Exhibit 4.2
 GEM Equity Line Facility Agreement




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Table of contents
 Parties
    
    
    1Background
    
    
    1Operative provisions
    
    
    11
    
    Equity Line facility
    
    
    1Commitment
    
    
    1Exclusivity
    
    
    1Use of Proceeds
    
    
    12
    
    Drawings
    
    
    2Entitlement
    
    
    2Drawdown procedure
    
    
    2Drawdown conditions
    
    
    3Drawing Limits
    
    
    5Requirements for Drawdown Notices
    
    
    6First Drawdown
    
    
    6Type 1 Drawdown
    
    
    6Type 2 Drawdown
    
    
    7Waiver of compliance
    
    
    7Confirmation of drawdown
    
    
    73
    
    Pricing
    
    
    8Calculation of Total Purchase Price
    
    
    8Drawdown Shares
    
    
    8Purchase Price
    
    
    9Adjustments  First Drawdown or Type 1 Drawdown
    
    
    9Adjustments  Type 2 Drawdown
    
    
    9Disposal during Pricing Period
    
    
    104
    
    Closing
    
    
    10Closing Date
    
    
    10Actions on closing
    
    
    11Actions after closing
    
    
    125
    
    Representations and warranties
    
    
    12Warranties
    
    
    12Application
    
    
    12Official quotation
    
    
    12Organisation and qualification
    
    
    13Issue of Shares
    
    
    13No conflicts
    
    
    14Financial statements
    
    
    14Information accurate and complete
    
    
    16CHESS
    
    
    166
    
    Mutual Representations and Warranties
    
    
    16General
    
    
    16Warranties
    
    
    167
    
    Indemnity by the Company
    
    
    17




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8
    
    Indemnity by GEM
    
    
    199
    
    Other agreements of the Parties
    
    
    20Listing
    
    
    20Disclosure of transactions and other material information
    
    
    20Negative covenants
    
    
    21Holding and trading Shares
    
    
    22Maximum holding
    
    
    2210
    
    Options
    
    
    2211
    
    Fees and costs
    
    
    22Commitment Fee
    
    
    22Scrip payment
    
    
    22Establishment Fee
    
    
    23General costs and expenses
    
    
    23Statutory charges and duties etc
    
    
    2312
    
    Goods and services tax
    
    
    23Recovery of GST on supplies and adjustments under this agreement
    
    
    23Other GST matters
    
    
    2413
    
    Term and termination
    
    
    24Term
    
    
    24Events of default
    
    
    24Consequences of an Event of Default
    
    
    25Effect of termination
    
    
    2614
    
    Notices
    
    
    26Service of notices
    
    
    26Receipt
    
    
    27Execution
    
    
    27Other modes of service permitted
    
    
    28Interpretation
    
    
    2815
    
    General
    
    
    28Approvals and consent
    
    
    28Assignment
    
    
    28Entire agreement
    
    
    28Execution of separate documents
    
    
    28Further acts
    
    
    29Governing law and jurisdiction
    
    
    29Rights cumulative
    
    
    29Severability
    
    
    29Stamp duty
    
    
    29Variation
    
    
    29Waiver
    
    
    29Calculation of time periods
    
    
    2916
    
    Definitions and interpretation
    
    
    30Interpretation
    
    
    30Interpretation
    
    
    35Execution
    
    
    36




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Schedule 1
    
    
    37Drawdown notice
    
    
    37Schedule 2
    
    
    40Form of Resolution of Directors (clause 2.4.2)
    
    
    40Schedule 3
    
    
    41New issue announcement, Application for quotation of
additional securities and
agreement (Appendix 3B of the Listing Rules) (clause 2.4.3)
    
    
    41Schedule 4
    
    
    42Share Lending Agreement
    
    
    42Schedule 5
    
    
    43Form of closing statement (clause 4.3.1(a))
    
    
    43Schedule 6
    
    
    46Option terms and conditions (clause 10)
    
    
    46Option terms and conditions of issue
    
    
    48




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Parties
 Metal Storm Limited Company
 GEM Global Yield Fund Ltd GEM
 GEM Investment Advisors, Inc GEM Advisors
 Background
  Operative provisions
 1
    
    Equity Line facility
 Commitment
 1.1
    
    GEM grants to the Company an Equity Line on the terms and conditions of this agreement under
which the Company may, during the Commitment Period, require GEM to subscribe for (or cause to
be subscribed for) such a number of Shares having a total issue price not exceeding the Total
Commitment.1.2
    
    GEM agrees that during the Commitment Period it will subscribe for (or cause to be subscribed
for) Shares having a total issue price not exceeding the Total Commitment on the terms and
conditions described in this agreement.1.3
    
    The Company must use its best endeavours to obtain the Shareholder Approval by no later than
the Approval Date.
 Exclusivity
 1.4
    
    For so long as the Company has rights under this agreement to make Drawings and provided
always that GEM is not in default of its obligations under this agreement, the Company and its
Controlled Entities must not solicit, negotiate or enter into any Equity Line with any third
party without the prior written consent of GEM. For the avoidance of doubt, this does not
restrict the Company from undertaking a rights issue or share purchase plan.
 Use of Proceeds
 1.5
    
    The Company must use the proceeds from GEMs subscription for Shares for the Permitted Use.
GEM may but is under no obligation to monitor whether the proceeds are actually applied in
accordance with this clause.
 1




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2
    
    Drawings
 Entitlement
 2.1
    
    Subject to this agreement, the Company may at any time during the Commitment Period, drawdown
any of the Available Commitment by following the procedure and satisfying the conditions set
out in this agreement.2.2
    
    The Company must not give a Drawdown Notice:
 2.2.1
    
    at any time during a Pricing Period; or2.2.2
    
    if the completion of any Drawing would result in GEM, GEM Advisors or
the Company being in breach of this agreement, any applicable Australian law or the
Listing Rules.
 2.3
    
    The Company must give GEM a valid Drawdown Notice for not more than $1,000,000, by no later
than the date which is 10 Business Days after the date of this Agreement.
 Drawdown procedure
 2.4
    
    If the Company wishes to drawdown any of the Available Commitment, it must deliver to GEM:
 2.4.1
    
    (Drawdown Notice)a Drawdown Notice duly executed by the Company which
complies with this agreement;2.4.2
    
    (directors resolutions)an extract from the minutes of a meeting of
directors of the Company or from a circulating resolution, certified as correct by a
director of the Company, evidencing that the directors of the Company have duly
passed resolutions which are in a form which is the same as or substantially similar
to those set out in Schedule 2;2.4.3
    
    (Application for grant of quotation)a copy of the proposed Listing
Application in relation to the Proposed Drawdown Shares; and2.4.4
    
    (shareholder approval)if the issue of Shares to GEM or its nominee
requires the approval of the Company in general meeting for any reason:
 (a)
    
    a certificate signed by two directors of the Company
that the approval has been obtained in accordance with law and the Listing
Rules; and(b)
    
    an extract from the minutes of the general meeting,
certified as correct by two directors of the Company, evidencing that such
approval has been obtained.
 2




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Drawdown conditions
 2.5
    
    GEMs obligations under clause 4 to subscribe for Shares under this agreement are subject to
and conditional upon the following conditions having been satisfied or fulfilled in respect of
each Drawdown:
 2.5.1
    
    (Drawdown Procedure)the Company being entitled under this agreement to
make a Drawdown and having complied with the drawdown procedure in this agreement;2.5.2
    
    (Drawing Limit)the Drawing Limits in clause 2.6 not having been
exceeded;2.5.3
    
    (Drawdown Documents)GEM having received properly completed and duly
executed Drawdown Documents in respect of the relevant Drawing;2.5.4
    
    (no breach or default)the Company not being in breach of this agreement
and no Event of Default has occurred or subsists as at the date of the relevant
Drawdown Date, the relevant Closing Date or will result from the provision of monies
under the Drawing;2.5.5
    
    (availability of funds)the provision of subscription monies in
accordance with the Drawdown Notice will not cause the Available Commitment to be
exceeded;2.5.6
    
    (representations and warranties)each representation and warranty by the
Company in this agreement is true and correct and is neither misleading nor
deceptive in any respect as at the Drawdown Date or at the relevant Closing Date as
though it had been made on and as of each of those dates;2.5.7
    
    (Authorisations)all Authorisations necessary to be obtained by the
Company for the Drawing have been obtained and evidence provided to GEM including,
without limitation, any approvals required under either Chapter 7 or 10 of the
Listing Rules;2.5.8
    
    (closing trade price)the closing trade price of a Share quoted on ASX
on the Trading Day immediately preceding the Drawdown Date is equal to or higher
than the Threshold Price;2.5.9
    
    (liquidity)during the 10 Trading Days prior to and excluding the
Drawdown Date:
 (a)
    
    the Shares were continuously quoted on ASX; and(b)
    
    there was no actual or threatened trading halt of the
Shares or suspension of the Shares from quotation (whether at the request
of the Company or otherwise). A trading halt or suspension is only taken
to have been threatened if the Company has received notice of that threat
from ASX;
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2.5.10
    
    (share lending)all of the following has occurred in respect of each proposed
Drawdown:
 (a)
    
    GEM has entered into a Share Lending Agreement with
the Share Lender; and(b)
    
    For the First Drawdown  the Share Lender has lent to
GEM or its nominee and delivered to either of them under the Share Lending
Agreement such a number of Shares which:
 
    
    If the Trading Value is less than $1 million  no
less than twice the number of Proposed Drawdown Shares up to a
maximum equal to the maximum number of Shares which when taken
with the number of Options that the Company is required to
grant to GEM or its nominee under clause 10, the Company can
issue or grant without having to obtain shareholder approval
under the Listing Rules.
    
