FEDERAL COURT OF AUSTRALIA

RuleBurst Holdings Limited, In the matter of RuleBurst Holdings Limited

[2008] FCA 1901

RULEBURST HOLDINGS LIMITED, IN THE MATTER OF RULEBURST HOLDINGS LIMITED

NSD 1683 of 2008

EMMETT J

7 NOVEMBER 2008

SYDNEY

IN THE MATTER OF RULEBURST HOLDINGS LIMITED,

THE COURT ORDERS THAT:

1.                  Pursuant to s 411(1) of the Corporations Act 2001 (Cth), the Plaintiff (“RuleBurst”) convene:

1.1              a meeting (“Share Scheme Meeting”) of the holders of shares in RuleBurst (“RuleBurst Shareholders”);

1.2              a meeting (“Note Scheme Meeting”) of the holders of convertible notes in RuleBurst (“RuleBurst Noteholders”);

1.3              a meeting (“Option Scheme Meeting”) of the holders of options to subscribe for shares in RuleBurst (“RuleBurst Optionholders”),

for the purpose of respectively considering and, if thought fit, agreeing (with or without modification) to schemes of arrangement proposed to be made between RuleBurst and its respective:

1.4              Shareholders (“Share Scheme”);

1.5              Noteholders (“Note Scheme”);

1.6              Optionholders (“Option Scheme”),

the terms of which are contained in sections 12, 14 and 18 respectively of the Scheme Booklet which is Exhibit 1 in this proceeding ( “Scheme Booklet”).

2.                  The Share Scheme Meeting be held at 10:00am(Australian Eastern Daylight (Savings) Time (“AEDST”)) on 8 December 2008 at Chatswood RSL, 446 Victoria Avenue, Chatswood, in the State of New South Wales.

3.                  The Note Scheme Meeting be held at 11:00 am (AEDST), or as soon thereafter as the Share Scheme Meeting has concluded on 8 December 2008 at Chatswood RSL, 446 Victoria Avenue, Chatswood, in the State of New South Wales.

4.                  The Option Scheme Meeting be held at 12:00pm (AEDST), or as soon thereafter as the Note Scheme Meeting has concluded on 8 December 2008 at Chatswood RSL, 446 Victoria Avenue, Chatswood, in the State of New South Wales.

5.                  Mr Matthew Perrin, or failing him, Mr Maximilian Walsh, be appointed chairman of the Scheme Meetings.

6.                  The chairman appointed to the Scheme Meetings have power to adjourn the Scheme Meetings in his absolute discretion.

7.                  The explanatory statement in the Scheme Booklet be approved for distribution to RuleBurst Shareholders, RuleBurst Noteholders and RuleBurst Optionholders.

8.                  On or before 14 November 2008, RuleBurst publish once in The Australian newspaper, a notice substantially in the form of Annexure A to these orders.

9.                  On or before 12 November 2008, there be personally served on or dispatched by pre-paid ordinary post (or in the case of overseas shareholders, noteholders or optionholders, by airmail) to:

9.1              each shareholder of RuleBurst whose names appear in the RuleBurst Register of Shareholders as at 5.00 pm on 10 November 2008;

9.2              each noteholder of RuleBurst whose names appear in the RuleBurst Register of Noteholders as at 5.00 pm on 10 November 2008;

9.3              each optionholder of RuleBurst whose names appear in the RuleBurst Register of Optionholders as at 5.00 pm on 10 November 2008:

9.3.1        a document substantially in the form of the Scheme Booklet;

9.3.2        proxy forms for the Share Scheme Meeting, the Note Scheme Meeting and the Option Scheme Meeting substantially in the form of Exhibits 2, 3 and 4 in this proceeding;

9.3.3        a reply paid envelope addressed to RuleBurst for return of the proxy.

10.              The time by which the RuleBurst Shareholders must return their proxy forms for the Share Scheme Meeting be 10:00am (AEDST) on 6 December 2008.

