REDSTONE RESOURCES LIMITED — Governance Information 2006

Aug 1, 2006

REDSTONE RESOURCES LIMITED

ACN 090 169 154

RULES OF 2006 REDSTONE RESOURCES EMPLOYEE OPTION PLAN

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المناج ولاستناء المحاربات المساعدة والمراقب المتعاط المساعدة والمساعدة المستحيرة

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RULES OF REDSTONE RESOURCES LIMITED 2006 EMPLOYEE OPTION PLAN

DEFINITIONS AND INTERPRETATION $\blacksquare$

$11$ In these Rules, unless the context otherwise requires, the following words and expressions shall have the following meanings:

"Associated Company" means at any time any body corporate that at that time is a related body corporate of the Company within the meaning of section 50 of the Corporations Act 2001:

"ASX" means Australian Stock Exchange Limited;

"Bid Period" in relation to a takeover bid in respect of shares in the Company, means the period referred to in the definition of that expression in section 9 of the Corporations Act provided that where a takeover bid is publicly announced prior to the service of a bidder's statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement:

"Board" means the directors acting as the board of directors of the Company or a committee appointed by such board of directors:

"Business Day" means a day on which the stock market of ASX is open for trading in securities:

"Certificate" means the certificate issued by the Company to a Holder in respect of an Option;

"Change of Control Event" means a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in the Company to give it or them the ability, and that ability is successfully exercised, in general meeting, to replace all or a majority of the Board;

"Company" means Redstone Resources Limited ACN 090 169 154;

"Corporations Act" means Corporations Act 2001 (Cth):

"Director" means a director of a Group Company from time to time but does not include a person who is only a director by virtue of being an alternate director:

"Eligible Person" means at any time a person who then is a Director or an employee (whether full-time or part-time) of a Group Company;

"Exercise Condition" means the performance, vesting or other conditions (if any) determined by the Board and specified in an Offer which are, subject to these Rules. required to be satisfied, reached or met before an Option can be exercised;

"Exercise Price" means, in respect of an Option, the subscription price per Share, determined in accordance with clause 15, payable by a Holder on exercise of the Option;

"Expiry Date" means, in relation to an Option, the date determined by the Board prior to the offer of the relevant Options, subject to any restriction in the Corporations Act from time to time but in any event no longer than 5 years from the Issue Date:

"Group" means, collectively the Company and each of the Associated Companies;

"Group Company" means the Company or any Associated Company;

"Holder" means, in relation to an Option, the person (whether an Eligible Person or a Permitted Nominee) entered in the Company's register of options as the holder of that Option:

"Issue Date" means, in relation to an Option, the date on which the Company grants that Option:

"Listing Rules" means the Official Listing Rules of ASX as they apply to the Company:

"Market Value" means:

• the weighted average closing sale price of the Shares recorded on the stock $(a)$ market of ASX over the five trading days immediately preceding the day on which the Board resolves to offer an Option: or
• $(b)$ in circumstances where there has been no trading in the Shares during the five trading days immediately preceding the day on which the Board resolves to offer an Option, the last sale price recorded on the stock market of ASX;
• in circumstances where the Shares are not listed on the ASX on or before the $(c)$ day in which the Board resolves to offer an Option, such other reasonable value determined by the Board.

"Participating Director" means, in relation to an Eligible Person, a nominated director whose participation in the scheme is subject to receipt of specific approval for his/her participation received from members in general meeting;

"Permanent Disablement" means, in relation to an Eligible Person, that the Eligible Person has, in the opinion of the Board, after considering such medical and other evidence as it sees fit, become incapacitated to such an extent as to render the Eligible Person unlikely ever to engage in any occupation for which he is reasonably qualified by education, training or experience:

"Official Quotation" has the meaning ascribed to it in the Listing Rules;

"Option" means an Option issued under the Plan to subscribe (subject to clauses 14.2) and 14.4) for a Share:

"Permitted Nominee" has the meaning given to it by clause 6.2;

"Plan" means the Redstone Resources Limited Employee Option Plan established in accordance with these Rules:

