deed and whether they should vote

for it. Given the timing of receipt of the Deed proposal there is not sufficient

time to adequately investigate and report on these issues ahead of the reconvened second creditors meeting scheduled for 30 September 2013;

� The proposed Deed includes inherent pre-conditions requiring satisfaction for

the proposed Deed to be completed, specifically that a refinance can be

completed (or that negotiations re same are in fact continuing) and that the HKR

agrees to the proposed terms of the Deed specifically those terms that require the HKR to release certain assets and funds for the benefits of unsecured creditors;

� Some key details of the Deed have also not been confirmed or provided including

(but not limited to):

– What is the definition of "unsecured creditors" for the purpose of the Deed

i.e. will Directors, related parties and intercompany creditors be eligible to participate in the distribution from the CT;

– What assets are proposed to be sold and what is the timeframe for such sales?;

– Confirmation of the value of the Unit proposed as security for the obligations

to pay funds to the creditors trust i.e.an independent valuation;

– Why the unit cannot be sold immediately to allow creditors to be paid in full in a much shorter time period?;

– Why can the same outcome not be obtained for creditors within a Deed

without the use of a CT?.

� 2.4 Much of the information we think should be provided to creditors will

describe the Administrators understanding of the law. Therefore, we consider

that Administrators should base such information on legal advice received by them that is applicable to the particular Deed proposal;

� 2.5 Because of the additional complexity involved in a Deed proposal involving a

creditors trust, we consider that creditors should be given adequate opportunity

to obtain (if they wish) professional advice about the proposal, its implications

and risks before they vote on the proposal. This may affect the appropriate period of notice of meeting, the need for an extension of the convening period,

or the need for an adjournment of the meeting;

� 2.6 Table 1 lists the information that should be provided to creditors and

includes:

– Reasons for the CT

– Key events – anticipated sequence of events if the Deed is approved

– Return to creditors anticipated

– Trustee particulars including skills, experience and insurance proposed

– Remuneration of deed administrator and trustee

– Indemnities provided for fees and or liabilities

– Powers – differences between powers of deed administrator and trustee

– Claims – how creditors claims will be dealt with under the Deed and in what

priority

– Details of differences of the rights of a beneficiary and creditor

– GEERS – affect on employee entitlements

– Solvency Statement – basis for opinion that company will be solvent at the

date of Deed effectuation

– Tax – details of taxation and stamp duty implications and differences in

treatment of creditors vs beneficiaries of a trust

– Any other material issues




We have written to the Directors requiring their urgent confirmation in regards to

the various information outlined above and to understand the actual current status

of negotiations between the secured creditor and the HKR in an effort to understand both the full details of the Deed that are relevant to the creditors

consideration of the Deed and whether any such Deed is a realistic prospect of

success.

We consider understanding this information is critical to the creditors decision as:

� Any delay to pursue a Deed without genuine prospects of success will necessarily result in additional costs of the voluntary administration (including assessing the

Deed and the use of a CT), the proposed Deed period and the various Group

receiverships;

� Will most likely delay a sale of the Group's assets. This could result in those

assets not being able to be marketed for sale until early 2014 subject to the length of time it ultimately takes to resolve whether the proposed Deed is to proceed.

This prolonged period of sale may risk a deterioration of asset realisation value;

and

� Will delay the ability of employees from accessing FairWork Employee

Guarantee (FEG). Please refer to our Section 439A report dated 5 September 2013 for further information.


Section 3 Administrators' recommendation




04. Remuneration

05. Meeting


Administrator's recommendation



As detailed in the Section 439A Report, the following options are available to

creditors to decide pursuant to s439C of the Corporations Act, being that:

1. The Company execute a Deed of Company Arrangement;

2. The administration should end; or

3. The Company be wound up.

Since our Section 439A Report was issued we have received a Deed proposal from

the Directors as outlined in this report.

As outlined in this report the Deed proposal is both complex and lacking the full

details required to allow it to be fully considered. In addition, given the time the proposed Deed was received and the complex nature of same, there is insufficient

time available to properly assess the proposed Deed before this report needs to be

issued so that our report is received by creditors in time for it to be considered ahead

of the reconvened second creditors meeting.

In our view, the Deed proposal also, importantly, requires certain confirmations to be received from the secured creditor and in particular the HKR in regards to the

status of the refinance negotiations and their support of the proposed Deed so that

we can be comfortable that a refinance is still being negotiated and that the Deed has

a realistic prospect of success. The Directors own proposal recognises those

negotiations have previously ceased and that they are seeking confirmation of the HKR's support by 23 September 2013.

In light of the issues raised above we do not consider that at the time of

writing this report that a Deed proposal exists that is capable of being

recommended to creditors.

On that basis, the Administrators recommendation remains as per our initial

Section 439A Report that the Company be placed into liquidation.

We do however note that should the Directors be able to clarify the issues raised in

this report and obtain confirmation of the support for the proposed Deed of the

secured creditor and HKR ahead of the reconvened second meeting of creditors then we believe it would be appropriate for creditors to consider a further

adjournment to enable the Administrators to properly investigate, analyse and report

to creditors on the proposed Deed.


Section 4 Remuneration




04. Remuneration

05. Meeting


Remuneration

Enclosed at Appendix B is the Administrators' remuneration report, which provides

details of:

� Remuneration approved to date;

� Voluntary Administrators' remuneration to be approved;

� Liquidators' future remuneration to be approved (if applicable); and

� If a Deed is approved by creditors, the Administrators' remuneration up to the

date of executing a Deed.