11.              The time by which the RuleBurst Noteholders must return their proxy forms for the Note Scheme Meeting be 11:00am am (AEDST) on 6 December 2008.

12.              The time by which the RuleBurst Optionholders must return their proxy forms for the Option Scheme Meeting be 12:00pm (AEDST) on 6 December 2008.

13.              All voting at the Scheme Meetings be by poll as declared by the Chairperson, except for procedural motions.

14.              Other than reg 5.6.13, regs 5.6.12 to 5.6.36A of the Corporations Regulations 2001 shall not apply to the Scheme Meetings.

15.              Notice of the hearing of any application to approve the Share Scheme, the Note Scheme and the Option Scheme be published once in The Australian newspaper, by a notice substantially in the form of Annexure B to these orders, such notice to be published no later than 5 December 2008, and RuleBurst otherwise be exempted from compliance with rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).

16.              Notice of the hearing of any application for an order approving only the Scheme and the Note Scheme be published one in the “The Australian” newspaper, by a notice substantially in the form of Annexure C to these Orders, such advertisement to be published no later than 5 December 2008, and RuleBurst otherwise be exempted from compliance with rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).

17.              The proceeding be stood over to 12 December 2008 not before 10.30 am before Justice Emmett for the hearing of any application to approve the Schemes.

18.              There be liberty to apply on one day’s notice.

19.              These Orders be entered forthwith.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE MATTER OF RULEBURST HOLDINGS LIMITED,

REASONS FOR JUDGMENT

1                     I have before me an application by RuleBurst Holdings Limited (the Company) for orders under s 411 of the Corporations Act 2001 (Cth) (the Act) to convene meetings of members and classes of creditors for the purpose of considering schemes between the Company and its members and between the Company and two classes of its creditors, being note-holders and option-holders.

2                     The Company is a privately held Australian software company.  It provides software for the administration of complex regulations, policies and rules.  The principal Australian operating company within the group is Haley Australia Limited which was founded in 1989 in the Australian Capital Territory.  The Company was rebranded as RuleBurst in 2005.  Following the acquisition of Haley Systems in the United States in November 2007 RuleBurst was rebranded globally as Haley and the group continues to do business under the Haley name.  The Company has its headquarters in Sydney.  It has approximately 123 employees in seven offices in Sydney, Canberra, Melbourne, London, Washington, Pittsburgh and Singapore. 

3                     Prior to the Company’s acquisition of Haley Systems, Haley Systems had established a commercial relationship with Oracle Corporation to incorporate Haley’s technology into an Oracle product.  Following the Company’s acquisition of Haley System, the Company and Oracle expanded their commercial relationship in March 2008 through a joint tender for provision of products in Canada. 

4                     The increased contact between senior executives of the companies highlighted the extent to which the technologies of the two parties were complementary and could yield benefits through a corporate transaction.  In the light of that, the Company engaged its corporate advisers to undertake discussions with Oracle Corporation.  They were also engaged to approach other industry participants on a confidential basis to determine the potential for a trade sale or other corporate transaction.  No other industry participant to date has expressed interest in effecting such a transaction at a valuation comparable to that to be provided under the proposed schemes.

5                     Oracle Corporation is the world’s largest enterprise software company.  It develops, manufactures, markets, distributes and services databases and middleware software as well as application software designed to help its customers manage and increase their business operations.  Oracle Corporation also provides support for the Linux Open Source Operating System through the Oracle Unbreakable Linux Support Program, which provides its customers with Oracle Corporation’s global support programs for Linux.

6                     The effect of the proposed schemes will be that the Company will become a wholly owned subsidiary of Oracle Corporation.  Oracle Corporation intends to acquire the Company to allow Oracle to offer its customers more competitive policy modelling and automation capabilities particularly focused on the public sector.  The Company has 20 years of experience in complex policy and rule automation for the public sector.  The group’s proprietary technology allows government and business users to translate legislation and policies into executable business rules using natural language.