    If the Trading Value is more than $1 million -
no less than the number of Proposed Drawdown Shares,
 Trading Valuemeans the dollar amount calculated in accordance with
the following formula:Trading Value = Benchmark Price x 10 x Trading VolumeWhereBenchmark Pricemeans the volume weighted average price of
Shares traded on ASX over the 10 Trading Days ending on the
date immediately prior to the Drawdown Date.Trading Volumemeans the average daily number of Shares
traded on ASX during the 10 Trading Days ending on the date
immediately prior to the Drawdown Date and excluding any Shares
traded on any day during that period when the closing trade price of
the Shares was less than the Threshold Price.(c)
    
    For a Type 1 Drawdown  the Share Lender has lent to
GEM or its nominee and delivered to either of them under the Share Lending
Agreement such a number of Shares which:
 
    
    If the Trading Value is less than $400,000  is
no less than twice the number of Proposed Drawdown Shares.
    
    If the Trading Value is more than $400,000  is
no less than the number of Proposed Drawdown Shares.
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Trading Valuemeans the dollar amount calculated in accordance with
the following formula:Trading Value = Benchmark Price x 15 x Trading VolumeWhereBenchmark Pricemeans the volume weighted average price of
Shares traded on ASX over the 15 Trading Days ending on the
date immediately prior to the Drawdown Date.Trading Volumemeans the average daily number of Shares
traded on ASX during the 15 Trading Days ending on the date
immediately prior to the Drawdown Date and excluding any Shares
traded on any day during that period when the closing trade price of
the Shares was less than the Threshold Price.(d)
    
    For a Type 2 Drawdown  -the Share Lender has lent to
GEM or its nominee and delivered to either of them under the Share Lending
Agreement such a number of Shares which is no less than the number of
Proposed Drawdown Shares; and(e)
    
    the Share Lender has otherwise complied with all of
its essential obligations under the Share Lending Agreement.
 Drawing Limits
 2.6
    
    The Company cannot require GEM in a Drawdown Notice to subscribe for such a number of Shares
which is more than:
 2.6.1
    
    For the First Drawdown:
 (a)
    
    If the Trading Value is equal to or less than $1
million  half of the maximum number of Shares which when taken with the
number of Options that the Company is required to grant to GEM or its
nominee under clause 10, that the Company can issue or grant without
having to obtain shareholder approval under the Listing Rules.(b)
    
    If the Trading Value is more than $1 million  the
maximum number of Shares which when taken with the number of Options that
the Company is required to grant to GEM or its nominee under clause 10,
that the Company can issue or grant without having to obtain shareholder
approval under the Listing Rules.
 2.6.2
    
    For Type 1 Drawdowns  the number of Shares determined in accordance
with the following formula:Maximum Proposed Drawdown Shares = $400,000 ÷ Benchmark PriceWhere
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Benchmark Priceis 90% of the volume weighted average price of Shares traded on
ASX over the 15 Trading Days ending on the date immediately prior to the
Drawdown Date.2.6.3
    
    In all other cases  the number calculated under the following formula:Drawing Limit = 700% x Trading Volumewhere:Trading Volumemeans the average daily number of Shares traded on ASX during
the number of Trading Days specified in the Drawdown Notice, prior to and
excluding the Drawdown Date, and excluding any Shares traded on any day during
that period when the closing trade price of the Shares was less than the
Threshold Price.
 Requirements for Drawdown Notices
 2.7
    
    A Drawdown Notice is irrevocable and will either be the First Drawdown, a Type 1 Drawdown or
Type 2 Drawdown.
 First Drawdown
 2.8
    
    The First Drawdown must:
 2.8.1
    
    be in the form set out in Schedule 1 except that it does not need to specify:
 (a)
    
    the number of Trading Days to determine the Trading
Volume;(b)
    
    that the number of Proposed Drawdown Shares does not
exceed 700% of the Trading Volume; or(c)
    
    the closing trade price of a Share on the Trading Day
immediately preceding the Drawdown Date; and
 2.8.2
    
    specify:
 (a)
    
    the calculation of the maximum number of Shares that
can be Drawn under clause 2.6.1.(b)
    
    the calculation of the Shares to be lent under clause
2.5.10(b).
 Type 1 Drawdown
 2.9
    
    A Type 1 Drawdown must:
 2.9.1
    
    be in the form set out in Schedule 1 except that it does not need to specify:
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(a)
    
    the number of Trading Days to determine the Trading
Volume;(b)
    
    that the number of Proposed Drawdown Shares does not
exceed 700% of the Trading Volume; or(c)
    
    the closing trade price of a Share on the Trading Day
immediately preceding the Drawdown Date; and
 2.9.2
    
    specify:
 (a)
    
    the Proposed Drawdown Shares.(b)
    
    the calculation of the maximum number of Shares that
can be Drawn under clause 2.6.2; and(c)
    
    the calculation of the Trading Value and the Shares
to be lent under clause 2.5.10(c).
 Type 2 Drawdown
 2.10
    
    A Type 2 Drawdown must be in the form set out in Schedule 1 and specify 15 consecutive
Trading Days as the period specified for the purposes of determining the Trading Volume.2.11
    
    All Drawdown Notices must
 2.11.1
    
    be duly completed and signed by the Company; and2.11.2
    
    be delivered to GEM on a Business Day by no later than 9.00 am on that Business
Day.
 2.12
    
    The Closing Date specified in a Drawdown Notice must be a Business Day.
 Waiver of compliance
 2.13
    
    The drawdown procedure in clause 2.4 and drawdown conditions in clauses 2.5 to 2.12 are for
the benefit of GEM only. They may only be waived by GEM in its absolute and sole discretion
and only by notice in writing to the Company. Any Drawdown Notice or purported Drawing which
does not comply with this agreement is invalid and ineffective.
 Confirmation of drawdown
 2.14
    
    GEM must no later than three Business Days after receipt of a Drawdown Notice either:
 2.14.1
    
    advise the Company that the drawdown procedure in clause 2.4 or the drawdown
conditions in clauses 2.5 to 2.12 have not been complied with together with written
particulars of the non-compliance; or2.14.2
    
    give the Company a Confirmation Statement confirming:
 (i)
    
    the Drawdown Date;
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(ii)
    
    the Pricing Period;(iii)
    
    the Closing Date; and(iv)
    
    the name of the person to whom
the Drawdown Shares are to be issued in accordance with clause
4.3.2.
 2.15
    
    The provision by GEM of a Confirmation Statement under clause 2.14:
 2.15.1
    
    is not a release or waiver by GEM of any obligation of the Company to satisfy the
drawdown procedures or conditions; and2.15.2
    
    does not impose an unconditional obligation on GEM to subscribe for any Shares.
GEMs obligation remains subject to the conditions in this agreement being
fulfilled.
 2.16
    
    If, within three Business Days after receipt of a Drawdown Notice, GEM has not:
 2.16.1
    
    informed the Company in accordance with clause 2.14.1 that the drawdown procedure
or the drawdown conditions have not been complied with; or2.16.2
    
    given the Company a Confirmation Statement in accordance with clause 2.14.2,
 GEM will be deemed to have given the Company a Confirmation Statement on the fourth
Business Day after receipt of the Drawdown Notice.2.17
    
    GEM is under no obligation to confirm a Drawdown or to subscribe for Shares under this
agreement if any of the representations and warranties in this agreement are not true and
correct as at the Drawdown Date or if any other drawdown condition has not been complied with.
 3
    