"Redundancy" means, in relation to an Eligible Person, a determination by the Board that the relevant Group Company's need to employ a person for the particular kind of work carried out by that Eligible Person has ceased (but, for the avoidance of any doubt, does not include the dismissal of an Eligible Person for personal or disciplinary reasons or where the Eligible Person leaves the employ of any Group Company of his or her own accord):

"Retirement" means, in relation to an Eligible Person, retirement by that Eligible Person from any Group Company at age 60 or over or such earlier age as considered appropriate by the Board;

"Rules" means these rules, as amended from time to time;

"Series" means, in relation to Options, Options with a common Issue Date; and

"Shares" means fully paid ordinary shares in the capital of the Company.

• $1.2$ In these Rules, unless a contrary intention appears:
  • $(a)$ where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning;
  • $(b)$ the singular includes the plural and vice versa;
  • $(c)$ a reference to a gender includes all genders; and
  • $(d)$ an expression defined in, or given a meaning for the purposes of, the Corporations Act has the same meaning where used in these Rules.

$2.$ ESTABLISHMENT AND TERMINATION OF THE PLAN

• $2.1$ The Board may establish and administer the Plan in accordance with the terms and conditions set out in these Rules and otherwise as it determines from time to time in its absolute discretion
• $2.2$ The Board may terminate the Plan, or suspend its operation for any period it considers desirable, at any time that it considers appropriate.
• $2.3$ The Board may not issue any further Options after the Plan has been terminated. However, these Rules will continue to apply to Options on issue at the date of such termination until the last of those Options lapses or is exercised.

$31$ PURPOSE OF PLAN

The purpose of the Plan is to:

• $(a)$ recognise the ability and efforts of the employees of the Company who have contributed to the success of the Company;
• provide an incentive to the employees to achieve the long term objectives of the $(b)$ Company and improve the performance of the Company:
• attract persons of experience and ability to employment with the Company and foster $(c)$ and promote loyalty between the Company and its employees; and
• $(d)$ provide employees of the Company with the opportunity to acquire Options, and ultimately Shares, in the Company, in accordance with these Rules.

ELIGIBILITY $\ddot{4}$ .

• $4.1$ Subject to these Rules, the Board may from time to time determine that any Eligible Person is entitled to participate in the Plan and the extent of that participation. Prior to making that determination, the Board must consider:

  • the seniority of the relevant Eligible Person and the position the Eligible $(a)$ Person occupies within the Group:
  • $(b)$ the length of service of the Eligible Person with the Group:
  • the record of employment of the Eligible Person with the Group: $(c)$
  • $(d)$ the potential contribution of the Eligible Person to the growth of the Group;

• the extent (if any) of the existing participation of the Eligible Person (or any $(e)$ Permitted Nominee in relation to that Eligible Person) in the Plan; and

• $(f)$ any other matters which the Board considers relevant.

• $4.2$ The Board may exercise its powers in relation to the participation of any Eligible Person on any number of occasions.

5. OFFER OF OPTIONS

Subject to these Rules and to the Listing Rules, the Company (acting through the Board) may offer Options to any Eligible Person at such times and on such terms as the Board considers appropriate. Each offer must state:

• $(a)$ the name and address of the Eligible Person to whom the offer is made:
• that the Eligible Person to whom it is addressed may accept the whole or any lesser $(b)$ number of Options offered. The offer may stipulate a minimum number of Options and any multiple of such minimum or any other number which may be accepted;
• the period within which the offer may be accepted, and the period or periods during $(c)$ which the Options or any of them may be exercised and the Expiry Date:
• the method of calculation of the Exercise Price: and $(d)$
• any other matters which the Board may determine. $(e)$

$6.$ ACCEPTING OFFERS

• Upon receipt of an offer of Options, an Eligible Person may, within the period specified $6.1$ in the offer:
  • $(a)$ accept the whole or any lesser number of Options offered by notice in writing to the Board: or
  • $(b)$ nominate a nominee in whose favour the Eligible Person wishes to renounce the offer by notice in writing to the Board. The Board may, in its absolute discretion, resolve not to allow such renunciation of an offer in favour of a nominee without giving any reason for such decision.
• 6.2 Upon:
  • $(a)$ receipt of the acceptance referred to in paragraph 6.1(a); or
  • $(b)$ the Board resolving to allow a renunciation of an offer in favour of a nominee ("Permitted Nominee") and the Permitted Nominee accepting the whole or any lesser number of Options offered by notice in writing to the Board.

then the Eligible Person or the Permitted Nominee, as the case may be, will be taken to have agreed to be bound by these Rules and will be granted Options subject to these Rules.