7                     At the present time the Company has 89,380,726 issued shares held by 776 persons of whom 11 are located outside Australia.  The Company has issued 8,420,763 convertible notes, which are presently held by 1178 persons, two of whom are located outside Australia.  In addition, the Company has granted 19,143,000 options to 44 persons of whom 12 are located outside Australia.  It is proposed that the note-holders will have their notes converted to shares representing 33 per cent of the fully diluted capital of the Company.  Shareholders, including those issued shares on conversion of the notes, will transfer their shares to a subsidiary of Oracle Corporation.  It is also proposed that option-holders will have their options to subscribe for shares in the Company cancelled.  Shareholders, note-holders and option-holders will receive cash consideration pursuant to the three schemes.

8                     I have had regard to an outline of submissions (set out in Schedule 1 to these reasons) provided to the Court on behalf of the Company by counsel for the Company.  I have had regard to the material in those submissions in relation to the exclusivity arrangements and reimbursement of costs arrangements contained in a scheme implementation deed made between Oracle Corporation and the Company, which has been amended on several occasions since its original execution.  I have also had regard to the independent experts’ reports described in the submissions.  Those reports indicate that the consideration payable under the schemes is in excess of the value of the respective interests to be acquired, as assessed by the independent experts.

9                     Having regard to those matters, I am satisfied that the schemes are such that the shareholders and note-holders and option-holders of the Company could reasonably be expected to approve the respective schemes to be put before them.  I am also satisfied that, if the schemes are approved by the respective majorities required by the Act, the Court would be likely to approve the schemes on the assumption that there is no opposition from persons to be bound by the schemes.

10                  I have seen evidence that the Australian Securities and Investments Commission (the Commission) has been provided with a copy of the proposed explanatory memorandum to be sent to members, note-holders and option-holders.  The Commission, by letter of 6 November 2008, has informed the Company’s solicitors that the Commission does not currently propose to appear to make submissions or intervene to oppose the proposed schemes between the Company and its shareholders, option-holders and note-holders. I am satisfied that the proposed explanatory memorandum makes adequate disclosure to the persons who will be affected by the scheme of relevant matters. 

11                  Accordingly, I propose to accede to the Company’s application pursuant to s 411 and to make orders convening the meetings proposed. 

Associate:

Dated:         12 December 2008

RULEBURST HOLDINGS LTD

No. NSD 1683 of 2008

OUTLINE OF PLAINTIFF’S SUBMISSIONS

(First Court hearing on 7 November 2008)

Outline of Schemes

1.                  Three separate but interdependent schemes are proposed between RuleBurst Holdings Ltd (“RuleBurst”), an unlisted public company, and its shareholders, noteholders, and optionholders.[1]

2.                  The proposal is that:

(a)              RuleBurst noteholders will have their notes converted to shares representing one-third of the fully diluted capital of RuleBurst;

(b)              RuleBurst shareholders (including those persons issued shares on conversion of the notes) will transfer their shares to Oracle Consolidation Australian Pty Ltd (“Oracle”) an indirect wholly owned subsidiary of Oracle Corporation (“Oracle Corporation”);

(c)              RuleBurst shareholders and noteholders will receive approximately $138.45 million less certain deductions[2].  Based on current estimates of these deductions, this yields a total scheme consideration for RuleBurst shareholders and noteholders of approximately $126.3 million (subject to reduction in respect of Adjustment Matters of up to $4.39 million);

(d)              based on current estimates of deductions, RuleBurst shareholders and noteholders will receive an initial cash consideration of approximately $0.853 per share and $5.416 per note.  Each noteholder will also receive from RuleBurst accrued interest of approximately $0.174 per note;

(e)              RuleBurst shareholders and noteholders may also potentially receive deferred or “adjustment” payments on and from 12 months after the Implementation Date, of up to $0.031 per share and $0.195 per note.  The timing and amount depends on the determination of all claims by Oracle with respect to Adjustment Matters in the Sale Deed to be entered into between RuleBurst as attorney and agent for each shareholder and noteholder and Oracle;

(f)               RuleBurst optionholders will have their options to subscribe for shares in RuleBurst cancelled, and will receive a cash consideration of between $0.15 and $0.85 per option (totalling $10.9 million), depending upon the terms of the relevant option;

(g)              the Schemes will effect the acquisition of RuleBurst by Oracle, and will result in RuleBurst becoming a wholly owned subsidiary of Oracle.

