MARKOVIC J: 1 On 1 May 2019 on the application of the plaintiff, NetComm Wireless Limited (NetComm), I made orders including an order pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act) convening a meeting of the holders of ordinary shares in NetComm to consider, and, if thought fit, approve (with or without modification) a scheme of arrangement (Scheme) proposed between NetComm and its shareholders (Scheme Shareholders), and orders for the approval and distribution of the scheme booklet, being the explanatory statement required by s 412(1)(a) of the Act, for the Scheme (Scheme Booklet). These are my reasons for making those orders.

background 2 NetComm is an Australian public company limited by shares, incorporated under a previous name on 30 June 1982. It is headquartered in Sydney and operates across Australia, New Zealand, the United States of America (USA), Canada, the United Kingdom and Europe. It is a provider of fixed wireless broadband, fibre and cable to the distribution point and machine-to-machine technologies to telecommunication carriers, core network providers, system integrators and government and enterprise customers. NetComm also designs and manufactures residential broadband internet devices. 3 Casa Systems, Inc (Casa) is a corporation formed in Delaware, USA. Casa and its related bodies corporate provide converged broadband technology solutions that enable mobile, cable and fixed network service providers to meet the growing demand for gigabit bandwidth and services. Its common stock trades on the NASDAQ. As at 31 March 2019, Casa had a fully diluted market capitalisation of US$694 million with global revenue in the 2018 financial year of approximately US$300 million. 4 On 22 February 2019 NetComm and Casa entered into a scheme implementation deed (SID) for the purpose of proposing the Scheme pursuant to which Casa or its nominated subsidiary will acquire all of the issued shares of NetComm for a cash consideration of $1.10 for each share on issue as at the "record date" (Scheme Consideration). On 4 April 2019 Casa nominated Casa Communications Pty Ltd (Casa Communications) as the entity which will acquire all of the shares under the Scheme.

Independent expert's report 5 The NetComm directors appointed Lonergan Edwards & Associates Limited (Lonergan Edwards) as the independent expert to prepare a report (IER) to consider whether, in their opinion, the Scheme is fair and reasonable and in the best interests of NetComm shareholders and to provide their reasons for that opinion. 6 Lonergan Edwards concluded that the Scheme is fair and reasonable and in the best interests of NetComm shareholders, in the absence of a superior proposal. Lonergan Edwards assessed the value of NetComm shares on a 100% controlling interest basis at $0.85 to $1.08 per share. Whilst they considered a number of valuation methodologies in forming their view on value, they had primary regard to the value under a revenue multiple approach and share market trading prior to the announcement of the Scheme, adjusted for a takeover premium. As Lonergan Edwards points out, the Scheme Consideration slightly exceeds the top end of its assessed value range for NetComm shares on a 100% controlling interest basis. 7 In an affidavit sworn by Martin Holt, a director of Lonergan Edwards, on 24 April 2019 Mr Holt notes that he and Craig Edwards, who is also a director of Lonergan Edwards, jointly had overall responsibility for the preparation of the IER and confirms that, as at the date of his affidavit, the information contained in the IER is true and correct and the opinions expressed therein are opinions which he and Mr Edwards hold. Mr Holt says that neither he nor Mr Edwards have become aware of any factual circumstances since the date of the IER which would cause them to change the opinions expressed therein.

NetComm's directors' recommendations 8 The NetComm directors have considered the proposal from Casa and have unanimously recommended that the Scheme Shareholders vote in favour of the Scheme in the absence of a superior proposal and provided that Lonergan Edwards continues to conclude that the Scheme is in the best interests of NetComm shareholders. The NetComm directors have also indicated that, subject to those same qualifications, they each intend to vote all of the NetComm shares held or controlled by them in favour of the Scheme.