Creditors should note that all work has, and will be, performed by the appropriate

level of staff in order to optimise any potential realisations which may be available to unsecured creditors.

Voluntary Administrators' remuneration – Liquidation scenario

The remuneration to be approved has been split between actual fees incurred for the

period 5 September 2013 to 16 September 2013, for which approval has not been

received, and the estimated future fees to be incurred for the period 17 September

2013 to 30 September 2013, being the date of the reconvened second meeting.

Remuneration

Remuneration

Voluntary Administrators' remuneration (ex of GST and disbursements) –

Approval Sought

DescriptionAmount

($)

Joint and Several Administrators' remuneration for the period 5

September 2013 to 16 September 2013 to be approved

3,845.50

Joint and Several Administrators' estimated future remuneration

for the period 17 September 2013 to 30 September 2013, being

the date of the second meeting

2,500.00

Voluntary Administrators' remuneration – Deed scenario (if applicable)

The remuneration to be approved has been split between:

� Actual fees incurred for the period 5 September 2013 to 16 September 2013, for

which approval has not been received;

� Estimated future fees to be incurred for the period 17 September 2013 to 30 September 2013, being the date of the reconvened second meeting; and

� Estimated future fees to be incurred for the period 1 October 2013 to 21

October 2013, being the date of execution of a Deed of Company Arrangement.

Voluntary Administrators' remuneration (ex of GST and disbursements) –

Approval Sought

DescriptionAmount

($)

Joint and Several Administrators' remuneration for the period 5

September 2013 to 16 September 2013 to be approved

3,845.50


for the period 17 September 2013 to 30 September 2013, being

the date of the reconvened second meeting

2,500.00


for the period 1 October 2013 to 21 October 2013, being the date

of execution of a Deed of Company Arrangement

5,000.00


Remuneration

Remuneration

Liquidators' future remuneration (if applicable)

It will be necessary for the creditors to approve the drawing of remuneration for the

Liquidators, should creditors vote that the Company be placed into liquidation.

Liquidators' future remuneration (ex of GST and disbursements)

DescriptionAmount

($)

Joint and Several Liquidators' remuneration for the period 1

October 2013 to finalisation

7,500.00

Deed Administrators' future remuneration (if applicable)

It will be necessary for the creditors to approve the drawing of remuneration for the

Deed Administrators, should creditors vote that the Company execute a Deed of

Company Arrangement.

Deed Administrators' future remuneration (ex of GST and

disbursements)

DescriptionAmount

($)

Joint and Several Deed Administrators' remuneration for the

period 22 October 2012 to effectuation of the Deed of Company

Arrangement

3,000.00


Section 5 Meeting




04. Remuneration

05. Meeting


Second meeting of creditors

Meeting

Lodging of proxies

Proxies lodged for the second meeting of creditors commenced on 16 September

2013 are valid for this meeting. However, as there has been an update to the motions to be put to the reconvened meeting, it would be preferable if creditors re-

submitted proxies to confirm their voting intentions.

Please ensure that the proxies are signed under seal, where appropriate (if you are a Company) and if the proxy is executed by a power of attorney, that a copy of the

power of attorney is enclosed with the proxy form. The proxy form is enclosed as

Appendix F.

Proxies for the meeting can be lodged in the following ways:

� Post: to arrive no later than 5.00pm on the business day prior to the meeting,

being Friday, 27 September 2013.

� Facsimile: to no later than 5.00pm on the business day prior to the meeting,

being Friday, 27 September 2013.

� In Person: by person with a person attending the meeting; or

� Email: by email to [email protected] no later than 5.00pm on the

business day prior to the meeting, being Friday, 27 September 2013.

If proxies are lodged by facsimile or email, the Act requires that the original proxy

must be lodged with the Voluntary Administrators within 72 hours of lodging the

faxed or emailed copy.

Contact details

Should you have any queries in relation to any matter raised in this report then

please do not hesitate to contact Lyle Fernandes on (07) 3222 0394.

Yours faithfully

Shaun McKinnon Michael McCann

Joint and Several Administrator Joint and Several Administrator

Second meeting of creditors

The reconvened second meetings of creditors is to be held at the Pullman Reef

Hotel Casino, 35-41 Wharf Street, Cairns QLD 4870 at 11:00am on Monday, 30 September 2013. Please arrive 30 minutes before hand to allow sufficient time for

registration.

The notice in regards to the meeting is enclosed as Appendix D.

The meeting will be open to creditors for questions and general discussion. Should

you wish to have us address any issue in detail please advise us prior to the meeting

date. This will allow sufficient time to prepare a detailed response to your question.

Please note that attendance at the meeting is not compulsory.

Telephone attendance

Should you not be able to attend the second meeting of creditors in person,

creditors are invited to attend via telephone. In order to do so, you will be required

to submit a proof of debt and proxy in favour of the party attending via telephone as

detailed below.

Please contact Lyle Fernandes of this office at [email protected] no later

than 5.00pm on the business day prior to the meeting, being Friday, 27 September

2013 to obtain dial in details.

Lodging of proofs of debt

Should you not have already lodged a proof of debt, you are required to complete

the proof of debt as attached as Appendix E.