3.                  The total transaction value is approximately $149.4 million less certain deductions[3], yielding an expected total scheme consideration for RuleBurst shareholders, noteholders and optionholders of approximately $137.2 million (subject to reduction in respect of Adjustment Matters of up to $4.39 million).

Scheme Implementation Deed

4.                  On 23 October 2008, Oracle Corporation and RuleBurst entered into a Scheme Implementation Deed (“SID”), which was amended and restated on 5 November 2008 and 6 November 2008, pursuant to which it was agreed that Oracle Corporation would assist RuleBurst and also procure its subsidiary, Oracle, to assist RuleBurst to propose three schemes of arrangement for the purpose of Oracle acquiring all of the ordinary shares of RuleBurst (including those to be issued to RuleBurst noteholders on conversion of their notes to shares) and RuleBurst cancelling all options to subscribe for shares in RuleBurst. 

5.                  The Schemes are interdependent, however Oracle Corporation may waive the interdependence of the Schemes such that the Share Scheme and the Note Scheme may proceed even if the Option Scheme does not proceed or is not approved (cl 3.3(c), SID).

6.                  In this regard, RuleBurst and Oracle Corporation have agreed (cl 4.1, SID) the form of Option Cancellation Deeds for United States resident optionholders and non-United States resident optionholders which RuleBurst must use its reasonable endeavours on or before 12 November 2008 to enter into with optionholders to effect cancellation of the options in an alternative manner to the Option Scheme.  The consideration payable to optionholders under such Deeds is equal to that payable under the Option Scheme.  If the Option Scheme becomes effective, the Option Scheme will operate to the exclusion of the Operation Cancellation Deeds.

Summary of Schemes

Share Scheme and Note Scheme

7.                  The Share Scheme and Note Scheme will be implemented in the following manner:

(a)              on the Conversion Date (expected to be 22 December 2008), RuleBurst will redeem all the notes held by noteholders on the Record Date (expected to be 19 December 2008) and apply the proceeds of redemption to pay up the issue price for ordinary shares in RuleBurst to be issued to noteholders;

(b)              on the Implementation Date (expected to be 30 December 2008), RuleBurst will execute the Sale Deed with Oracle as the attorney and agent of each RuleBurst shareholder and noteholder on the Record Date (cl 4.2(a), Share Scheme and Note Scheme);

(c)              Oracle will provide the cash consideration in respect of both Schemes by no later than the business day prior to the Implementation Date, by depositing:

(1)              an amount equal to the Floor Scheme Consideration (expected to be approximately $121.9 m), in a trust account operated by RuleBurst as trustee for its shareholders and noteholders as at the Record Date (cl 5(a), Share Scheme and Note Scheme);

(2)              an amount equal to the Additional Scheme Consideration ($4,392,772.43), into the Escrow Account in the name of the Agent as trustee for Oracle and the RuleBurst shareholders and noteholders to be administered in accordance with the Sale Deed (cl 5(a)(3), Share Scheme and Note Scheme);

(3)              an amount equal to the Seller’s Representative Costs ($100,000), into the Seller’s Representative Costs Account to be paid out in accordance with the terms of the Sale Deed (cl 5(a)(2), Share Scheme and Note Scheme);

(d)              on the Implementation Date, all the shares in RuleBurst (including those issued on conversion of the notes to shares) will be transferred to Oracle and RuleBurst as trustee must pay the proportionate share of the Floor Scheme Consideration to each shareholder and noteholder (cls 4.2(a) and 5(b), Share Scheme and Note Scheme);

(e)              on the Adjustment Date (being 12 months after the Implementation Date), Oracle must direct the Agent to withdraw the Additional Scheme Consideration from the Escrow Account and pay the proportionate share of that amount to each shareholder and noteholder, except to the extent that this amount is reduced by claims by Oracle arising from the accuracy of certain statements (or Adjustment Matters) set out in the Sale Deed;

(f)               under the Sale Deed, the Seller’s Representative (Mr Alan Dixon) will assess, negotiate and dispute where necessary on behalf of RuleBurst shareholders and noteholders, the validity of any claims by Oracle in respect of the inaccuracy of an Adjustment Matter (cls 3 and 8, Sale Deed).

