BLUGLASS LIMITED — Capital/Financing Update 2015

Nov 17, 2015

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12

Name of entity

Bluglass Limited

ABN

20 116 825 793

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	Incentive Options pursuant to the Bluglass Incentive Option Scheme as approved at the 2015 AGM
	1,150,000 Incentive Options to be held by BluGlass Employee Incentive Plan Pty Limited on behalf of BluGlass employees
	Refer Annexure 2

• See chapter 19 for defined terms.

Appendix 3B Page 1

01/08/2012

Appendix 3B New issue announcement

4 Do the[+] securities rank equally in Refer Annexure 2 all respects from the date of allotment with an existing[+] class of quoted[+] securities? If the additional securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration $Nil 6 Purpose of the issue Issue of incentive options pursuant to the (If issued as consideration for the Bluglass Option Scheme as approved at the acquisition of assets, clearly 2015 AGM. identify those assets) 6a Is the entity an[+] eligible entity that Yes has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the[+] securities the subject of this Appendix 3B , and comply with section 6i 6b The date the security holder 16 Nov 2015 resolution under rule 7.1A was passed 6c Number of +securities issued N/A without security holder approval under rule 7.1 6d Number of[+] securities issued with N/A security holder approval under rule 7.1A

• See chapter 19 for defined terms.

Appendix 3B Page 2

01/08/2012

Appendix 3B New issue announcement

6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of securities issued under an exception in rule 7.2 6g If securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the issue date and both values. Include the source of the VWAP calculation. 6h If securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 Dates of entering+securities into uncertificated holdings or despatch of certificates 8 Number and +class of all +securities quoted on ASX (_including_the securities in section 2 if applicable)	1,150,000 at AGM held on 16 Nov 2015	1,150,000 at AGM held on 16 Nov 2015
	N/A
	N/A
	N/A
	Refer Annexure 1
	18 November 2015
	Number	+Class
	326,601,721	Ordinary Fully Paid

• See chapter 19 for defined terms.

Appendix 3B Page 3

01/08/2012

Appendix 3B New issue announcement

9 Number and +class of all +securities not quoted on ASX (_including_the securities in section 2 if applicable)	Number	+Class
	1,832,666 4,059,000 5,500,000	Incentive Plan Options expiring 18 January 2016, $0.0 exercise price, subject to vesting criteria Incentive Plan Options expiring 1 December 2016, $0.01 exercise price, subject to vesting criteria Incentive Plan Options expiring 1 December 2018, $0.01 exercise price, subject to vesting criteria

• 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Part 2 - Bonus issue or pro rata issue

==> picture [177 x 234] intentionally omitted <==

----- Start of picture text -----

11 Is security holder approval
required?
12 Is the issue renounceable or non-
renounceable?
13 Ratio in which the [+] securities will
be offered
14 +Class of +securities to which the
offer relates
15 +Record date to determine
entitlements
16 Will holdings on different registers
(or subregisters) be aggregated for
calculating entitlements?
----- End of picture text -----

• See chapter 19 for defined terms.

Appendix 3B Page 4

01/08/2012

Appendix 3B New issue announcement

• 17 Policy for deciding entitlements in relation to fractions

18 Names of countries in which the entity has[+] security holders who will not be sent new issue documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations

• See chapter 19 for defined terms.

Appendix 3B Page 5

01/08/2012

Appendix 3B New issue announcement

20	Names of any underwriters
21	Amount of any underwriting fee or
	commission
22	Names of any brokers to the issue
23	Fee or commission payable to the
	broker to the issue
24	Amount of any handling fee payable
	to brokers who lodge acceptances
	or renunciations on behalf of
	+security holders
25	If the issue is contingent on
	+security holders’ approval, the date
	of the meeting
26	Date entitlement and acceptance
	form and prospectus or Product
	Disclosure Statement will be sent to
	persons entitled
27	If the entity has issued options, and
	the terms entitle option holders to
	participate on exercise, the date on
	which notices will be sent to option
	holders
28	Date rights trading will begin (if
	applicable)
29	Date rights trading will end (if
	applicable)
30	How do+security holders sell their
	entitlements_in full_through a
	broker?
31	How do+security holders sell_part_
	of their entitlements through a
	broker and accept for the balance?
32	How do+security holders dispose of
	their entitlements (except by sale
	through a broker)?