Appendices




C. Charge out rates


F. Proxy form



Appendices

SAN_113644_1473723

Cnr Shields and Grafton Streets Cairns QLD 4870 | PO Box 5046 Cairns QLD 4870, Australia P 617 4030 0600 | F 617 4030 0699 | E [email protected] | www.macdonnells.com.au

ABN 13 315 585 268

Our Ref: Ian Conrad:113644

20 September 2013 Mr Alf Pappalardo Partner Allens 31/123 Eagle St Brisbane QLD 4000

Email: [email protected] [email protected]

Various Companies Within the H & S Vision Group (Receivers & Managers Appointed)(In Administration) ("the Companies") – Proposal For A Possible Scheme of Company Arrangement

We refer to your letter of the 18 September 2013.

It is our clients' belief that there is a genuine willingness at high levels of ANZ and the Hong Kong based proposed refinancer, to finalise and execute the Trade Confirmation and assignment of securities. Our clients gather there are impediments to the progress of that deal, that might best be described as "communication problems". Our clients understand these should not provide a fundamental barrier to finalisation of the agreement and that top down steps are being taken on both sides to resolve these impediments, but this is yet to be resolved.

We have instructions to put to the Administrators the enclosed draft DOCA proposal. In essence, that proposal involves:

(a) a residential unit owned by Mr Ross Straguszi (worth approximately $2,500,000.00) being released from ANZ securities pursuant to the Trade Confirmation, without fresh security being over it by the financier, so that the unit can be offered as security for the payment mentioned below;

(b) A trust fund being created for the benefit of unsecured creditors in a similar form to that which was the subject of approval of a DOCA by the Supreme Court of NSW, in the matter of Bevillesta Pty Ltd [2011] NSWSC 417;

(c) First Mortgage security would be granted over Mr Straguszi's unit to be held by the current Administrators as security for performance by our clients of their obligations under the DOCA mentioned below;

(d) Group companies would be released from administration and the receivers would retire, upon completion of the Trade Confirmation and assignment of securities and the grant of security in favour of the Bevillesta style Trust Fund;

(e) on sale of property by H & S Group entities, some of those funds would be released to satisfy the terms of the DOCA and the Bevillesta style Trust Fund, with a total of

MacDonnells Law 20 September 2013

Page 2

Mr. D. Monaghan Senior Associate Allens

SAN_113644_1473723

$1,500,000.00 to be paid into the trust;

(f) unsecured creditors will be paid by a distribution from the Bevellista Style Trust Fund, from those funds; and

(g) in the event that unsecured creditors do not receive the intended distribution in full, within 12 months, the current Administrators as trustees of the Bevillesta style Trust Fund, could exercise security over Mr Straguszi's unit to make payment to them.

We are instructed that the two key elements of the DOCA proposal that require the refinancer's agreement, have been discussed and they have been agreed to in principle. These are:-

(a) the refinancer not requiring a fresh mortgage over Mr Straguszi's unit when it is released by the ANZ from their securities; and

(b) allowing some of the proceeds of sale of some of the H & S Group assets, to be used to pay unsecured creditors.

We understand that the release of Mr Straguszi's unit to allow it to be put up as security for the DOCA has been agreed to by the refinancer and will not be controversial.

Whilst further discussion will be required around details of how the release of funds from asset sales, (to pay unsecured creditors) would work, that should not be an impediment to acceptance of the DOCA proposal, it Mr Straguszi's unit is available to be provided as security.

We have requested Corrs Chambers Westgarth to confirm that their client will agree to this by Monday.

Yours faithfully MacDonnells Law

Writer: Ian Conrad ½ Senior Counsel Direct: + 61 7 4722 0247 Email: [email protected] Liability limited by a scheme approved under professional standards legislation.

DOCA Proposal

SAN_113644_1440118

Parties: The Administered Companies The Deed Administrators Ross Straguszi, Peter Hopkins and Rose-Marie Dash (the Proponents)

DEFINITIONS

1. Definitions:-

a. Administered Companies means the companies listed in the Report to Creditors dated 13th August, 2013;

b. Completion Date means the date upon which Completion of the Trade Confirmation occurs;

c. Completion of the Trade Confirmation means ANZ either:- i. releasing; or

ii. unconditionally assigning, transferring or novating to GN each of the Debts and each of the Securities;

d. Conditional Mortgage means the Conditional Mortgage referred to in paragraph 9;

e. Confirmation Date means the date that is 10 business days after execution of the DOCA or such later date as is agreed to in writing between the Deed Administrators and the Proponents;

f. Debt Restructure Agreement means a proposed agreement between the Proponents and GN under which the terms applicable to the Debts are renegotiated,

g. Debts means the debts owing under the facilities being assigned or novated under the Trade Confirmation;

h. Effectuation of the DOCA means effectuation of the DOCA under paragraph 15;

i. GN means [full name etc]; j. Creditors Trust means the trust referred to in paragraphs 14 and 15; k. The Mortgage Conditions Precedent are:-

i. Completion of the Trade Confirmation ii. Execution of the Debt Restructure Agreement

l. Property means [description of Ross Straguzsi's unit]; m. Securities means the securities being assigned or novated under the Trade

Confirmation; n. Sunset Date means the date that is 60 Business days after execution of the

DOCA or such later date as is agreed to in writing between the Deed Administrators and the Proponents;

o. Trade Confirmation means [complete details].