If Options are issued to a Permitted Nominee of an Eligible Person, the Eligible 6.3 Person must, without limiting any provision in these Rules, ensure that the Permitted Nominee complies with these Rules.

NO CONSIDERATION 7.

No consideration is payable by an Eligible Person for a grant of an Option, unless the Board decides otherwise.

8. CERTIFICATES

• $8.1$ Certificates for Options will be dispatched within 10 Business Days after their Issue Date.
• 8.2 The Certificates must state:
  • $(a)$ the number of Options issued to the Eligible Person:
  • $(b)$ the Exercise Price of those Options: and
  • $(c)$ the Issue Date of those Options.

9. QUOTATION

• $9.1$ The Company will not apply for Official Quotation of any Options.
• $9.2$ If shares of the same class as those allotted under the Plan are listed on the ASX, the Company must apply for Official Quotation of those Shares allotted pursuant to the exercise of Options within the time required by the Listing Rules after the date of allotment.

$10.$ NOT TRANSFERABLE

Subject to clause 13.4. Options are not transferable.

$11.$ EXERCISE OF OPTIONS

• $111$ Subiect to these Rules and the terms of the Options, Options may be exercised at any time during the period commencing on the Issue Date and ending on the Expiry Date.
• $11.2$ Notwithstanding paragraph 11.1, all Options may be exercised:
  • $(a)$ during a Bid Period: or
  • at any time after a Change of Control Event has occurred; or $(b)$
  • on an application under section 411 of the Corporations Act 2001, if a court $(c)$ orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.
• $11.3$ Options not validly exercised on or before the Expiry Date will automatically lapse.
• $11.4$ Options may only be exercised by notice in writing to the Board delivered to the registered office of the Company. The notice must specify the number of Options being exercised and must be accompanied by:
  • $(a)$ the Exercise Price for the number of Options specified in the notice; and
  • $(b)$ the Certificate for those Options, for cancellation by the Company.

The notice is only effective (and only becomes effective) when the Company has received value for the full amount of the Exercise Price (for example, if the Exercise Price is paid by cheque, by clearance of that cheque).

$11.5$ Subject to paragraph 11.3, within 10 Business Days after the notice referred to in clause 11.4 becoming effective, the Board must:

• $(a)$ allot and issue the number of Shares specified in the notice to the Holder:
• $(b)$ cancel the Certificate for the Options being exercised: and
• if applicable, issue a new Certificate for any remaining Options covered by the $(c)$ Certificate accompanying the notice.
• $116$ The Board may, at it's discretion, by notice to the Holder reduce, waive or vary (provided such variation is not adverse to the Holder) the Exercise Conditions attaching to Options in whole or in part at any time and in any particular case.

$12.$ SHARES ALLOTTED ON EXERCISE OF OPTIONS

All Shares allotted upon exercise of Options rank pari passu in all respects with Shares previously issued and, in particular, entitle the Holders to participate fully in:

• $(a)$ dividends declared by the Company after the date of allotment; and
• $(b)$ all issues of securities made or offered pro rata to holders of Shares.