    Pricing
 Calculation of Total Purchase Price
 3.1
    
    The Total Purchase Price is the amount which is equal to the number of Drawdown Shares
multiplied by the Purchase Price.
 Drawdown Shares
 3.2
    
    The Drawdown Shares comprise:
 3.2.1
    
    For the First Drawdown and a Type 1 Drawdown  the higher of:
 (a)
    
    the Proposed Drawdown Shares, as adjusted in
accordance with this clause 3; and(b)
    
    the number of Shares that GEM is required to
re-deliver to the Share Lender on the maturity date under the Share
Lending Agreement.
 8




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3.2.2
    
    For a Type 2 Drawdown  the Proposed Drawdown Shares as adjusted in
accordance with this clause 3.
 Purchase Price
 3.3
    
    For any Drawdown, if GEM is required under this agreement to subscribe for Shares, it must do
so at a Purchase Price per Share equal to 90% of the average closing trade price of Shares
during the Pricing Period as adjusted under clause 3.8.2.
 Adjustments  First Drawdown or Type 1 Drawdown
 3.4
    
    Each of the following events during a Pricing Period for the First Drawdown or a Type 1
Drawdown is an Adjustment Event:
 3.4.1
    
    the volume weighted average price of Shares traded on ASX during a
Trading Day in the Pricing Period is less than the Threshold Price;3.4.2
    
    an event occurs which has a Material Adverse Effect or which in GEMs
reasonable opinion is likely to have a Material Adverse Effect.
 Adjustments  Type 2 Drawdown
 3.5
    
    Each of the following events during a Pricing Period for a Type 2 Drawdown is an Adjustment
Event:
 3.5.1
    
    the volume weighted average price of Shares traded on ASX during a
Trading Day in the Pricing Period multiplied by 90%, is less than the
Threshold Price;3.5.2
    
    trading in the Shares on ASX is suspended or halted;3.5.3
    
    the number of Shares traded on ASX on any Trading Day is less than 25%
of the Trading Volume (as defined in clause 2.6); and3.5.4
    
    an event occurs which has a Material Adverse Effect or which in GEMs
reasonable opinion is likely to have a Material Adverse Effect.
 3.6
    
    A Knockout Dayis a day on which an Adjustment Events occurs.3.7
    
    Notwithstanding anything else contained in this agreement, if a Knockout Day occurs during a
Pricing Period of the First Drawdown or a Type 1 Drawdown:
 3.7.1
    
    the Proposed Drawdown Shares will be reduced by:
 (a)
    
    for the First Drawdown  1/10th for every
Knockout Day which occurs during the Pricing Period; or(b)
    
    for a Type 1 Drawdown  1/15th for every
Knockout Day which occurs during the Pricing Period; and
 3.7.2
    
    in calculating the average closing trade price in clause 3.3, the
closing trade price on any Knockout Day will be disregarded and the number of
Trading Days comprising the Pricing Period will be reduced by the number of Knockout
Days that occur during that period.
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3.8
    
    Notwithstanding anything else contained in this agreement, if a Knockout Day occurs during a
Pricing Period , for a Type 2 Drawdown:
 3.8.1
    
    the Proposed Drawdown Shares will be reduced by 1/15th for
every Knockout Day which occurs during any other Pricing Period under this
agreement; and3.8.2
    
    in calculating the average closing trade price in clause 3.3, the
closing trade price on any Knockout Day will be disregarded and the number of
Trading Days comprising the Pricing Period will be reduced by the number of Knockout
Days that occur during that period.
 3.9
    
    GEM has the right in its absolute discretion (but not the obligation):
 3.9.1
    
    For a Type 2 Drawdown  to reduce the Proposed Drawdown Shares
(following adjustment, if any, under clause 3.8.1) by up to 50% of the number of
Proposed Drawdown Shares; or3.9.2
    
    For a Type 2 Drawdown  increase the Proposed Drawdown Shares (with or
without adjustment under clause 3.8.1) by up to 200%, provided that GEM cannot
require the Company on the Closing Date to issue any Shares to GEM or its nominee if
to do so would be in breach of any Australian law or the Listing Rules; and3.9.3
    
    For a Type 1 Drawdown  increase the Proposed Drawdown Shares by up to
100%, provided that GEM cannot require the Company on the Closing Date to issue any
Shares to GEM or its nominee if to do so would be in breach of any Australian law or
the Listing Rules.
 Disposal during Pricing Period
 3.10
    
    For a Type 2 Drawdown, GEM must not, on any Trading Day during the Pricing Period:
 3.10.1
    
    if the First Drawdown is a Type 2 Drawdown under this agreement, sell Shares
representing more than 1/10th of the Shares specified in the First
Drawdown Notice; or3.10.2
    
    in respect of any other Type 2 Drawdown under this agreement, sell Shares
representing more than 1/15th of the Shares specified in a Drawdown
Notice.
 4
    
    Closing
 Closing Date
 4.1
    
    Subject to clause 4.2, the Closing Date in relation to any given Drawdown is the date which
is the Trading Day immediately after the end of the Pricing Period.4.2
    
    Despite anything else in this agreement, if GEMs nominee for the issue of Drawdown Shares is
the Share Lender and the issue of the Drawdown Shares will require
 10




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shareholder approval under
the Corporations Act or the Listing Rules, the Closing Date in relation to any given Drawdown
will be the date that is two Business Days after the date on which shareholder approval to the
issue of the Drawdown Shares to the Share Lender is obtained.
 Actions on closing
 4.3
    
    Subject to the Company having complied with the drawdown procedure in clause 2.4, the
drawdown conditions in clause 2.5 having been fulfilled (or waived by GEM) and any shareholder
approval required under clause 4.2 having been obtained, on the Closing Date:
 4.3.1
    
    GEM must:
 (a)
    
    give the Company a Closing Statement;(b)
    
    subscribe for the Drawdown Shares at the Purchase
Price; and(c)
    
    if the allottee of the Drawdown Shares is a nominee
of GEM and is not the Share Lender or an existing member of the Company,
provide to the Company a written consent from the allottee:
 
    
    consenting to the issue of the Drawdown Shares to
it;
    
    consenting to become a member of the Company; and
    
    agreeing to be bound by the Constitution on the
issue of the Drawdown Shares to it; and
 (d)
    
    pay the Company the Drawdown Amount; and
 4.3.2
    
    the Company must:
 (a)
    
    allot and issue the Drawdown Shares to GEM or its
nominee; and(b)
    
    lodge with ASX the Listing Application (amended as
appropriate) in respect of the Drawdown Shares and pay any fees or other
costs associated with it.
 4.4
    
    The Company must use its best endeavours to obtain a grant of quotation from ASX for the
Drawdown Shares within five Business Days after the Closing Date, including complying with any
reasonable condition required by ASX as a condition of it granting quotation.4.5
    
    The Drawdown Amountis an amount equal to the difference between:
 4.5.1
    
    the Total Purchase Price calculated under clause 3; and4.5.2
    
    all monies due and payable by the Company to GEM or GEM Advisors as at
the relevant Closing Date under this agreement including monies payable under clause
11 (Fees and costs) and clause 12 (Goods and Services Tax) or otherwise.
 11




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4.6
    
    The obligations of GEM and the Company on the Closing Date are interdependent.
 Actions after closing
 4.7
    
    On the Business Day after the Closing Date, the Company must lodge with ASX a notice which
complies with section 708A(6) of the Corporations Act.4.8
    
    No later than two Business Days after the Closing Date, the Company must cause its share
registry to deliver to GEM or the allottee of the Drawdown Shares:
 4.8.1
    
    a holding statement evidencing the allotment and issue of the Drawdown
Shares on the Closing Date; and4.8.2
    
    details of all necessary identification numbers and other information
necessary to enable the allottee to deal immediately with the issued Drawdown
Shares.
 4.9
    
    The Company hereby requests, authorises and directs GEM to withhold from the Drawdown Amount
to be paid to the Company pursuant to clause 4.3.1(d) any monies specified in clause 4.5.2 and
to pay those monies directly to GEM or GEM Advisors (as the case may be) or its nominee.5
    
    Representations and warranties
 Warranties
 5.1
    
    The Company gives to GEM and GEM Advisors the representations and warranties set out in this
clause. Each representation and warranty is a separate representation and warranty and is in
no way limited by any other representation and warranty. Where a representation or warranty
is qualified by announcements by the Company or disclosures which the Company has made to GEM
and GEM Advisors, it is only qualified by written disclosures given to GEM and GEM Advisors.
 Application
 5.2
    