DOCA PROCESS 2. The DOCA will include terms typically provided for in a trading DOCA, consistent with

the terms of this Proposal. The terms of the DOCA will be negotiated between the Proponents and the Administrators and the DOCA must be executed within 21 days of approval of this Proposal at the 2nd meeting of creditors of the Administered Companies.

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3. The Administrators of the Administered Companies will be appointed as Deed

Administrators under the DOCA.

4. The Deed Administrators will cause the Administered Companies to continue to trade until the DOCA is effectuated or terminated.

5. Continuation of the DOCA beyond the Confirmation Date will be conditional upon:-

a. The establishment of the Creditors Trust; b. Ross Straguszi executing and delivering to the Deed Administrators the

Conditional Mortgage; and c. the Trade Confirmation remaining on-foot as at that date.

6. The Proponents will endeavour to negotiate the terms of a Debt Restructure

Agreement with GN. That agreement will be conditional upon, and will come into effect on Completion of the Trade Confirmation. The Proponents will notify the Deed Administrators in writing when the Debt Restructure Agreement is executed.

7. Upon the Deed Administrators being notified in writing of both:-

a. execution of the Debt Restructure Agreement by the parties thereto; and

b. Completion of the Trade Confirmation,

the Deed Administrators shall forthwith:

c. pay into the fund created by the Creditors Trust the balance cash funds held by the Administered Companies after payment of their proper fees and outlays incurred in the DOCA administration;

d. release the Administered Companies to the control of the directors thereof; and

e. take such steps as are required under the Corporations Act to confirm the Effectuation of the DOCA.

8. If the conditions mentioned:-

a. in paragraph 5 are not satisfied by the Confirmation Date; or

b. in paragraph 7a&b are not satisfied by the Sunset Date, the DOCA shall be

terminated and the Administered companies shall be placed in liquidation.

THE CONDITIONAL MORTGAGE

9. The Conditional Mortgage will be negotiated between the Proponents and the Deed Administrators and will include the following terms:

a. The mortgage will provide a first registered charge over the Property;

b. The obligations secured under the mortgage will be the obligations of the mortgagor Proponent to procure the payment referred to in paragraph 10b and 14eii below;

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c. The rights of the mortgagee shall be conditional upon and arise only upon

satisfaction of the following conditions precedent: i. Execution of the Creditors Trust Deed; ii. Execution of the Debt Restructure Agreement; iii. Completion of the Trade Confirmation; and iv. Effectuation of the DOCA.

THE DEBT RESTRUCTURE AGREEMENT

10. The Debt Restructure Agreement will be negotiated between the Proponents and

GN, will be executed by the Confirmation Date and will:-

a. permit the orderly sale of certain assets of the Administered Companies; and

b. permit the payment of the Proponents Contribution to the Creditors Trust fund after agreed debt reduction targets are met.

11. The Deed Administrators shall have the discretion to waive any of the requirements

of paragraph 7 if they consider it is in the interests of Creditors to do so.

12. The terms of the Debt Restructure Agreement will be confidential and the final document will be provided to the Deed Administrators in strict confidence, for the sole purpose of verifying compliance with paragraphs 7 and 8.

THE CREDITORS TRUST

13. The Creditors Trust will be established after the DOCA is executed and before the Confirmation Date.

14. The Deed constituting the Creditors Trust will be negotiated between the Proponents and the Deed Administrators and include the following terms:

a. the trust will be constituted upon payment by the Settlor of the initial sum of $10 to the Trustees;

b. The Trustees will be the current Administrators; c. The Beneficiaries will be the creditors of the Administered Companies; d. The Trustees will have typical powers required to properly manage the trust

fund; e. The trust fund will include:-

i. any funds paid into the trust fund under the DOCA; and ii. subject to the satisfaction of the conditions listed in paragraphs 5a&b:

A. the Proponents Contribution of $1,500,000 which is to be paid within 12 months from execution of the DOCA; or

B. if the Proponents fail to cause the Proponents Contribution to be paid, the proceeds of sale of the properties subject to the Conditional Mortgage.

f. Upon receipt of those funds, the trustees will pay the trust fund: i. firstly in payment of the Trustees reasonable fees and expenses of

administering the trust; and ii. then to the creditors of the Administered Companies in shares

equivalent to the respective dividends they would receive on a winding up, were that trust fund divided between the Administered Companies

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in liquidation pro rata to those companies' respective net balance sheet deficiencies.

EFFECTUATION OF THE DOCA

15. Upon satisfaction of the conditions precedent to the Conditional Mortgage other than effectuation of the DOCA, the DOCA shall be effectuated and come to an end and the creditors of the Administered Companies whose rights are compromised under the DOCA shall from that time on arise solely under the Creditors Trust.



Appendices

H & S Vision Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

Remuneration Request Approval Report Page 1 of 19

Part 1: Declaration

We, Shaun McKinnon and Michael Gerard McCann, of Grant Thornton Australia Limited have undertaken a proper assessment of this remuneration claim for our appointment as Grant Thornton Australia Limited, of H & S Vision Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed), in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the Administration.