$13.$ CEASING TO BE AN ELIGIBLE PERSON

• $13.1$ Unless otherwise determined by the Board, if at any time prior to the earliest date any Options in a Series are exercisable, an Eligible Person ceases to be an Eligible Person for any reason other than Retirement, Permanent Disability, Redundancy or death, all Options in that Series held by such Eligible Person, or if appropriate, his or her Permitted Nominee, will automatically lapse.
• $13.2$ For the avoidance of doubt, if at any time after the earliest date any Options in a Series are exercisable and prior to the Expiry Date of those Options an Eligible Person ceases to be an Eligible Person by reason of Retirement, Permanent Disability, Redundancy or death, such Eligible Person, or if appropriate, his or her Permitted Nominee, may exercise any or all of the Options in that Series held by him or her within 3 months of the date of Retirement. Redundancy or death or of the date of the Board's determination of Permanent Disability, or such longer period as the Board determines.
• $13.3$ A certificate signed by the company secretary of the Company stating that a person ceased for any reason to be an Eligible Person shall (in the absence of manifest error) be conclusive for the purposes of the Plan, both as to such occurrence and the date of such occurrence.
• $13.4$ If at any time prior to the Expiry Date of any Options a Holder dies, the deceased Holder's legal personal representative may:
  • $(a)$ elect to be registered as the new Holder of the deceased Holder's Options;
  • whether or not he becomes so registered, exercise those Options as if he $(b)$ were the Holder of them in accordance with these Rules; and
  • if the deceased Holder had already given the Company a notice of exercise of $(c)$ his or her Options, pay the Exercise Price in respect of those Options.

14. ENTITLEMENT TO PARTICIPATE IN FUTURE ISSUES

$14.1$ New Issues

Holders may only participate in new issues of securities to holders of Shares if an Option has been exercised and Shares allotted in respect of the Option before the record date for determining entitlements to the issue. The Company must give notice

as required under the Listing Rules to Holders of any new issue before the record date for determining entitlements to the issue in accordance with the Listing Rules.

$14.2$ Bonus Issues

If there is a bonus share issue ("Bonus Issue") to the holders of Shares, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the Holder would have received if the Option had been exercised before the record date for the Bonus Issue ("Bonus Shares"). The Bonus Shares must be paid up by the Company out of the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank pari passu in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares

$14.3$ Pro Rata Issues

If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise of any Options, the Exercise Price of an Option will be adjusted in the manner provided for in the Listing Rules.

$14.4$ Reorganisation of Capital

If, prior to the expiry of any Options, there is a reorganisation of the issued capital of the Company, Options will be reorganised in accordance with the Listing Rules.

$14.5$ Advice

In accordance with the Listing Rules, the Company must give notice to each Holder of any adjustment to the number of Shares for which the Holder is entitled to subscribe or to the Exercise Price pursuant to the provisions of clauses 14.2, 14.3 or 14.4.

$15.$ EXERCISE PRICE OF OPTIONS

The method of calculation of the Exercise Price of each Option will be determined by the Board with regard to the Market Value of the shares when it resolves to offer the Option.

16. NUMBER OF OPTIONS TO BE ISSUED

The Company shall not offer or issue Options to any Eligible Person in accordance with the Plan if the total number of Shares the subject of Options being offered, when aggregated with:

• the number of Shares in the same class which would be issued were each outstanding $(a)$ offer or Option to acquire unissued Shares in the Company, being an offer made or Option acquired pursuant to the Plan or any other employee or executive share scheme extended only to employees or directors of the Company and of associated bodies corporate of the Company, to be accepted or exercised (as the case may be): and
• $(b)$ the number of Shares in the same class issued during the previous five years pursuant to the Plan or any other employee or executive share scheme extended only to employees or directors of the Company and of associated bodies corporate of the Company;

but disregarding any offer made, or Option acquired or Share issued by way of or as a result of:

$(c)$ an offer to a person situated at the time of receipt of the Offer outside Australia; or

• an offer that was an excluded offer or invitation within the meaning of the Corporations $(d)$ Law as in force before the commencement of Schedule 1 to the Corporate Law Economic Reform Program Act 1999; or
• $(e)$ an offer that did not need disclosure to investors because of section 708 of the Corporations Act: or
• an offer that did not require the giving of a Product Disclosure Statement because of $(f)$ section 1012D of the Corporations Act: or
• $(g)$ an offer made under a disclosure document or Product Disclosure Statement.

would exceed 5% of the total number of issued Shares in the Company as at the time of the offer under the Plan.