    Subject to the disclosures provided to GEM from time to time by the Company in writing and
any announcements made by the Company to ASX:
 5.2.1
    
    each of the warranties in this clause 5 (other than clauses 5.12  5.17)
applies as at the date of this agreement, on each Closing Date and on each date
between them; and5.2.2
    
    each of the warranties in clauses 5.12 to 5.17 applies as at the date of
this agreement.
 Official quotation
 5.3
    
    The Company is admitted to the official list of ASX and its Shares are admitted to official
quotation on ASX.5.4
    
    There is no reason that the Shares could be removed or suspended from official quotation on
ASX or the Company removed from the official list of ASX.
 12




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##### 



Organisation and qualification
 5.5
    
    The Company and each of its Subsidiaries is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership of material property or the nature of
its Business makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect.5.6
    
    No resolution to alter the Constitution having a Material Adverse Effect has been passed or
if passed will have a Material Adverse Effect.5.7
    
    None of the following has occurred in relation to the Company or any of its Subsidiaries:
 5.7.1
    
    no resolution for their winding up has been passed and no meeting of
members or creditors has been convened for that purpose;5.7.2
    
    no winding up application has been made to a court, and no event has
occurred which would entitle any person to apply to a court to wind them up in
insolvency;5.7.3
    
    no composition or arrangement has been entered into with any of their
creditors;5.7.4
    
    no demand has been received under section 459E of the Corporations Act;5.7.5
    
    no receiver or other controller (as that expression is defined in the
Corporations Act) has been appointed to them or any of their material assets;5.7.6
    
    none of the entities are externally administered bodies corporate (as
that expression is defined in the Corporations Act);5.7.7
    
    none of the entities are insolvent within the meaning in section 95A of
the Corporations Act;5.7.8
    
    no distress, execution or other similar order or process has been levied
on any of their material property or assets;5.7.9
    
    none of the entities has received from ASIC any notice or warning of
possible cancellation of registration of the Company which cannot be rectified
within seven Business Days of receipt; and5.7.10
    
    no event has occurred which would entitle a person to take any proceeding or step
the effect of which would result in the appointment of a receiver or receiver and
manager, to the entity.
 Issue of Shares
 5.8
    
    The Drawdown Shares will be capable of quotation by ASX.5.9
    
    Upon issue of the Drawdown Shares:
 13




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##### 



5.9.1
    
    all of the Drawdown Shares will be validly issued and fully paid and
free from all Liens; and5.9.2
    
    the Drawdown Shares will rank equally with all existing Shares on and
from the date of issue in respect of all rights issues, bonus share issues and
dividends which have a record date for determining entitlements on or after the date
of issue of those Drawdown Shares.
 5.10
    
    The issue of Shares and any grant of Options under this document is made for the purposes of
raising funds for the Permitted Use. The issue of Shares and any grant of Options is not made
for a purpose specified in section 707(3)(b)(i) of the Corporations Act.
 No conflicts
 5.11
    
    The execution, delivery and performance of this agreement will not:
 5.11.1
    
    breach the Constitution;5.11.2
    
    result in a material breach of any material agreement, indenture or instrument to
which the Company or any Subsidiary is a party; or5.11.3
    
    subject to the Company having obtained all necessary Authorisations for each
Drawing, result in a material violation of any law, rule, court order, (including
the Corporations Act, the Listing Rules or any other Commonwealth or State laws).
 Financial statements
 5.12
    
    Except as disclosed in the financial statements, the Companys financial statements as at 30
June 2009 (Balance Date):
 5.12.1
    
    have been prepared by the Company in accordance with the Corporations Act, the
Accounting Standards and generally accepted accounting principles in Australia;5.12.2
    
    present a true and fair view of the profit or loss of the Company and its
Subsidiaries for the relevant accounting periods to which they relate and the state
of affairs of the Company and its Subsidiaries as at the Balance Date;5.12.3
    
    accurately disclose the assets and liabilities of the Company and its Subsidiaries
at the Balance Date;5.12.4
    
    provide fully for all liabilities of the Company and its Subsidiaries for tax at
the Balance Date;5.12.5
    
    are not affected by any unusual or non-recurring item; and5.12.6
    
    take account of all gains and losses whether realised or unrealised arising from
foreign currency transactions as at the Balance Date.
 5.13
    
    Subject to disclosures made by the Company to ASX on or before the date of this agreement,
since the Balance Date:
 14




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##### 



5.13.1
    
    to the best of the Companys knowledge and belief, after having made reasonable
enquiry, no material change has occurred which would result in a Material Adverse
Effect; and5.13.2
    
    the Company has not declared or paid any dividend, nor has there been any other
distribution of property to its members.
 5.14
    
    The Company or a Subsidiary is the beneficial owner of each of the material assets included
in the Companys financial statements except to the extent that a material asset of the
Company may, in the ordinary course of business of the Company, have changed, been reduced, or
disposed of after the Balance Date.5.15
    
    The Company has not since the Balance Date acquired or disposed of any material assets other
than in the ordinary course of business of the Company.5.16
    
    There is no default under any material mortgage, encumbrance or Lien to which the Company or
any of its Subsidiaries is a party or to which any material property or assets of the Company
or any of its Subsidiaries are subject and there has not occurred since the Balance Date any
event which with the passage of time or giving of notice would constitute a default.5.17
    
    The Company or its Subsidiaries does not have any material debts or liabilities other than
those debts and liabilities disclosed in the Companys financial statements and debts and
liabilities which have been incurred in the ordinary course of the ordinary business of the
Company up to the date of this agreement and are neither of an unusual nature or an unusually
large amount.5.18
    
    Particulars of all material bills of exchange, promissory notes and other negotiable or
transferable instruments in respect of which the Company has any liability (other than cheques
drawn by the Company in the ordinary course of business) have been fully disclosed to GEM.5.19
    
    Subject to the accounting provisions in the financial statements, the Company reasonably
believes that the material trade debts owing at the Balance Date and the date of this
agreement are good debts and will produce the full amount of the debts without deduction.5.20
    
    The rate of depreciation applied in respect of each material depreciable asset of the Company
in the Companys financial statements has been consistently applied over the previous
accounting periods of the Company and is adequate to write down the value of each such fixed
asset to its realisable value at the end of its effective working life.5.21
    
    The Company will upon reasonable request of GEM, make available to GEM such information as
GEM may reasonably require in order to verify these warranties, provided that the Company is
under no obligation to provide GEM with information which is subject to confidentiality
restrictions or which would otherwise result in the Company or any of its Subsidiaries
breaching an agreement, law or Authorisation.
 15




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##### 



Information accurate and complete
 5.22
    
    The Company has lodged, as and when required (or as varied by any relief sought), all
documents required to be lodged by it with the ASIC and ASX which would be likely to be
material to GEM as the grantor of the Equity Line under this agreement (Disclosure Documents).5.23
    
    The Disclosure Documents are fair and accurate and otherwise comply in all material respects
with the requirements of the Corporations Act and the Listing Rules and at the time they were
lodged with the ASX or ASIC, contained no untrue statement of a material fact or omitted to
state a material fact required to be stated or were, in light of the circumstances under which
they were made, not misleading or deceptive.5.24
    
    As at the date of this agreement, the Company has disclosed all materially price sensitive
information required by the Listing Rules and, as at each Drawdown Date and Closing Date, the
Company will have disclosed all materially price sensitive information required by the Listing
Rules as at those dates.5.25
    
    The Company has not, by act or omission, made any disclosure to GEM such that if GEM enters
into or completes any of the transactions contemplated under this
agreement, a breach by any party of Part 7.10 Division 3 (Insider Trading) of the
Corporations Act or similar law of this jurisdiction will occur or arise.
 CHESS
 5.26
    
    The Company is a CHESS participant under the Listing Rules and must for so long as GEM holds
Shares operate an electronic issuer sponsored sub-register and an electronic CHESS
sub-register.6
    
    Mutual Representations and Warranties
 General
 6.1
    
    Each party gives to the other the representations and warranties set out in this clause to
the best of its knowledge and belief. Each representation and warranty is a separate
representation and warranty and is in no way limited by any other representation or warranty.6.2
    
    Each of the warranties in this clause 6 applies as at the date of this agreement, on each
Closing Date and on each date between them.
 Warranties
 6.3
    
    The party:
 6.3.1
    
    is a body corporate validly existing under the laws of its place of
incorporation or establishment; and6.3.2
    
    has the corporate power to enter into and perform its obligations under
this agreement and to carry out the transactions contemplated by this agreement.
 16