• See chapter 19 for defined terms.

Appendix 3B Page 6

01/08/2012

Appendix 3B New issue announcement

33 +Despatch date

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of securities ( tick one )

• (a)[Securities described in Part 1 ]

(b)[All other securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• 37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

Appendix 3B Page 7

01/08/2012

Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of securities for which +quotation is sought 39 Class of +securities for which quotation is sought 40 Do the[+] securities rank equally in all respects from the date of allotment with an existing[+] class of quoted +securities? If the additional securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security) Number +Class 42 Number and[+] class of all[+] securities quoted on ASX ( including the securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 8

01/08/2012

Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:

Emmanuel Correia Company secretary

Date: 18 November 2015

Print name: Emmanuel Correia

== == == == ==

• See chapter 19 for defined terms.

Appendix 3B Page 9

01/08/2012

Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for +eligible entities

Introduced 01/08/12

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

Rule 7.1 – Issues exceeding 15% of capital	Rule 7.1 – Issues exceeding 15% of capital
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
Insertnumber of fully paid ordinary securities on issue 12 months before date of issue or agreement to issue	326,601,721
Addthe following: • Number of fully paid ordinary securities issued in that 12 month period under an exception in rule 7.2 • Number of fully paid ordinary securities issued in that 12 month period with shareholder approval • Number of partly paid ordinary securities that became fully paid in that 12 month period Note: • Include only ordinary securities here – other classes of equity securities cannot be added • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items	Nil 1,150,000 Incentive Options (16 Sept 2015) Nil
Subtractthe number of fully paid ordinary securities cancelled during that 12 month period	Nil
“A”	327,751,721

Step 2: Calculate 15% of “A”

“B”

0.15

• See chapter 19 for defined terms.

Appendix 3B Page 10

01/08/2012

Appendix 3B New issue announcement

	[Note: this value cannot be changed]
Multiply“A” by 0.15	49,162,758
Step 3: Calculate “C”, the amount of placement capacity under rule
7.1 that has already been used
Insertnumber of equity securities issued or
agreed to be issued in that 12 month period
_not counting_those issued:
• Under an exception in rule 7.2
• Under rule 7.1A
• With security holder approval under rule
7.1 or rule 7.4
Note:
• This applies to equity securities, unless
specifically excluded – not just ordinary
securities
• Include here (if applicable ) the
securities the subject of the Appendix
3B to which this form is annexed
• It may be useful to set out issues of
securities on different dates as separate
line items

	[Note: this value cannot be changed]
Multiply“A” by 0.15	49,162,758
Step 3: Calculate “C”, the amount of placement capacity under rule
7.1 that has already been used
Insertnumber of equity securities issued or
agreed to be issued in that 12 month period
_not counting_those issued:
• Under an exception in rule 7.2
• Under rule 7.1A
• With security holder approval under rule
7.1 or rule 7.4
Note:
• This applies to equity securities, unless
specifically excluded – not just ordinary
securities
• Include here (if applicable ) the
securities the subject of the Appendix
3B to which this form is annexed
• It may be useful to set out issues of
securities on different dates as separate
line items

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining	Step 4: Subtract “C” from [“A” x “B”] to calculate remaining
placement capacity under rule 7.1
“A” x 0.15	49,162,758
Note: number must be same as shown in
Step 2
Subtract“C”	Nil
Note: number must be same as shown in
Step 3
Total[“A” x 0.15] – “C”	49,162,758
	N_ote: this is the remaining placement_
	capacity under rule 7.1]

• See chapter 19 for defined terms.