relevant principles 9 In EcoBiotics Limited, in the matter of EcoBiotics Limited [2017] FCA 643 (EcoBiotics) at [19] Gleeson J identified three stages to an application under s 411 of the Act for approval of a members' scheme of arrangement, namely: the application to the Court to approve the convening of a scheme meeting and the explanatory statement to be sent to members concerning the scheme; the holding of the scheme meeting at which members, or a relevant class of members, vote on the proposed scheme; and the application to the Court to approve the proposed scheme. 10 At [20] her Honour identified the matters which are to be established at the first stage, as follows: (1) the plaintiff is a "Part 5.1 body"; (2) the proposed scheme is an "arrangement" within the meaning of s 411 of the Act; (3) the explanatory statement will provide proper disclosure to members; (4) the scheme is bona fide and properly proposed; (5) ASIC has had reasonable opportunity to examine the proposed scheme and the explanatory statement, to make submissions and has had 14 days' notice of the proposed hearing date of the first court hearing; and (6) any other procedural requirements have been met, such as r 3.2 of the Federal Court (Corporations) Rules 2000 (Cth) as to the nomination of a chairperson for the scheme meeting. 11 The Court's approach at the first court hearing is that it will not ordinarily summon a scheme meeting unless the scheme is of such a nature and cast in such terms that, if it receives the support of the statutory majorities at the scheme meeting, the Court would be likely to approve it on the hearing of an application which is unopposed: see FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72. 12 The Court is not concerned with the business or commercial efficacy of the proposed scheme, which is a matter for members, but considers whether the scheme is one that sensible business-people might conclude is of benefit to members: see In the matter of DUET Finance Limited [2017] NSWSC 415 at [14]. It is not the Court's role to usurp the shareholders' decision by attempting to intrude its own commercial judgment. Rather, the Court is concerned with whether there is adequate disclosure to shareholders in the explanatory statement, whether the legal requirements have otherwise been complied with and whether the scheme, on its face, is one that is sufficiently fair and reasonable so as to be capable of being put to shareholders for their approval or rejection: see Re Cytopia Ltd [2009] VSC 560 at [3]. 13 At the first court hearing, when the Court approves the convening of a scheme meeting and the draft explanatory statement to be sent to members, and the second court hearing, when the Court approves the proposed scheme, the plaintiff has a duty of disclosure given that, in a technical sense, the application proceeds ex parte in the absence of any defendant or contradictor: see Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [7].

Matters for the Court's satisfaction 14 Having considered the evidence relied on by NetComm, I was satisfied that: (1) NetComm is a Part 5.1 Body as defined in s 9 of the Act; (2) the Scheme is an arrangement between NetComm and all of its shareholders, not merely a class of them. It is a "takeover scheme of arrangement" of the kind which has become common for non-hostile takeovers and is a change of control arrangement for cash consideration. It is an "arrangement" within in the meaning of s 411(1) of the Act; (3) the Scheme Booklet will provide proper disclosure to members. Christopher Last, NetComm's company secretary and chief financial officer, has given evidence about the verification process undertaken for the information contained in the Scheme Booklet relating to or provided by NetComm (NetComm Information). Mr Last gave evidence that, having regard to that process and its outcome, he is not aware of any statement in the NetComm Information which is likely to be false, misleading or deceptive; of any material omission from the NetComm Information; or of anything that causes him to believe the issue of the NetComm Information may involve misleading or deceptive conduct. Similarly, Daniel Carlo Scotti, a partner of MinterEllison, the solicitors for Casa and Casa Communications, has given evidence about the verification procedures undertaken in relation to the information contained in section 4 of the Scheme Booklet concerning Casa and its subsidiaries, including Casa Communications (Casa Information). Mr Scotti's evidence is that, having regard to the verification process and having made reasonable inquiries, to the best of his knowledge, information and belief the Casa Information is complete and accurate in all material respects; none of the Casa Information is misleading or deceptive or likely to mislead or deceive in any material respect; and there is no material omission in respect of the Casa Information which renders that information misleading or deceptive in any material respect; (4) the Scheme is bona fide and properly proposed. The SID, which sets out the terms on which NetComm and Casa agree to implement the Scheme, provides prima facie evidence that the Scheme is bona fide and properly proposed: see EcoBiotics at [34]. In addition, Ken Sheridan, a director of NetComm and its former CEO and managing director, gives evidence from which it can be seen that the negotiations leading to the formulation of the Scheme were at arm's length and that the NetComm directors have no material interest in relation to the Scheme nor will any of them receive any payment or benefit as compensation for their retirement from office as a result of the Scheme; and (5) a copy of the draft Scheme Booklet was first provided to the Australian Securities and Investments Commission (ASIC) on 8 April 2019, which was more than 14 days before the first court hearing. A subsequent revised version of the Scheme Booklet was provided to ASIC on 24 April 2019. By letter dated 30 April 2019 ASIC informed the solicitors for NetComm that the requirement that it be given at least 14 days' notice of the hearing of an application under s 411(1) of the Act had been satisfied and that it did not propose to appear at the first court hearing to make submissions or intervene to oppose the Scheme. Relevantly I was also informed by NetComm that ASIC raised a cosncern about the wording of the fiduciary carve-out in cl 14.7 of the SID which was addressed by NetComm amending the clause to ASIC's satisfaction. 15 I was also satisfied that other procedural requirements set out in Div 3 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) which apply to arrangements between a Part 5.1 Body and its members had been met. This included that each of Justin Milne and Stuart Alexander Black, who are directors of NetComm, had affirmed affidavits on 29 April 2019 in relation to their respective ability and willingness to chair the Scheme Meeting in accordance with the requirements of r 3.2 of the Rules.