Part 2: Executive Summary To date the following Administrators’ remuneration has been approved: (a) For the period 12 August 2013 to 4 September 2013 in the amount of $17,402.00 (excluding GST); and (b) For the period 5 September 2013 to 16 September 2013 in the amount of $3,500.00 (excluding GST). No remuneration approved by creditors has been drawn as at the date of this report. This remuneration report details approval sought for the following fees:

Period Report

Reference Amount (ex GST)

Current remuneration approval sought:

Voluntary Administration

Resolution 1: 05/09/2013 – 16/09/2013 Section 4 $7,345.50

17/09/2013 – 30/09/2013* Section 4 $2,500.00

$9,845.50

Less: Fees previously approved: 05/09/2013 – 16/09/2013 ($3,500.00) Total Resolution 1 $6,345.50 Liquidation (if applicable) Resolution 2a: Commencement of liquidation to finalisation* Section 4 $7,500.00



Period Report Reference

Amount (ex GST)

Voluntary Administration (if a Deed is approved by creditors) (if applicable)

Resolution 2b: From meeting of creditors to execution of the Deed*

Section 4 $5,000.00

Deed (if approved) (if applicable) Resolution 3: From execution of the Deed to execution of the Creditors’ Trust Deed*

Section 4 $3,000.00

* Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to report section references detailed above and on the previous page for full details of the calculation and composition of the remuneration approval sought. The remuneration for the period 5 September 2013 to 16 September 2013 was more than the estimate of costs provided in report to Creditors dated 5 September 2013. This increase of $3,845.50 is attributable to the time spent dealing with the following:

- Preparing reports to creditors; and

- Preparing for the first meeting of creditors.



Part 3: Description of work completed

Resolution 1

“The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of H & S Vision Holdings Pty Ltd for the period 12 August 2013 to 16 September 2013, not previously approved, and for the period 17 September 2013 to 30 September 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $6,345.50, plus GST and should be drawn to the extent of available funds.”

Company H & S Vision Holdings Pty Ltd (Administrators Appointed)

Practitioner(s) Shaun McKinnon and Michael Gerard McCann Firm Grant Thornton Australia Limited

Administration Type Voluntary Administration

Period From 05/09/2013 To 16/09/2013

Task Area General Description Includes

Assets (1.6 hours) ($584.00)

Forecasting Prepare cash flow forecast

Creditors (15.7 hours) ($5,506.50)

Creditor Enquiries Receive and follow up creditor enquiries via telephone

Maintaining creditor enquiry register

Review and prepare correspondence to creditors and their representatives via facsimile, email and post

Secured creditor reporting

Preparing update to secured creditor

Responding to secured creditor’s queries

Creditor reports Preparing 439A report, investigation, meeting and general reports to creditors

Dealing with proofs of debt

Receipting and filing Proofs of Debt when not related to a dividend

Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend




Meeting of Creditors Preparation meeting notices, proxies and advertisements

Forward notice of meeting to all known creditors

Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting

Preparation and lodgement minutes of meetings with ASIC

Responding to stakeholder queries and questions immediately following meeting

Investigation (0.1 hours) ($23.00)

Conducting investigation

Preparation of comparative financial statements

Employees (0.2 hours) ($54.00)

Calculation of entitlements

Receive and follow up employee enquiries via telephone

Maintain employee enquiry register

Administration (3.0 hours) ($1,178.00)

Correspondence

Document maintenance/file review/checklist

Filing of documents

Updating checklists

Insurance Correspondence with Insurance Brokers regarding ongoing insurance requirements

Planning/Review Discussions regarding status of administration

Bank account administration

Bank account reconciliation



Company H & S Vision Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)



Period From 17/09/2013 To 30/09/2013


Creditors ($1,500.00)





Preparing updates to secured creditor




Meeting of Creditors Preparation of circular to creditors to advise of adjourned meeting of creditors

Consider any Deed of Company Arrangement proposed

Preparation of adjourned meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting

Employees ($500.00)

Employees enquiry




Administration ($500.00)

Correspondence


Filing of documents

Updating checklists







Part 4: Calculation of Remuneration Please find below a calculation of remuneration by staff and task area.


Part 4 Calculation of remuneration by staff and task area - 5 September 2013 to 16 September 2013

Employee Position

$/hour (excl.

GST)

Total actual

hours

Total

Cost Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Hrs $

Michael McCann Partner 550 0.9 495.00 0.20 110.00 - - 0.70 385.00 - - - - - - - -

Shaun McKinnon Partner 550 1.9 1,045.00 1.40 770.00 - - 0.50 275.00 - - - - - - - -

Alison Harness Senior Manager 450 3.8 1,710.00 - - - - 3.80 1,710.00 - - - - - - - -

Shane Smith Senior Manager 450 1.2 540.00 - - - - 1.20 540.00 - - - - - - - -

Jonathan Kairuz Supervisor 365 1.4 511.00 - - 1.40 511.00 - - - - - - - - - -

Lauren McMullan Supervisor 365 0.7 255.50 0.10 36.50 0.20 73.00 0.40 146.00 - - - - - - - -

Paula Smith Supervisor 365 0.9 328.50 - - - - 0.90 328.50 - - - - - - - -

Thomas Wood Senior Accountant 330 1.0 330.00 - - - - 1.00 330.00 - - - - - - - -

Aaron Previte Accountant 270 0.3 81.00 0.30 81.00 - - - - - - - - - - - -

Camille Grassick Accountant 270 0.2 54.00 - - - - 0.20 54.00 - - - - - - - -

Lyle Fernandes Accountant 270 3.4 918.00 - - - - 3.20 864.00 0.20 54.00 - - - - - -