Option Scheme

8.                  The Option Scheme will be implemented in the following manner:

(a)              Oracle will provide the cash consideration to RuleBurst ($10.9 million) no later than the business day prior to the Implementation Date, by depositing that sum in a trust account operated by RuleBurst as trustee for its optionholders (cl 5(a), Option Scheme);

(b)              on the Implementation Date, subject to the transfer of the option scheme consideration to the trust account operated by RuleBurst, all the options in RuleBurst will be cancelled and RuleBurst as trustee must pay the specified consideration to each optionholder (cls 4(2)(a) and 5(b), Option Scheme).

Scheme is recommended by RuleBurst directors

9.                  The RuleBurst directors unanimously recommend that, in the absence of a superior proposal, RuleBurst shareholders, noteholders and optionholders vote in favour of the Schemes at the proposed Scheme meetings – section 1.3 of the Scheme Booklet.

Scheme is in the best interest of RuleBurst shareholders, noteholders and optionholders

10.             BDO Kendalls Securities (NSW-Vic) Pty Ltd (“BDO”), the independent expert appointed by RuleBurst to assess the Schemes, has prepared two reports, one in relation to the Share Scheme and Note Scheme (see: section 10 of the Scheme Booklet) and one in relation to the Option Scheme (see: section 16 of the Scheme Booklet). 

11.             BDO has concluded that each Scheme is fair and reasonable and in the best interests of the shareholders, noteholders and optionholders respectively.

12.             In summary, BDO:

(a)              assesses the value of each share in RuleBurst at between $0.38 to $0.57;

(b)              estimates the value of the scheme consideration to be received by shareholders to be $0.88 per share;

(c)              assesses the value of each note in RuleBurst at between $3.30 to $3.67;

(d)              estimates the value of the scheme consideration to be received by noteholders to be $5.61 per note; and

(e)              assesses the value of the various tranches of options to be $6,816,780, and the value of the scheme consideration to be received by all optionholders to be $10,890,850.

Tax opinion

13.             The Scheme Booklet contains, in section 7, a report from PricewaterhouseCoopers addressing the tax implications of the Schemes. 

Deed Poll

14.             The obligations of Oracle under the three Schemes and the Sale Deed (to be entered into between RuleBurst as attorney for each shareholder and noteholder and Oracle), are backed up by a Deed Poll to be given by Oracle Corporation in favour of the RuleBurst shareholders, noteholders and optionholders respectively (section 20 of the Scheme Booklet).

Relevant aspects of the transaction

15.             There are a number of aspects of the Scheme which it is appropriate to bring to the Court’s attention.

Optionholders as creditors

16.             In accordance with the consistent line of first instance authority, subject to one exception[4], optionholders should be regarded as contingent creditors rather than contingent members for the purposes of s 411.

Classes

17.             In respect of optionholders inter se, the question arises whether the fact of different strike prices for the 37 tranches of options coupled, in some cases, with different deadlines for option exercise, means that there are different classes of optionholders. 

18.             BDO, the independent expert, has used a consistent and indiscriminate application of the same pricing or valuation methodology to the options having different characteristics in terms of exercise price and expiry, being a methodology that has regard to value criteria in one market at one time: see Re MIA Group Ltd (2004) 50 ACSR 29 at 32 [14]. 

19.             It is submitted, having regard to the pricing or valuation methodology used by BDO, that the different characteristics of the options do not destroy the community of interest between optionholders, and it is appropriate that a single meeting of all optionholders be convened.