other matters 16 NetComm brought the following matters to the Court's attention, none of which, upon consideration, justified the Court declining to make the orders sought by it.

Share appreciation rights 17 Share appreciation rights (SARs) have been issued to NetComm executives under the NetComm Long Term Incentive Plan (Plan). The Plan was in evidence and Mr Sheridan gave evidence in relation to it. Relevantly Mr Sheridan noted that: (1) the Plan provides for the board of NetComm to issue SARs to "Eligible Employees", and that as at the date of his affidavit, 26 April 2019, 2.25 million SARs had been issued (Issued SARs); (2) no further SARs have been issued since 26 March 2019; (3) the NetComm board does not intend to issue any further SARs prior to the Court's approval of the Scheme; (4) none of the Issued SARs have vested in accordance with their terms. Issued SARs automatically vest under r 5.1 of the Plan on the "vesting date", which is three years from the "issue date" unless otherwise specified in the relevant offer. According to the evidence before me the earliest "vesting date" for any of the Issued SARs is 10 October 2019, which is after the "end date" for the Scheme; (5) if any SARs vest prior to 8.00 am on the date of the second court hearing or if any securities, options or performance rights in respect of NetComm shares are issued prior to that time then cl 3.1 of the Scheme and cl 3.1.8 and cl 3.1.14 of the SID will operate such that a condition precedent to the Scheme becoming effective will not be satisfied; and (6) the Issued SARs will lapse upon Court approval of the Scheme, unless the NetComm board exercises its discretion under r 9.1 of the Plan to cause the SARs to vest. But, having regard to the matters set out at (4)-(5) above and the effect of rr 5.2.1(b) and 5.2.6 of the Plan (which I do not propose to set out), Mr Sheridan is of the opinion that there can be no basis for the NetComm board to exercise its discretion under r 9.1 of the Plan and says that it would not contemplate doing so prior to the Court's approval of the Scheme. 18 As is evident from Mr Sheridan's evidence and the terms of the Scheme and the SID, the Scheme will not extend to the holders of SARs. As submitted by NetComm, the holders of SARs have no entitlement in respect of, or interest in, NetComm Shares but rather have a prospective right to either cash or shares subject to certain conditions. The Issued SARs have not vested in accordance with their terms and they will not vest prior to the "end date" of the Scheme, such that the conditions for exercise of the Issued SARs will not be satisfied at any time relevant to the implementation of the Scheme. 19 I was satisfied that the SARs did not create any issue for the Scheme.