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##### 



6.4
    
    This agreement is a valid and binding obligation in accordance with its terms and conditions.6.5
    
    Neither the execution nor performance by this agreement nor any transaction contemplated
under this agreement will violate in any material respect any provision of:
 6.5.1
    
    any judgement binding on it;6.5.2
    
    its constituent documents;6.5.3
    
    subject to the Company having obtained all necessary Authorisations for
each Drawing, any applicable law binding on it; and6.5.4
    
    any other material document, agreement, authorisation or other
arrangement binding upon it.
 6.6
    
    Each partys decision to enter this agreement has been based solely on their respective
independent evaluations.
 7
    
    Indemnity by the Company7.1
    
    Subject to clause 7.2, in consideration of GEMs execution and delivery of this
agreement and acquiring the Drawdown Shares under it and in addition to all of the Companys
other obligations under this agreement, the Company must continuously indemnify GEM and GEM
Advisors and their respective lawful successors in title and officers, employees and advisers
(collectively, the Indemnified Persons) from and against any and all third party actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages and
expenses in connection therewith (Indemnified Liabilities), incurred by any Indemnified Person
as a result of, or arising out of, or relating to:
 7.1.1
    
    any misrepresentation or breach of any representation or warranty made
by or on behalf of the Company in this agreement or any other certificate,
instrument or document contemplated by it;7.1.2
    
    any material breach of any obligation of the Company contained in this
agreement or any other certificate, instrument or document contemplated by it; and7.1.3
    
    any proceeding, investigation, cause of action, suit or claim brought,
made or threatened against an Indemnified Person and arising out of or resulting
from the execution, delivery, performance or enforcement of this agreement or any
other certificate, instrument or document contemplated by any of them.
 17




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##### 



7.2
    
    The indemnity in clause 7.1 does not extend to and will not be deemed to be an indemnity for
an Indemnified Person against:
 7.2.1
    
    Indemnified Liabilities arising out of or as a result of the wilful
default, misconduct, dishonesty, fraud or gross negligence of the Indemnified
Person;7.2.2
    
    any penalty or fine which the Indemnified Person is required to pay for
any contravention of the Corporations Act or any other law;7.2.3
    
    any announcement, advertisement or publicity made or distributed by the
Indemnified Person in relation to this agreement or the transactions contemplated by
this agreement if the content of the announcement, advertisement or publicity was
not first approved by the Company; and7.2.4
    
    any obligation of GEM or GEM Advisors to subscribe for Shares under this
agreement.
 7.3
    
    If an Indemnified Person becomes aware that any act, matter or thing may give rise to any
Indemnified Liabilities against it in relation to which the Company would be required to
indemnify it under clause 7.1, GEM must notify the Company of the act, matter or thing and
give details as far as practicable.7.4
    
    Notice given by GEM pursuant to clause 7.3 by any Indemnified Person will operate as notice
given on behalf of all Indemnified Persons.7.5
    
    Subject to clause 7.7, the Company will be entitled to defend or institute such legal or
other proceedings as it sees fit in respect of any Indemnified Liabilities in the name of
any or all Indemnified Persons and conduct the same under the sole management
and control of the Company (the Relevant Proceedings) provided that the Company
must:
 7.5.1
    
    pay the costs and expenses of the Relevant Proceedings;7.5.2
    
    indemnify and keep indemnified each Indemnified Person against all
Indemnified Liabilities incurred by an Indemnified Person as a result of, or arising
out of or in relation to any Relevant Proceedings; and7.5.3
    
    pay the Indemnified Liabilities contemplated in clause 7.5.2 to the
relevant Indemnified Person immediately on demand.
 7.6
    
    Subject to clause 7.7, GEM must, and where the relevant Indemnified Person is not GEM, GEM
must procure the relevant Indemnified Person to, at the expense of the Company on a full
indemnity basis to:
 7.6.1
    
    take such reasonable action as the Company requests to avoid, dispute,
resist, appeal, compromise or defend any Indemnified Liabilities;7.6.2
    
    not admit any liability for or settle any Indemnified Liabilities
without the prior written consent of the Company; and
 18




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##### 



7.6.3
    
    promptly render all reasonable assistance and co-operation to the
Company in the conduct of any legal or other proceedings.
 7.7
    
    Clauses 7.5 and 7.6 will only operate if the Company acknowledges, subject to clauses 7.1 and
7.2, to indemnify the Indemnified Person under clause 7.1.8
    
    Indemnity by GEM8.1
    
    Subject to clause 8.2, in consideration of the Companys execution and delivery of this
agreement and in addition to all of GEMs other obligations under this agreement, GEM must
continuously indemnify the Company, its lawful successors in title and its officers and
employees (collectively, in this clause the Indemnified Persons) from and against any and all
third party actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages and expenses in connection therewith (Indemnified Liabilities),
incurred by any Indemnified Person as a result of, or arising out of, or relating to:
 8.1.1
    
    any misrepresentation or breach of any representation or warranty made
by GEM in this agreement or any other certificate, instrument or document
contemplated by it;8.1.2
    
    any material breach of any obligation of GEM contained in this agreement
or any other certificate, instrument or document contemplated by it; and8.1.3
    
    any proceeding, investigation, cause of action, suit or claim brought,
made or threatened against such Indemnified Person and arising out of or resulting
from the execution, delivery, performance or enforcement of this agreement or any
other certificate, instrument or document contemplated by any of them.
 8.2
    
    The indemnity in clause 8.1 does not extend to and will not be deemed to be an indemnity for
an Indemnified Person against:
 8.2.1
    
    Indemnified Liabilities arising out of or as a result of the wilful
default, misconduct, dishonesty, fraud or gross negligence of an Indemnified Person;8.2.2
    
    any penalty or fine which the Indemnified Person is required to pay for
any contravention of the Corporations Act or any other law; or8.2.3
    
    any announcement, advertisement or publicity made or distributed by the
Indemnified Person in relation to this agreement or the transactions contemplated by
this agreement if the content of the announcement, advertisement or publicity was
not first approved by GEM.
 8.3
    
    If an Indemnified Person becomes aware that any act, matter or thing may give rise to any
Indemnified Liabilities against it in relation to which GEM would be required to indemnify it
under clause 8.1, the Company must notify GEM of the act, matter or thing and give details as
far as practicable.
 19




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##### 



8.4
    
    Notice given by the Company pursuant to clause 8.3 will operate as notice given on behalf of
all Indemnified Persons.8.5
    
    Subject to clause 8.7, GEM will be entitled to defend or institute such legal or other
proceedings as it sees fit in respect of any Indemnified Liabilities in the name of any or all
Indemnified Persons and conduct the same under the sole management and control of GEM (the
Relevant Proceedings) provided that GEM must:
 8.5.1
    
    Pay the costs and expenses of the Relevant Proceedings;8.5.2
    
    indemnify and keep indemnified each Indemnified Person against all
Indemnified Liabilities incurred by an Indemnified Person as a result of, or arising
out of or in relation to any Relevant Proceedings; and8.5.3
    
    pay the Indemnified Liabilities contemplated in clause 8.5.2 to the
relevant Indemnified Person immediately on demand.
 8.6
    
    Subject to clause 8.7, the Company must, and where the relevant Indemnified Person is not the
Company, the Company must procure the relevant Indemnified Person to, at the expense of GEM on
a full indemnity basis to:
 8.6.1
    
    take such reasonable action as GEM requests to avoid, dispute, resist,
appeal, compromise or defend any Indemnified Liabilities;8.6.2
    
    not admit any liability for or settle any Indemnified Liabilities
without the prior written consent of GEM; and8.6.3
    
    promptly render all reasonable assistance and co-operation to GEM in the
conduct of any legal or other proceedings.
 8.7
    
    Clauses 8.5 and 8.6 will only operate if GEM acknowledges, subject to clauses 8.1 and 8.2, to
indemnify the Indemnified Person under clause 8.1.9
    
    Other agreements of the Parties
 Listing
 9.1
    
    Neither the Company nor any of its Subsidiaries will take any action which GEM would
reasonably expect to result in the removal of the Company from the official list of ASX or
suspension of quotation of the Drawdown Shares on ASX except where such action is required by
law or by the Listing Rules or in order for the officers of the Company to act in accordance
with their duties.
 Disclosure of transactions and other material information
 9.2
    
    Subject to this clause, the Company must disclose this transaction on the date of this
agreement.9.3
    
    Prior to its release, the Company must consult with GEM in connection with any press release
or other public disclosure relating to this transaction, the giving of any Drawdown Notice or
the issue of any Drawdown Shares. However, the Company will
 20