Caitlin Wilkinson Graduate 230 0.5 115.00 - - - - 0.50 115.00 - - - - - - - -

Courtney Butler Graduate 230 0.1 23.00 - - - - 0.10 23.00 - - - - - - - -

Holly Millman Graduate 230 3.4 782.00 0.10 23.00 - - 3.20 736.00 - - 0.10 23.00 - - - -

Emily Midson Graduate 230 0.2 35.00 0.20 35.00 - - - - - - - - - - - -

Pippa Hocken Secetary 175 0.6 105.00 0.60 105.00 - - - - - - - - - - - -

Tanya Brow n Secetary 175 0.1 17.50 0.10 17.50 - - - - - - - - - - - -

20.6 7,345.50 3.0 1,178.00 1.6 584.00 15.7 5,506.50 0.2 54.00 0.1 23.00 - - - -

734.55 117.80 58.40 550.65 5.40 2.30 - -

8,080.05 1,295.80 642.40 6,057.15 59.40 25.30 - -

356.58 392.67 - 350.73 270.00 230.00 - -

TOTAL INCLUDING GST

AVERAGE HOURLY RATE (EXCLUDING GST)

TOTAL

GST

IPAA Tasks

Admin Assets Creditors Statutory Trade OnEmployees Investigations



Part 5: Description of work from the commencement of liquidation to finalisation

Resolution 2

“That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to H&S Vision Holdings Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”




Period From 01/10/2013 To Finalisation






Correspondence with committee of inspection members if appointed




Creditor reports Preparing reports to creditors




Final Meeting of Creditors

Preparation meeting notices, proxies and advertisements

Forward notice of meeting to all known creditors




Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting.

Preparation and lodgement minutes of meetings with ASIC

Responding to stakeholder queries and questions immediately following meeting

Employees ($2,000.00)

Employees enquiry




Preparation of letters to employees advising of their entitlements and options available

Receive and prepare correspondence in response to employees objections to leave entitlements

FEG Correspondence with DEEWR in respect to FEG

Preparing notification spreadsheet

Preparing DEEWR quotations

Preparing DEEWR distributions

Calculation of entitlements

Calculating employee entitlements

Reviewing employee files and company’s books and records

Reconciling superannuation accounts

Reviewing awards

Employee dividend Correspondence with employees regarding dividend

Correspondence with ATO regarding SGC proof of debt

Calculating dividend rate

Preparing dividend file

Advertising dividend notice

Preparing distribution

Receipting Proofs of Debt

Adjudicating Proofs of Debt

Ensuring PAYG is remitted to ATO




Investigation ($1,000.00)

Conducting investigation

Reviewing company’s books and records

Review of specific transactions and liaising with Directors regarding certain transactions

Liaising with Directors regarding certain transactions

Preparation of investigation file

Lodgement of investigation with the ASIC

Preparation and lodgement of supplementary report if required

Litigation / Recoveries (if applicable)

Internal meetings to discuss status of litigation

Preparing brief to solicitors

Liaising with solicitors regarding recovery actions

Attending to negotiations

Attending to settlement matters

ASIC reporting Preparing statutory investigation reports

Liaising with ASIC

Dividend ($1,000.00)

Processing proofs of debt (if applicable)

Preparation of correspondence to potential creditors inviting lodgement of Proofs of Debt

Receipt of Proofs of Debt

Maintain Proofs of Debt register

Adjudicating Proofs of Debt

Request further information from claimants regarding Proofs of Debt

Preparation of correspondence to claimant advising outcome of adjudication

Dividend procedures (if applicable)

Preparation of correspondence to creditors advising of intention to declare dividend

Advertisement of intention to declare dividend

Obtain clearance from ATO to allow distribution of Company’s assets

Preparation of dividend calculation

Preparation of correspondence to creditors announcing declaration of dividend

Advertise announcement of dividend




Preparation of distribution

Preparation of dividend file

Preparation of payment vouchers to pay dividend

Preparation of correspondence to creditors enclosing payment of dividend

Administration ($1,000.00)

Correspondence


First month, then 6 monthly administration review

Filing of documents

File reviews

Updating checklists


Preparing correspondence closing accounts

Requesting bank statements

Bank account reconciliations

Correspondence with bank regarding specific transfers

Finalisation Notifying ATO of finalisation

Cancelling ABN / GST / PAYG registration

Completing checklists

Finalising WIP


Books and records/ storage

Dealing with records in storage

Sending job files to storage

Statutory ($1,000.00)

ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, 911 etc

Correspondence with ASIC regarding statutory forms

ATO & other statutory reporting

Preparing BAS’

Completing PAYG Payment Summaries/group certificates



Part 6: Description of work from the meeting of creditors to execution of the Deed

Resolution 2b

“That should the Company’s creditors vote in favour of a Deed of Company Arrangement, that the remuneration of the Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 1 October 2013 to 21 October 2013, being the period to execution of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $5,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”




Period From 01/10/2013 To 21/10/2013






Correspondence with committee of inspection members if appointed











Employees ($500.00)

Employees enquiry



Review and prepare correspondence to creditors and their representatives via facsimile, email and post Administration ($500.00)

Correspondence


Filing of documents

Updating checklists


Bank account reconciliations

Correspondence with bank regarding specific transfers


Statutory ($2,500.00)

Deed of Company Arrangement

Various correspondence to stakeholders and solicitors relating to the Deed and Creditors’ Trust Deed preparation

Review of draft Deed and Creditors’ Trust Deed

Execution of Deed

Compliance monitoring of the requirements of the Deed


Preparing BAS’



