In the matter of Rocksoft Limited [2006] FCA 1098

REASONS FOR JUDGMENT 1 Rocksoft Limited seeks the approval of the Court pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) in relation to a scheme of arrangement between Rocksoft and its members and option holders (the scheme). I gave that approval by orders made on 25 July 2006. These are my reasons for the orders then made. 2 On 19 June 2006 I ordered pursuant to s 411(1) of the Act that separate meetings of the members and option holders of Rocksoft be convened for the purpose of considering, and if thought fit, agreeing to the scheme. Those meetings have now been held. The members of Rocksoft voted strongly in favour of the scheme. All who attended voted in favour of the scheme, being 58.77 per cent of those entitled to vote and representing 86.96 per cent of the total share capital of Rocksoft. The option holders also voted strongly in favour of the scheme. Again, all those who attended the option holders meeting voted in favour of the scheme, being 67.30 per cent of option holders entitled to vote and representing 68.32 per cent of the total available for voting purposes in respect of all options over unissued shares in Rocksoft. 3 In essence, the scheme is to effect a merger between Rocksoft and Advanced Digital Information Corporation, a United States corporation, under which Rocksoft will become a wholly owned subsidiary of ADIC. To facilitate that, ADIC has incorporated an Australian registered wholly owned subsidiary, ACN 120 786 012 Pty Ltd (ADIC Australia), to become the acquirer of the Rocksoft issued capital. 4 The vehicle by which the scheme is to be implemented is an Implementation Agreement of 14 March 2006 between Rocksoft and ADIC. It contemplates ADIC Australia becoming the registered owner of all the share capital in Rocksoft, the cancellation of all existing options held for the issue of capital in Rocksoft, and the payment to members and option holders of an appropriate portion of the scheme consideration. Subject to the qualification referred to below, each member of Rocksoft will receive $1 for each share held, and each option holder will receive for each option held in respect of Rocksoft $1 less the amount required to exercise the option. That amount varies as between certain groups of options. There are a small number of employee share option plan (ESOP) options which are not immediately exercisable. Otherwise, all outstanding options are immediately exercisable, so that it is obvious that all shareholders and option holders are being treated equally. I do not think that the small percentage of ESOP options which are not immediately exercisable are significant enough to merit separate consideration. Their options are being treated as immediately exercisable, even though they are not. They represent only 1.66 per cent of the option holders. 5 The exception concerns two directors of Rocksoft, Ross Williams and Neil Johnson. At the time the Implementation Agreement was negotiated, they held either personally or through their entities 31,980,000 and 14,755,260 options respectively. They have agreed to the exercise date for a significant number of those options being brought forward so that the date has passed and the rights under those options has elapsed. The options in respect of which they will benefit under the scheme have reduced to 23,756,012 and 8,906,777 respectively. In no instance will either of them receive more per share or per option than other members or option holders in Rocksoft. The purpose of that change in their option holding has been to ensure that all share holders and option holders receive $1 or $1 less the option exercise price per option through the scheme. 6 There are no common directorships between ADIC and Rocksoft.