$17.$ AMENDMENTS TO THE RULES

The Board may, subject to the Listing Rules (if applicable) alter, delete or add to these Rules at any time (save for the provisions of clause 16).

18. POWERS OF THE BOARD

The Plan shall be administered by the Board who shall have the power to:

• determine procedures from time to time for administration of the Plan consistent with $(a)$ these Rules:
• resolve conclusively all questions of fact or interpretation arising in connection with the $(b)$ Plan: and
• $(c)$ delegate to any one or more persons for such period and on such conditions as the Board may determine to exercise any of the Board's powers or discretions arising under the Plan.

19. NOTICES

Notices may be given by the Company to any Holder either personally or by sending by post to his or her address as noted in the Company's records or to the address (if any) within the Commonwealth of Australia supplied by him to the Company for the giving of notices. Notices for any overseas Holders shall be forwarded and posted by air. Where a notice is sent by post the notice shall be deemed to be served on the day after posting. The signature of any notice may be given by any Director or secretary of the Company. A Notice of Exercise shall not be deemed to be served on the Company until actually received.

20. NO COMPENSATION OR DAMAGES

• $20.1$ The rights and obligations of any Holder under the terms of his or her employment with a Group Company are not affected by his or her participation in the Plan.
• $20.2$ These Rules do not form part of, and will not be incorporated into, any contract of engagement or employment between a Holder and a Group Company.
• $20.3$ No Holder has any rights to compensation or damages as a result of the termination of his or her employment, so far as those rights arise or may arise from the Holder ceasing to have rights under the Plan as a result of the termination.

GOVERNING LAW $21.$

This plan and any Options issued under it are governed by the laws of Western Australia and the Commonwealth of Australia.

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$22.$ ADVICE

Eligible Persons should obtain their own independent advice at their own expense on the financial, taxation and other consequences to them of or relating to participation in the Plan.

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REDSTONE RESOURCES LIMITED ACN 090 169 154 2006 REDSTONE RESOURCES LIMITED EMPLOYEE OPTION PLAN APPLICATION FORM

Before completing this form, you should read the Plan Rules.PLEASE USE BLOCK LETTERS

Details of Employee/Director/Consultant:

Full name(s):
Full address:
Telephone:
Details of Applicant:
Full name(s)
Full address:
Telephone:
Invitationfor.Numberof.

Employee Options under the	Invitation for Numberof.
	Plan

I, being the Applicant referred to above, hereby accept the Company's invitation to participate in

		the 2006 Redstone Resources Limited Employee Option Plan and apply for that number of Employee Options shownabove/or ____________________________________
*Strike out whichever is not applicable.		of ______ cents and otherwise on the terms and conditions of the 2005 Redstone Resources Employee Option Plan.
Executed by a Company:		Executed by a natural person:
EXECUTED pursuant to section 127 of theCorporations Act 2001 (Cth)		SIGNED by_________________________
		in the presence of:
		Witness: Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness and Witness
Director	Director/Secretary	Name: ________ ______________
Print name	Print name	Address:

DECLARATION BY APPLICANT ON SIGNING THIS APPLICATION FORM By signing this Application Form:

I declare that all details and statements made by me are complete and accurate and the Application complies with the terms of the Invitation.

Occupation:

I agree to be bound by the Rules of the 2006 Redstone Resources Employee Option Plan.

INSTRUCTIONS TO APPLICANTS

Please complete all sections of the Application Form using BLOCK LETTERS.

In order for your application to be accepted, you must post or deliver the completed Application Form so as to reach the Company at:

The Company Secretary Redstone Resources Limited Level 2 110-116 East Parade EAST PERTH WA 6004

Please provide us with a telephone number (including the person responsible in the case of an application by a company) so that we can contact you quickly if there is an irregularity in your Application Form.

Before signing the Application Form the applicant should read the Invitation and the Rules of the 2006 Redstone Resources Employee Option Plan in full.

If you need any advice on investing in the Options under the 2006 Redstone Resources Employee Option Plan you should consult your stockbroker or independent financial adviser.

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