Part 7: Description of work from execution of the Deed to execution of the Creditors’ Trust Deed / Effectuation of the Deed

Resolution 3

“That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 22 October 2013 to the date of execution of the Creditors’ Trust Deed / effectuation of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”



Administration Type Deed of Company Arrangement

Period From 22/10/2013 To Execution of the Creditors’ Trust Deed / Effectuation of the Deed


Creditors ($500.00)






Employees ($500.00)

Employees enquiry



Review and prepare correspondence to creditors and their representatives via facsimile, email and post Statutory ($2,000.00)

Deed of Company Arrangement

Various correspondence to stakeholders and solicitors relating to the monitoring of the Deed terms and Creditors’ Trust Deed preparation

Review of draft Creditors’ Trust Deed




Execution of the Creditors’ Trust Deed

Filing of Deed and Creditors’ Trust Deed with ASIC

Compliance monitoring of the requirements of the Deed

Any other tasks associated with facilitating the transition from Deed to the Creditors’ Trust Deed


Preparing BAS’



Part 8: Schedule of remuneration methods and hourly rates

Remuneration Methods

There are four basic methods that can be used to calculate the remuneration charged by an Insolvency Practitioner. They are:

a. Time based / hourly rates This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed.

b. Fixed Fee The total fee charged is normally quoted at the commencement of the administration and is the total cost for the administration. Sometimes a Practitioner will finalise an administration for a fixed fee.

c. Percentage The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of assets realisations.

d. Contingency The practitioner’s fee is structured to be contingent on a particular outcome being achieved.

Method chosen

Given the nature of this administration we propose that our remuneration be calculated on a time based / hourly rated basis. This is because:

• It ensures that creditors are only charged for work that is performed. Our time is recorded and charged in six minute increments.

• We will be required to perform a number of tasks that do not specifically relate to asset realisation.

Explanation of Hourly Rates

The rates for our remuneration calculation are set out in the attached table together with a general guide showing the qualifications and experience of staff engaged in the administration and the role they take in the administration. The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage. Refer Appendix C.



Part 9: Statement of Remuneration Claim Resolution 1 “The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of H & S Vision Holdings Pty Ltd for the period 12 August 2013 to 16 September 2013, not previously approved, and for the period 17 September 2013 to 30 September 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $6,345.50, plus GST and should be drawn to the extent of available funds.” Resolution 2 (whichever is applicable) (a) Description of work from the commencement of liquidation to finalisation “That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to H&S Vision Holdings Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”

(b) Description of work from the meeting of creditors to execution of the Deed “That should the Company’s creditors vote in favour of a Deed of Company Arrangement, that the remuneration of the Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 1 October 2013 to 21 October 2013, being the period to execution of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $5,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”



Resolution 3 (if applicable) Description of work from execution of the Deed to execution of the Creditors’ Trust Deed / Effectuation of the Deed

“That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 22 October 2013 to the date of execution of the Creditors’ Trust Deed / effectuation of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”

Part 10: Disbursements Disbursements are divided into three types: A, B1, B2.

A disbursements are all externally provided professional services. These are recovered at cost. An example of an A disbursement is legal fees.

B1 disbursements are externally provided non-professional costs such as travel, accommodation and search fees. B1 disbursements are recovered at cost.

B2 disbursements are internally provided non-professional costs such as photocopying, printing and postage. B2 disbursements, if charged to the Administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs.

I have undertaken a proper assessment of disbursements claimed for the Company, in accordance with the law and applicable professional standards. I am satisfied that the disbursements claimed are necessary and proper.



All disbursements are claimed at cost except for faxing which is charged as follows:

- Local - $1 per page

- National - $2 per page

- International - $3 per page.

Creditors have the right to question the incurring of disbursements and can challenge disbursements in court.

Part 11: Report on Progress of the Administration Please refer to the attached report and the Report to Creditors dated 16 September 2013 for an update on the progress of the Administration.

Part 12: Queries Arrangements can be made to inspect the time and costs records which give greater detail of the work performed by contacting Lyle Fernandes of this office on (07) 3222 0394. We would appreciate it if this could be done no later than 2:00pm on Thursday, 26 September 2013 to allow sufficient time for a review of the information.

Part 13: Information Sheet The ASIC Creditors Information Sheet (INFO 85) that outlines further information regarding the remuneration approval and payment process can be obtained from the following web address: www.asic.gov.au/insolvencyinfosheets. This document was also attached to the previous two circulars to creditors. Further information regarding creditors’ trusts can be found in Regulatory Guide 82 and can be obtained from the following web address: http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/creditors_trusts_guide.pdf/$file/creditors_trusts_guide.pdf.