Exclusivity arrangements 20 Clause 14 of the SID titled "exclusivity" includes "no shop", "no talk" and "no due diligence" provisions which operate during the "exclusivity period" (as defined in the SID). In summary, those clauses provide that NetComm must not and ensure that its related bodies corporate and their respective "authorised persons" (as defined) do not: (1) directly or indirectly solicit, invite, initiate or encourage any competing proposal or any enquiries, proposals or discussions with any third party that could reasonably be expected to lead to a competing proposal (the "no shop" provision, set out in cl 14.2); (2) directly or indirectly negotiate or enter in to or participate in negotiations or discussions with any person or communicate any intention to do so in relation to a competing proposal even if such a proposal was not directly or indirectly solicited or initiated by NetComm (the "no talk" provision, set out in cl 14.3); and (3) except with the prior written consent of Casa, directly or indirectly solicit, invite, initiate, encourage or facilitate any person to undertake due diligence investigations in respect of NetComm, its related bodies corporate or any of their businesses in connection with any person developing or formulating a competing proposal or make available to any person, other than Casa, any non-public information relating to NetComm, its related bodies corporate or any of their businesses in connection with any person formulating or finalising or assisting in the formulation of a competing proposal unless strictly required as a result of the operation of cl 14.7 (the fiduciary carve-out) of the SID (the "no due diligence" provision, set in cl 14.4). 21 The "no talk" and "no due diligence" restrictions are subject to cl 14.7, which is designed to lift the restrictions imposed if, in the circumstances, compliance with them would entail a breach by the NetComm directors of their fiduciary duties. 22 In Re Arthur Yates & Co Ltd (2001) 36 ACSR 758; [2001] NSWSC 40 at [9] Santow J observed that an exclusivity clause should: (1) be for no more than a reasonable period capable of precise ascertainment; (2) where directed at dealing with a solicited or unsolicited alternative merger proposal, be framed so that it is subject to a fiduciary carve-out; and (3) be clearly disclosed in the explanatory statement sent to shareholders. 23 In this case those criteria are met. The exclusivity restrictions apply during the "exclusivity period", that is from the date of the SID until the "effective date", the date of termination of the SID or the "end date", whichever is earlier. As noted, the "no talk" and "no due diligence" clauses are subject to the fiduciary carve-out in cl 14.7, and the "no talk" and "no shop" clauses have been disclosed in the Scheme Booklet.

Break fee 24 Clause 15.3 of the SID provides for payment of a break fee by NetComm to Casa of $1,609,629 in the circumstances set out therein, including where a NetComm director no longer supports the Scheme or acts inconsistently with his or her statement in support of the Scheme; where a competing proposal is made prior to the second court hearing and a third party completes a superior proposal or acquires a relevant interest in at least 50% of NetComm's shares; or where Casa terminates the SID in accordance with specified clauses. Similarly cl 15.4 of the SID requires Casa to pay a break fee to NetComm in the same amount if the SID is terminated because Foreign Investment Review Board (FIRB) approval was not obtained. However, Mr Sheridan's evidence is that FIRB approval has been obtained such that this event will not arise. 25 Clause 15.2 provides that the break fees have been calculated to reimburse NetComm and Casa for their respective reasonable advisory costs, out of pocket expenses, management time and reasonable opportunity costs. 26 Mr Sheridan participated in the negotiation of the break fees. His evidence was that the inclusion of the break fees and the conditions triggering their payment were robustly negotiated between the parties and that the break fees represent a genuine pre-estimate of the costs set out in cl 15.2 of the SID. 27 NetComm submitted that the break fee payable to Casa satisfies the requirements set out in Re APN News & Media Ltd (2007) 62 ACSR 400; [2007] FCA 770 at [44] where Lindgren J said that break fees are justified by reference to the costs incurred by the offeror company; the benefit that the company confers on the members of the target company by increasing its value; and the desirability from the point of view of the members that takeover offers be made to them. I accept that each of these features was present here. As to the first requirement I refer to Mr Sheridan's evidence summarised in the preceding paragraph, while the latter two requirements are self-evident. Further, as the break fee payable by NetComm to Casa will not be payable simply because the shareholders do not vote to approve the Scheme, the existence of the fee can have no influence on voting at the Scheme Meeting: see Re SFE Corporation Ltd (2006) 59 ACSR 82; [2006] FCA 670 at [7]. 28 Finally the quantum of the break fee payable by NetComm represents approximately 1% of the total equity value of NetComm and is thus in line with the Takeovers Panel Guidance Note 7: Lock-up devices at [9].

conclusion 29 I was satisfied that the Scheme was of such a nature and cast in such terms that, if approved at the Scheme Meeting by the requisite statutory majorities, the Court would be likely to approve it on the hearing of an unopposed application. 30 For the reasons set out above I made the orders sought by NetComm. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.