---



##### 



be entitled to make any press
release or other public disclosure relating to this transaction, the giving of any Drawdown
Notice or the issue of any Drawdown Shares which is required by any applicable law and
regulations (including the Listing Rules).
 9.4
    
    Except as contemplated under this agreement, the Company must not disclose to GEM any inside
information to which section 1043A of the Corporations Act would apply (Inside Information).9.5
    
    If the Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents breach clause 9.4, in addition to any other remedy, GEM may
make a public disclosure, in the form of a press release, public advertisement or otherwise,
of any Inside Information.9.6
    
    GEM will not have any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, shareholders or agents for any loss or damage
suffered due to any such disclosure under clause 9.5 unless such disclosure is known to GEM to
be misleading or deceptive.9.7
    
    Subject to this clause 9, the Company must give GEM prior and reasonable opportunity to
comment on any submission made to ASX in relation to, and including the form of any notice and
explanatory memorandum convening any meeting of its members to approve, the issue of the
Drawdown Shares for the purposes of the Listing Rules.9.8
    
    For the avoidance of doubt, the provisions in clause 9.2 to 9.7 apply for so long as the
Company is entitled to make Drawings under this agreement, and in any event cease to operate
at the end of the Commitment Period.9.9
    
    The Company must ensure that the exemption in section 708A(5) applies to any issue of Shares
under this agreement.
 Negative covenants
 9.10
    
    The Company must use reasonable endeavours to ensure that none of the following occurs except
where required by law or by the Listing Rules without the prior written approval of GEM, such
approval not to be unreasonably withheld:
 9.10.1
    
    a reorganisation, reclassification, reconstruction, consolidation or subdivision
of the capital of the Company or the creation of any different class of securities
in the capital of the Company other than employee options approved by the Company in
general meeting or issued pursuant to any employee or executive share option plan of
the Company;9.10.2
    
    any buyback, redemption, reduction or cancellation of shares or share capital;9.10.3
    
    any decision that will, or is likely to cause a Material Adverse Effect on the
Company or its Business.
 21




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Holding and trading Shares
 9.11
    
    GEM acknowledges and agrees that during the term of this agreement it must not sell any
Shares that it is not the registered holder of, other than Shares:
 9.11.1
    
    it is entitled or required to subscribe for under a Draw Down Notice or Option; or9.11.2
    
    it is entitled to take a transfer of in accordance with a Share Lending Agreement.
 Maximum holding
 9.12
    
    GEM acknowledges and agrees that during the term of this agreement it must not hold more than
that number of Shares which is 19.9% of the total issued Shares of the Company.
 10
    
    Options
 10.1
    
    In consideration of GEM entering into this document, the Company must, on the Closing
Date of each Drawdown under this document:
 10.1.1
    
    grant to GEM or its nominee that number of Options which is equal to 20% of the
number of Drawdown Shares issued under that Drawdown; and10.1.2
    
    deliver to GEM or its nominee Option Certificates evidencing the grant of those
Options.
 11
    
    Fees and costs
 Commitment Fee
 11.1
    
    Subject to and conditional upon the members of the Company in general meeting on or before
the Approval Date approving the Company entering into this Agreement and subject to clause
13.4, the Company must pay GEM Advisors a commitment fee of $303,000 (Commitment Fee) in
accordance with this clause.
 Scrip payment
 11.2
    
    If the Shareholder Approval is obtained by the Approval Date, the Company may satisfy its
obligation to pay the Commitment Fee by issuing to GEM or its nominee on the first Closing
Date which occurs after the date of the Shareholder Approval, the number of Shares calculated
under the following formula:Shares to be issued for the Commitment Fee = $303,000 ÷ Initial Purchase PriceWhere:Initial Purchase Pricemeans the Purchase Price per Share that was issued under the First
Drawdown under this Agreement.
 22




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##### 



Establishment Fee
 11.3
    
    In consideration for GEM and GEM Advisors entering into this agreement, the Company must pay
GEM Advisors an Establishment Fee of $200,000 in full without set off, counterclaim or
deduction on the Business Day immediately after the Approval Date by bank cheque or other form
of immediately available funds.11.4
    
    If Shareholder Approval is obtained by the Approval Date, GEM Advisors waives its right to be
paid the Establishment Fee and releases the Company from its obligation to pay the
Establishment Fee.
 General costs and expenses
 11.5
    
    The Company must pay the legal fees and expenses of GEM on a full indemnity basis incurred in
relation to the preparation, and negotiation of this agreement up to a maximum of US$20,000
(inclusive of GST).
 Statutory charges and duties etc
 11.6
    
    The Company indemnifies GEM and GEM Advisors and agrees to keep them indemnified against any
stamp duty, debits and other taxes (including fines, penalties and interest provided they are
not incurred as a consequence of the action or inaction of GEM or GEM Advisors or any of their
respective officers, employees or agents) that may be payable on the issue of the Drawdown
Shares in accordance with the terms of this agreement, or on the execution and delivery of
this agreement, which are or may be required to be paid under the laws of any Australian
jurisdiction.
 12
    
    Goods and services tax
 Recovery of GST on supplies and adjustments under this agreement
 12.1
    
    All consideration provided under this agreement is exclusive of GST, unless it is expressed
to be GST-inclusive.12.2
    
    Where a party (Supplier) makes a taxable supply to another party (Recipient) under or in
connection with this agreement, the Recipient must pay to the Supplier an additional amount
equal to the GST payable on the supply (unless the consideration for that taxable supply is
expressed to include GST). The additional amount must be paid by the Recipient at the later
of the following:
 12.2.1
    
    The date when any consideration for the taxable supply is first paid or provided.12.2.2
    
    The date when the Supplier issues a tax invoice to the Recipient.
 12.3
    
    If, under or in connection with this agreement, the Supplier has an adjustment for a supply
under the GST law which varies the amount of GST payable by the Supplier, the Supplier will
adjust the amount payable by the Recipient to take account of the varied GST amount. The
Supplier must issue an adjustment note to the Recipient within 28 days of becoming aware of
the adjustment.
 23




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##### 



Other GST matters
 12.4
    
    If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be
reimbursed or indemnified is reduced by the amount of GST for which there is an entitlement to
claim an input tax credit on an acquisition associated with the reimbursement or indemnity.
The reduction is to be made before any increase under clause 12.2. An entity is assumed to be
entitled to a full input tax credit on an acquisition associated with the reimbursement or
indemnity unless it demonstrates otherwise before the date the reimbursement or indemnity is
made.12.5
    
    Any reference in this agreement to cost, expense, liability or similar amount (Expense) is a
reference to that Expense exclusive of GST (unless that Expense is expressed to be
GST-inclusive).12.6
    
    This clause will not merge on completion and will survive the termination of this agreement
by any party.12.7
    
    Terms used in this clause that are not otherwise defined in this agreement have the meanings
given to them in the GST Act.13
    
    Term and termination
 Term
 13.1
    
    Subject to clause 13.3, this agreement ends at the end of the Commitment Period unless
otherwise agreed.
 Events of default
 13.2
    
    An Event of Default occurs if any of the following events occur:
 13.2.1
    
    the Company defaults in duly performing or observing any of the undertakings or
agreements on its part contained in this agreement and such default, if capable of
remedy, remains unremedied for a period of 30 days after notice from GEM requiring
such default to be remedied;13.2.2
    
    any of the representations or warranties herein contained is found to have been
false or misleading in any material respect when made or become false or misleading
in any material respect;13.2.3
    
    a material judgment is entered against the Company or any Subsidiary of the
Company;13.2.4
    
    any event occurs which has a Material Adverse Effect;13.2.5
    
    a petition is lodged or an order is made or a resolution is passed for the winding
up of the Company or any Subsidiary of the Company or any meeting is convened for
the purposes of considering the said resolutions;13.2.6
    
    a receiver or receiver and manager of any material undertaking or property of the
Company or any Subsidiary of the Company or any part thereof is appointed;
 24




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##### 



13.2.7
    
    an administrator or controller is appointed to the Company or any Subsidiary of
the Company;13.2.8
    
    the Company or any Subsidiary of the Company suspends payment of its debts or if
the Company seeks or is required to seek the approval of its shareholders for a
disposal of its main undertaking or a major asset under chapter 11 of the Listing
Rules;13.2.9
    
    the Company or any Subsidiary being or becoming unable to pay its debts when they
are due or being unable to pay its debts within the meaning of the Corporations Act;13.2.10
    