C. Charge out rates

Appendices

Grant Thornton Recovery and Reorganisation Services

Charge Rates

Staff Classification Rate Per Hour (QLD)

from 1/7/13*

Partner/Director/Appointee $550 Associate Director $495 Senior Manager $450 Manager $405 Supervisor/Client Manager $365 Senior Accountant $330 Accountant $270 Graduate $230 Under Graduate $190 Secretary $175 EDP $175

* Rates are exclusive of GST



Appendices

FORM 529


Subregulation 5.6.12 (2)

NOTICE OF RECONVENED CONCURRENT SECOND MEETING OF CREDITORS OF COMPANY UNDER ADMINISTRATION

BEACHMORE PTY LTD (RECEIVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED) ACN 054 453 851 H & S VISION CHILDCARE PTY LTD (ADMINISTRATORS APPOINTED) ACN 117 350 928 H & S VISION HOLDINGS PTY LTD (RECEIVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED) ACN 107 554 370 H & S VISION PTY LTD (RECEIVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED) ACN 102 250 911 PARADISE PALMS (NQ) PTY LTD (RECEIVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED) ACN 112 797 261 PELICANS IN THE PARK PTY LTD (ADMINISTRATORS APPOINTED) ACN 068 884 560

PTH VISION PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 102 250 804

RAS VISION PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 102 250 877

T.L.D.C PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 068 761 900

THE LAKES MANGEMENT COMPANY PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 065 156 381 USCON PTY LTD (RECIEVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED) ACN 058 849 479

(“THE COMPANIES”) Notice is given that the reconvened concurrent second meeting of the creditors of the Companies will be held at the Pullman Reef Hotel Casino, 35-41 Wharf Street, Cairns QLD 4870, at 11:00 AM on 30 September 2013.

AGENDA

1. To consider the Voluntary Administrators' update to creditors Companies. 2. To approve the remuneration of the Voluntary Administrators. 3. To consider a proposed Deed of Company Arrangement, if received prior to the commencement of the

reconvened meeting. 4. For creditors to resolve:

a) That the Companies execute a Deed of Company Arrangement; or b) That the administration should end; or c) That the Companies be wound up.

5. If the Companies are to execute a Deed of Company Arrangement, to consider appointing a Committee of Inspection.

6. If the Companies are to be wound up, to consider appointing a Committee of Inspection. 7. To approve future remuneration of the Liquidators (if applicable).

8. To approve future remuneration of the Deed Administrators (if applicable).

9. To approve the early destruction of the Companies’ books and records. 10. Any other business that may be lawfully brought forward. Dated this 23rd day of September 2013.

Shaun McKinnon Joint and Several Administrator Grant Thornton Australia Limited Level 18 King George Central 145 Ann Street Brisbane QLD 4000 Tel: (07) 3222 0200 Note: Under the Corporations Regulations, a creditor is not entitled to vote at a meeting unless:

• his/her claim has been admitted, wholly or in part, by the administrator; or

• he/she has lodged with the administrator particulars of the debt or claim (regulation 5.6.23). Furthermore proxies must be made available to the administrator.

A secured creditor may vote for the whole of his debt without deduction for his/her security (reg 5.6.24(4)).



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F. Proxy form

Appendices

FORM 532 Regulation 5.6.29

Corporations Act 2001 (Cwlth)

APPOINTMENT OF PROXY CREDITORS MEETING

H & S VISION HOLDINGS PTY LTD

(RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 107 554 370

I/We (Note 1)________________________________________________________________ (name of creditor)

Of________________________________________________________________________ address of creditor)

A creditor of H & S Vision Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) hereby appoint:

_______________________________________________________________________(name of proxy)(Note 2)

Of__________________________________________________________________________(address of proxy)

Or in his absence,_____________________________________________________(name of alternative proxy)

Of_________________________________________________________________(address of alternative proxy)

As my/our special/general (Note 3) proxy to vote at the concurrent meeting of creditors to be held in the above matter on 30 September 2013 or at any adjournment thereof. If special proxy please select ONE of

the following:

To vote specifically in the following manner: FOR AGAINST ABSTAIN

1. The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of H & S Vision Holdings Pty Ltd for the period 12 August 2013 to 16 September 2013, not previously approved, and for the period 17 September 2013 to 30 September 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $6,345.50 plus GST and should be drawn to the extent of available funds.

2. That should the Company’s creditors vote in favour of a Deed of

Company Arrangement that the remuneration of the Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 1 October 2013 to 21 October 2013, being the period prior to execution of the Deed be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $5,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.

3. Please choose one of the below

a) That the Company execute a Deed of Company Arrangement; OR b) That the Company be Wound Up; OR

c) That the Voluntary Administration should end.

FOR AGAINST ABSTAIN

4. Please choose one of the below a) That should the Company execute a Deed of Company

Arrangement, that the Committee of Inspection be appointed; OR

b) That should the Company be wound up, that a Committee of Inspection be appointed.

5. Please choose one of the below

a) That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service; OR

b) That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to H & S Vision Holdings Pty Ltd for the period 22 October 2013 to the date of execution of the Creditors’ Trust Deed / execution of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,000.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.

6. That should the Company be wound up, the Liquidator be authorised

to destroy the books and records of the Company six months after the date of its deregistration, subject to consent of the Regional Commissioner of the Australian Securities and Investments Commission in accordance with Section 542(4) of the Corporations Act 2001.

DATED this day of 2013 Signature ___________________________(Note 4)

CERTIFICATE OF WITNESS (NOTE 5) I, of , certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. DATED this day of 2013 Signature of Witness____________________________ Description ___________________________________ Place of Residence ______________________________ NOTE: 1. If a firm, strike our “I” and set out the full name of the firm. 2. Insert the name, address and description of the person appointed. 3. If a special proxy add the words “to vote for” or the words “to vote against” and specify the particular resolution. 4. The signature of the creditor, contributory, debenture holder or member must not be attested by the person nominated as proxy. 5. This certificate is to be completed only where the person giving the proxy is blind or incapable of writing.

Documents

H &S Vision Holdings Pty Ltd (Receivers and Managers