Performance risk

20.             The provisions for payment by Oracle of the cash consideration, prior to the transfer of shares and cancellation of the options is a safeguard against the risk that shareholders, noteholders and optionholders will suffer delay or default in the provision of the scheme consideration after their memberships or options have been cancelled.  They will not be relegated to the remedy of suing on the deed poll[5]. 

21.             The status of noteholders will however permanently change to that of a shareholder before the Implementation Date, as conversion is required to occur before the Implementation Date (cl 4.3, Note Scheme).

Exclusivity

22.             Clause 11 of the SID is an exclusivity provision which includes a “no shop” restriction and a conditional “no talk” restriction.

23.             It may be observed that:

(a)              the exclusivity clause is for a reasonable period (approximately 4 months) and capable of precise ascertainment, being the “exclusivity period” lasting from the date of the SID, 23 October 2008, until 12 February 2009 unless extended by agreement of RuleBurst and Oracle (see cls 11.1 and 11.2, SID).  Alternatively, it will terminate earlier if the SID is terminated in accordance with its terms;

(b)              the “no-talk” restriction in clause 11.2 is subject to the overriding obligation not to breach the directors’ fiduciary duties, or be otherwise unlawful (see cls 11.3(a) and 11.6, SID);

(c)              the exclusivity provisions are referred to in section 8.1 of the Scheme Booklet: see Re Arthur Yates & Co Ltd (2001) 36 ACSR 758 at [9] per Santow J.

Break fee

24.             The reimbursement fee of $1,464,257 payable by RuleBurst to Oracle, under clause 12 of the SID, is disclosed in section 8.1 of the Scheme Booklet.  In general terms, the fee is payable if the proposed acquisition by Oracle fails for certain reasons, such as acceptance of a competing proposal (including an IPO or takeover) announced before 12 February 2009 and subsequently implemented within the succeeding 12 months (cl 12.2(b), SID).

25.             In relation to the reasonableness and appropriateness of the break fee, it may be observed that:

(a)              the reimbursement fee is broadly consistent with the Takeovers Panel guidelines.  It is approximately 0.98% of the aggregate offer price payable by Oracle of $149.4 million, and approximately 1.06% of the equity value of RuleBurst, having regard to the expected net scheme consideration of approximately $137.2 million;

(b)              the reimbursement fee is not so large as to be likely to coerce shareholders, noteholders and optionholders into agreeing to the Schemes;

(c)              the reimbursement fee is not payable if shareholders, noteholders or optionholders vote down the Schemes except in the limited circumstances where a competing proposal (including an IPO or takeover) is announced prior to 12 February 2009 and is subsequently implemented within the succeeding 12 months;

(d)              there is contractual acknowledgement that Oracle would not have entered into the SID without the reimbursement fee, that the RuleBurst Board believes the fee is reasonable and appropriate to secure the benefits of the proposal to its shareholders, noteholders and optionholders, and that the Board has received legal advice in relation to the fee (see clause 12.1, SID).

Deemed warranty

26.             Under the Share Scheme and the Note Scheme, shareholders and noteholders will be bound by the Sale Deed which provides in clause 2 for a deemed warranty by the shareholders and noteholders that their shares will be free from encumbrances.  Appropriate prominence is given to the deemed warranty in the Scheme Booklet at sections 3.8 and 3.9: see Re APN News and Media Ltd [2007] 62 ACSR 400 at [57]-[63].

Position of creditors

27.             The entirety of payments to be made under the Schemes to shareholders, noteholders and optionholders is to be funded from the cash consideration to be provided by Oracle. 

28.             RuleBurst’s Chief Financial Officer, Mr Mole, has deposed that the Schemes will not materially prejudice RuleBurst’s ability to pay its creditors as and when they fall due: paragraphs 39-41, second Mole affidavit sworn 5 November 2008.  See also sections 1.5 and 9.21 Scheme Booklet.