    ASIC, ASX, any Governmental Authority or any person appointed under legislation
exercises formal powers to conduct an investigation into matters concerning all or
any part of the affairs of the Company or any Subsidiary of the Company (other than
as part of an industry or sector or in the ordinary course of the authoritys
activities);13.2.11
    
    a step is taken under sections 601AA, 601AB or 601AC of the Corporations Act to
cancel the registration of the Company or one of its Subsidiaries;13.2.12
    
    a compromise or arrangement is proposed between the Company or any Subsidiary of
the Company and its creditors or any class of them;13.2.13
    
    any Authorisation which is:
 (a)
    
    necessary for the execution, delivery or performance
by the Company or any Subsidiary of the Company, or the validity or
enforceability, of any transaction contemplated under this agreement; or(b)
    
    material to the conduct by the Company or any
Subsidiary of the Company of its business,
 is not obtained or maintained on terms reasonably acceptable to GEM or is
revoked; or13.2.14
    
    all or a material part of the assets of the Company or any Subsidiary of the
Company are compulsorily acquired by a Governmental Authority or a Governmental
Authority orders the sale or divestiture of those assets or a Governmental Authority
takes a step for the purpose of doing so or proposes to do so.
 Consequences of an Event of Default
 13.3
    
    If an Event of Default occurs, at any time thereafter, GEM may by giving written notice to
the Company cancel the Equity Line facility and terminate this agreement.13.4
    
    If GEM terminates this agreement under clause 13.3, the following amounts become immediately
payable by the Company:
 25




---



##### 



13.4.1
    
    The Establishment Fee if it is unpaid or to the extent that it is unpaid as at the
date of termination;13.4.2
    
    Any other amounts payable by the Company under this agreement which are unpaid as
at the date of termination.
 Effect of termination
 13.5
    
    On termination of this agreement for any reason, subject to clause 13.6, all future
obligations of the Company and GEM to each other end.13.6
    
    Notwithstanding clause 13.5:
 13.6.1
    
    all provisions which by their nature survive the termination of this agreement,
including clause 13.4, remain in full force and effect;13.6.2
    
    any other agreement between the Company, GEM or GEM Advisors, and any other third
party remains in full force and effect according to the tenor of that agreement;13.6.3
    
    all accrued and outstanding obligations of the parties as at the date of
termination remain despite termination;13.6.4
    
    if this agreement is terminated by GEM for an Event of Default before a Closing
Date, GEM has no obligation to subscribe for Shares. If this agreement is
terminated for any other reason, any outstanding obligation of GEM to subscribe for
Shares arising under a valid Drawdown Notice survives and continues after
termination; and13.6.5
    
    if this agreement is terminated at any time, any obligation the Company may have
to issue Shares to GEM or its nominee or to apply for or to obtain the grant of
quotation of those Shares in accordance with this agreement survives and continues
after termination.
 14
    
    Notices
 Service of notices
 14.1
    
    Notwithstanding anything else in this agreement and this clause 14:
 14.1.1
    
    any notice which the Company is required to give in accordance with clause 2, 3 or
4; and14.1.2
    
    any notice or statement which GEM is required to give under any of clause 2, 3 or
4,
 must given by facsimile in accordance with this clause 14.14.2
    
    A party giving or serving notice or notifying under this agreement must do so in writing:
 26




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##### 



14.2.1
    
    directed to the recipients address specified in this clause, as varied by any
notice; and14.2.2
    
    hand delivered or sent by prepaid post or facsimile to that address.
 14.3
    
    The parties addresses and facsimile numbers are:GEM and GEM Advisors
 Attention
    
    Mr Clive Needham
    
    Mr Christopher BrownAddress:
    
    GEM Global Yield Fund Ltd
    
    c/- GEM Advisors IncC/- CM Group
    
    27th FloorCommerce House
    
    590 Madison Avenue1 Bowring Road
    
    New York, NY 10022Ramsey, Isle of Man, IM8, 2JQ
    
    United States of AmericaFacsimile no:
    
    +44 (0)1624 816645
    
    (1) 212 265 4035
 with a copy to:
 Attention
    
    Mr Eugene FungAddress:
    
    DLA Phillips FoxLawyersLevel 28, Waterfront Place1 Eagle Street, BrisbaneQueensland, Australia, 4000Facsimile No:
    
    +61 7 3229 4077
 The Company
 Attention:
    
    Chief Executive OfficerAddress:
    
    Unit 4, 848 Boundary Road, Richlands, Queensland, AustraliaFacsimile no:
    
    +61 7 3217 0811
 Receipt
 14.4
    
    A notice given in accordance with this clause is taken to be received:
 14.4.1
    
    If hand delivered, on delivery;14.4.2
    
    If send by prepaid post, five Business Days (or, in the case of a notice or
communication posted to another country, nine) after the date of posting; or14.4.3
    
    if sent by facsimile, when the senders facsimile system generates a message
confirming successful transmission of the total number of pages of the notice
unless, within one Business Day after the transmission, the recipient informs the
sender that it has not received the entire notice.
 Execution
 14.5
    
    A notice given in accordance with this clause is sufficiently signed for or on behalf of a
party if:
 27




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##### 



14.5.1
    
    in the case of a company, it is signed by a director, secretary or other officer
of the company; or14.5.2
    
    in the case of an individual, it is signed by that party.
 Other modes of service permitted
 14.6
    
    The provisions of this clause are in addition to any other mode of service permitted by law.
 Interpretation
 14.7
    
    In this clause, noticeincludes a demand, request, consent, approval, offer and any other
instrument or communication made, required or authorised to be given under this agreement.15
    
    General
 Approvals and consent
 15.1
    
    Except when the contrary is stated in this agreement, a GEM may give or withhold any approval
or consent to be given under this agreement in its absolute discretion and subject to those
conditions determined by it. GEM is not obliged to give its reasons for giving or withholding
any approval or consent or for giving any approval or consent subject to conditions.
 Assignment
 15.2
    
    GEM and GEM Advisors are entitled to assign all or part of the benefit of this Agreement
(including any right, actual, prospective or contingent, to be issued Shares, Options or other
securities of the Company) to any person without the consent of the Company.15.3
    
    The Company must not assign or transfer any of the rights to which it is entitled or the
obligations by which it is burdened under this agreement without the written consent of GEM
and GEM Advisors.
 Entire agreement
 15.4
    
    This agreement contains everything the parties have agreed on in relation to the matters
those documents deal with. No party can rely on an earlier document or anything said or done
by another party, or by a director, officer, agent or employee of that party, before this
agreement was executed, save as permitted by law.
 Execution of separate documents
 15.5
    
    This agreement is properly executed if each party executes either this agreement or an
identical document. In the latter case, this agreement takes effect when the separately
executed documents are exchanged between the parties.15.6
    
    Notwithstanding anything else in this agreement a party can enter into this agreement by
signing a facsimile copy of it and sending the signed page by facsimile to the other party or
its solicitor.
 28




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##### 



15.7
    
    This agreement is deemed to have been entered into by all parties at the time the last
of the parties has entered into it.
 Further acts
 15.8
    
    Each party must promptly execute all documents and do all things that another party from time
to time reasonably requests to effect, perfect or complete this agreement and all transactions
incidental to it.
 Governing law and jurisdiction
 15.9
    
    This agreement is governed by the law applicable in Queensland, Australia. Each Party
irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of
that State.
 Rights cumulative
 15.10
    
    Except when the contrary is stated in this agreement, the rights of a party under this
agreement are cumulative and are in addition to the other rights of that party.
 Severability
 15.11
    
    If a clause or part of a clause of this agreement can be read in a way that makes it
illegal, unenforceable or invalid, but can also be read in a way that makes it legal,
enforceable and valid, it must be read in the latter way. If any clause or part of a clause
is illegal, unenforceable or invalid, that clause or part is to be treated as removed from
this agreement, but the rest of this agreement is not affected.
 Stamp duty
 15.12
    
    The Company must promptly pay all stamp duty payable in connection with this agreement and
any document incidental to it.
 Variation
 15.13
    
    This agreement may only be varied by the written agreement of the parties.
 Waiver
 15.14
    
    The fact that a party fails to do, or delays in doing, something the party is entitled to do
under this agreement, does not amount to a waiver of any obligation of, or breach of
obligation by, another party. A waiver by a party is only effective if it is in writing. A
written waiver by a party is only effective in relation to the particular obligation or breach
in respect of which it is given. It is not to be taken as an implied waiver of any other
obligation or breach or as an implied waiver of that obligation or breach in relation to any
other occasion.
 Calculation of time periods
 15.15
    
    Where this agreement expresses:
 15.15.1
    
    a period of time in which an action is to be performed or an event is to occur;
 29