Appendix 3B Page 11

01/08/2012

Appendix 3B New issue announcement

Part 2

Rule 7.1A – Additional placement capacity for eligible entities

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

“A” Note: number must be same as shown in Step 1 of Part 1

326,601,721

Step 2: Calculate 10% of “A”

“D” 0.10 Note: this value cannot be changed Multiply “A” by 0.10 32,660,172

Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used

Insert number of equity securities issued or agreed to be issued in that 12 month period under rule 7.1A

Nil

Notes:

• This applies to equity securities – not just ordinary securities

• Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed

• Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained

• It may be useful to set out issues of securities on different dates as separate line items

“E” Nil

• See chapter 19 for defined terms.

Appendix 3B Page 12

01/08/2012

Appendix 3B New issue announcement

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	32,660,172
Subtract“E” Note: number must be same as shown in Step 3	Nil
Total[“A” x 0.10] – “E”	32,660,172 Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

Appendix 3B Page 13

01/08/2012

Appendix 3B New issue announcement

ANNEXURE 2 – TERMS OF INCENTIVE OPTIONS

The terms and conditions of the Incentive Options are as follows and as otherwise provided in the Incentive Option Scheme:

• (a) each Incentive Option entitles the holder, when exercised, to one (1) Share;

• (b) subject to paragraphs (d) and (e) below, the Incentive Options are exercisable at any time on or prior to 5.00pm (EST) on 1 December 2018 ( Expiry Date ) by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Incentive Options are exercised to the registered office of the Company;

• (c) the amount payable upon exercise of each Incentive Option will be $0.01 ( Exercise Price );

• (d) subject to (e) below, the Incentive Options and any Shares issued on the exercise of the Incentive Options will vest on the attainment of:

• the option holder being employed for a continuous period of 24 months from the date of issue of the Incentive Options; and

• Achievement of one or more of the following significant events, to the ultimate satisfaction and discretion of the Board:

  •  RPCVD overgrown green LED consistently outperforms the Company’s MOCVD grown green LEDs;

  •  the Company enters into a commercial arrangement with an equipment or device manufacturer (e.g. Joint Development Agreement, Joint Venture or Strategic Partnership) focussed on commercialising the RPCVD technology; or

  •  Demonstrated RPCVD p-AlGaN properties comparative or better than MOCVD performance; and

• (i) Final Vesting Criteria: Once all the above performance milestones are met, the Incentive Options will only vest with Board approval.

• (e) in the event:

• (i) any third party acquires greater than a 50% interest in the Company’s issued shares (by way of takeover, Incentive Option Scheme of arrangement or any other means); or

• (ii) the Company sells a majority of its assets to a third party,

any unvested Incentive Options or Shares issued on the exercise of the Incentive Options will immediately vest and must be exercised within 90 days thereafter (otherwise they will immediately lapse);

• (f) an Incentive Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Incentive Option can be exercised;

• (g) all Shares allotted upon the exercise of Incentive Options will upon allotment rank pari passu in all respects with other Shares;

• (h)

• the Incentive Options are not transferable;

• See chapter 19 for defined terms.

Appendix 3B Page 14

01/08/2012

Appendix 3B New issue announcement

• (i) Incentive Options will not be quoted on the ASX. However an application will be made to ASX for official quotation of the Shares allotted pursuant to the exercise of the Incentive Options if the Company’s Shares are listed on ASX at that time;

• (j) there are no participating rights or entitlements inherent in the Incentive Options and Incentive Option holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Incentive Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Incentive Option holders the opportunity to exercise their Incentive Options prior to the date for determining entitlements to participate in any such issue; and

• (k) if at any time the issued capital of the Company is reconstructed, all rights of an Incentive Option holder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

• See chapter 19 for defined terms.

Appendix 3B Page 15

01/08/2012