Section 411(17)

29.             It is now settled that the appropriate occasion on which the Court is required to address the question posed by section 411(17) is on an application to approve a scheme at the second court hearing: Re Macquarie Private Capital A Ltd [2008] NSWSC 323 at [25]-[37] per Barrett J.  Consequently, it is not incumbent upon the Court, at the convening stage, to canvass the question of avoidance of the operation of Chapter 6.

ASIC’s position

30.             The “usual” letter from ASIC that it does not propose to appear at the first court hearing will be available for tender at the hearing.

Compliance with prescribed disclosure requirements

31.             Attached as Annexure A is a table setting out the prescribed disclosure requirements of Part 3 of Schedule 8 of the Corporations Regulations and the relevant parts of the Scheme Booklet containing those disclosures.

32.             ASIC has granted relief to RuleBurst from compliance with certain prescribed disclosure requirements of Part 2 of Schedule 8 of the Corporations Regulations (ASIC letter to be tendered at the hearing).

Evidence for first court hearing

33.             The evidence may be summarised as follows:

(a)              formal evidence of the Scheme company – see the ASIC company search at exhibit NJM1 to the affidavit of Nicholas Mole sworn 24 October 2008 – this proves RuleBurst is a Part 5.1 body;

(b)              RuleBurst’s Constitution – exhibit NJM2 to the affidavit of Nicholas Mole, 24 October 2008;

(c)              RuleBurst has committed itself to propounding the Scheme – see SID.  This provides prima facie evidence that the Scheme is bona fide and has been properly proposed;

(d)              verification of factual information in the Scheme Booklet – second affidavit of Nicholas Mole sworn 5 November 2008, paragraphs 33-37;

(e)              the Independent Expert’s Report, Taxation Report and verification of the expert opinions contained in the Scheme Booklet – affidavit of Sebastian Stevens sworn 6 November 2008; affidavit of Chris Lowe sworn 5 November 2008 and affidavit of Brady Mickelsen sworn [ ] November 2008;

(f)               the text of the draft Explanatory Statement, the Schemes, the Deed Poll, the Notices of Meeting and the Proxy Forms.  The text of the Scheme provides prima facie evidence in each case that it is “an arrangement” or “compromise” within s 411;

(g)              consents to act as chairman and alternative chairman of the Scheme meeting – affidavits of Matthew Perrin and Max Walsh;

(h)              notification to ASIC – see second affidavit of Nicholas Mole, paragraphs 41-42.  This provides prima facie evidence that s 411(2)(a) has been activated;

(i)               the “usual letter” from ASIC (to be tendered at the hearing) that it does not propose to appear at the first court hearing.  It is noted that it is ASIC’s practice not to give a s 411(17)(b) clearance until the second court hearing.

Orders

34.             Draft orders are attached.  Attention is drawn to the following matters:

(a)              the operation of rule 2.15 of the Federal Court (Corporations) Rules 2000 is excluded, except for Regulation 5.6.13, which provides a convenient method of proving service of the notices of meeting and Scheme Booklet (see order 14);

(b)              the former practice of advertising the Scheme meeting (which is not now required under the Corporations Rules) has generally ceased since the decision of Barrett J in Re Sims Group Ltd (2000) 55 ACSR 422.  Consistent with current practice, no order for advertisement of each of the proposed Scheme meetings is sought, however it is proposed to advertise the Option Scheme Meeting to give notice to any unregistered holders of options, that they need to prove to RuleBurst their entitlement to be registered as an optionholder if they are to vote and participate under the Option Scheme (order 8);

(c)              approval is sought to vary the prescribed form of notice of advertisement of the second court hearing to permit such advertisement to be publicised prior to the date of the Scheme meetings.  Alternative advertisements are proposed, depending upon whether Oracle waives the requirement for RuleBurst to propose to Option Scheme (cl 4.2(b), SID), or waives the interdependence of the Schemes (cl 3.3(c), SID) (see orders 15 and 16).

6 November 2008

Fabian Gleeson

Counsel for the plaintiff

Tel: 8239 0220

ANNEXURE A

Part 3, Sch 8 Corporations Regulations Disclosure Requirements