---



##### 



15.15.2
    
    a period of time calculated by reference to whether parties taken have received
notice from another party, then irrespective of whether:
 (a)
    
    the relevant action is to be performed by the Company
or the relevant event or receipt of notice is to occur in Australia; or(b)
    
    the relevant action is to be performed by GEM or
GEM Advisors or the relevant event or receipt of notice is to occur
outside Australia,
  16
    
    Definitions and interpretation
 Interpretation
 16.1
    
    The following terms used in this agreement will bear the following meanings, unless the
context otherwise requires:Words and expressions used but not expressly defined in this agreement, which are also
used in the Corporations Act or the Listing Rules, have the same meanings given to those
words or expressions in the Corporations Act or the Listing Rules.Accounting Standardsmeans:
 (a)
    
    accounting standards as defined in section 9 of the Corporations Act;(b)
    
    the requirements of the Corporations Act for the preparation and content
of financial statements; and(c)
    
    generally accepted principles and practices consistently applied in
Australia, including any domestically accepted international accounting standards,
except principles and practices that are inconsistent with (a) or (b).
 Approval Date
 ASIC
 ASX
 Authorisation
 (a)
    
    any consent, authorisation, registration, filing, agreement,
notarisation, certificate, permission, licence, approval or exemption from, by or
with a Governmental Authority;(b)
    
    in relation to anything which is prohibited or restricted by law if a
Governmental Authority takes certain action within a specified period, the
 30




---



##### 



expiry of
that period without the Governmental Authority taking that action; and
 (c)
    
    all approvals, permissions or consents required under any applicable laws
(including the Corporations Act and the Foreign Acquisitions and Takeovers Act) or
the Listing Rules.
 Available Commitment
 Business
 Business Day
 CHESS
 Closing Date
 Closing Statement
 Commitment Fee
 Commitment Period
 Confirmation Statement
 Constitution
 Controlled Entities
 Corporations Act
 Disclosing Party
 Disclosure Documents
 Drawdown Amount
 Drawdown Date
 31




---



##### 



Drawdown Documents
 Drawdown Notice
 Drawdown Shares
 Drawing Drawdown
 Drawing Limit
 Equity Line
 Establishment Fee
 Event of Default
 First Drawdown
 Governmental Authority
 GST
 GST Act A New Tax System (Goods and Services Tax) Act
 Liability
 Lien
 Listing Application
 32




---



##### 



Listing Rules
 Market Rules
 Material Adverse Effect
 Option Certificate
 Option
 Permitted Use
 Person
 Potential Event of Default
 Pricing Period
 (a)
    
    in respect of the First Drawdown under this agreement, 10 consecutive
Trading Days after the Drawdown Date; or(b)
    
    in respect of any other Drawdown under this agreement, 15 consecutive
Trading Days after the Drawdown Date.
 Proposed Drawdown Shares
 Purchase Price
 Shares
 Shareholder Approval
 33




---



##### 



Share Lender
 Share Lending Agreement
 Subsidiary or Subsidiaries
 Threshold Price
 (a)
    
    for the First Drawdown or a Type 1 Drawdown, 90% of the volume weighted
average price of Shares traded on ASX over:
 (i)
    
    in respect of the First Drawdown under this
agreement, 10 consecutive Trading Days ending on the date immediately
prior to a Drawdown Date; or(ii)
    
    in respect of any other Drawdown under this
agreement, 15 consecutive Trading Days ending on the date immediately
prior to a Drawdown Date; and
 (b)
    
    for a Type 2 Drawdown, no less than:
 (i)
    
    $0.01 per share;(ii)
    
    any other price per Share that GEM and the Company
agree in writing,
  Total Commitment
 Total Purchase Price
 Trading Day
 Trading Volume
 Type 1 Drawdown
 Type 2 Drawdown
 34




---



##### 



Interpretation
 16.2
    
    In this agreement, unless the context otherwise requires:
 16.2.1
    
    The headings in this agreement are for convenience only, and shall be ignored in
construing its terms;16.2.2
    
    the singular includes the plural and vice versa;16.2.3
    
    words importing a gender include the other genders;16.2.4
    
    other grammatical forms of defined words or phrases have corresponding meanings;16.2.5
    
    a reference to a clause, part of a clause, schedule or annexure is a reference to
that clause or part of a clause of or schedule or annexure to this agreement;16.2.6
    
    a reference to this agreementincludes its recitals, schedules and any annexures
as it may from time to time be amended and except to the extent that the context
clearly otherwise indicates includes all supplemental or collateral deeds whether or
not they are expressly incorporated in such reference;16.2.7
    
    legislation referred to in this agreement is as amended, re-enacted or replaced
from time to time;16.2.8
    
    a reference to a party is a reference to a party to this agreement;16.2.9
    
    a reference to a party to this agreement includes that partys successors and
permitted assigns;16.2.10
    
    a reference to a document or agreement, including this agreement, includes a
reference to that document or agreement as novated, altered or replaced from time to
time and, in the case of this agreement, to any supplemental or collateral document
to this agreement;16.2.11
    
    a reference to cents dollar or $, is a reference to the currency of
Australia;16.2.12
    
    use of a term denoting subject matter which comprises more than one part or
aspect includes a reference to each or any part or aspect of the subject matter;16.2.13
    
    a term of this agreement which has the effect of requiring anything to be done on
or by a date which is not a business day must be interpreted as if it required it to
be done on or by the next business day;16.2.14
    
    a reference to a group of Persons is a reference to all of them collectively, to
any two or more of them collectively and to each of them individually; and16.2.15
    
    a reference to any time means Sydney time, unless otherwise indicated.
 35




---



##### 



Execution
   Metal Storm Limited
 /s/ Dr. Lee J Finniear
    
    /s/ Mr. Terry ODwyerSignature of Director
    
    Signature of ChairmanDr. Lee J. Finniear
    
    Mr Terry O DwyerPrint full name
    
    Print full name
 
 *
    
    Delete whichever is not applicable GEM Global Yield Fund Ltd
 /s/ L. Walker
    
    /s/ Clive NeedhamSignature of witness
    
    Signature of authorised personL. Walker
    
    Clive NeedhamName of witness (print)
    
    Name of authorised person (print)Executed by GEM Investment Advisors, Incby being signed by:/s/ Warren Baker
    
    /s/ Chris BrownSignature of witness
    
    Signature of authorised personWarren Baker
    
    Chris BrownName of witness (print)
    
    Name of authorised person (print)
 36




---



##### 



Schedule 1
 Drawdown notice
 To:
    
    GEM Investment Advisors, IncAttention: Mr Christopher Brown
 Facility Agreement
 1.
    
    We give you irrevocable notice that we require you to subscribe for [     ] Shares (Proposed Drawdown
Shares) on [                    ] (Closing Date). This is a Type 1/Type 2 Drawdown Notice2.
    
    The Available Commitment as at [          ] is:3.
    
    Type 2 Drawdown only  Number of Trading Days to determine Trading Volume[see clause2.10]4.
    
    The Trading Volume before the Drawdown Date was:5.
    
    Type 2 Drawdown only  the number of Proposed Drawdown Shares does not exceed 700% of the
Trading Volume.6.
    
    *No Authorisations are required under the Facility Agreement to be obtained by the Company
for the allotment and issue of shares to GEM or the Share Lenderor*All Authorisations (including approval under Listing Rules 7.1 and 10.11) required to be
obtained by the Company for the allotment and issue of shares to GEM or the Share Lender
have been obtained. Details of the Authorisations obtained and the dates obtained follow:*Delete whichever is inapplicable7.
    
    Type 2 Drawdown only  the closing trade price of a share on the Trading Day immediately
preceding the Drawdown Date was: [        ]8.
    
    The Threshold Price is $[          ].9.
    
    For Type 1 Drawdowns:
 (a)
    
    the number of Proposed Drawdown Shares is [insert]
 37




---



##### 



[Note  it must not exceed the number calculated as follows:Maximum Proposed Drawdown Shares = $400,000 ÷ Benchmark PriceWhereBenchmark Price is the volume weighted average price of Shares traded on
ASX over the 15 Trading Days ending on the date immediately prior to the
Drawdown Date.](b)
    
    the Maximum Proposed Drawdown Shares in accordance with clause 2.6.2 of the
Facility Agreement was calculated as follows;[insert]
 10.
    
    We attach the following Drawdown documents:
 (a)
    
    Certified extracts of directors resolutions(b)
    
    Draft Listing Application(c)
    
    [evidence of shareholder approvals and compliance with requirements]
 11.
    
    We request that the proceeds of the Drawdown Amount be remitted to account number [     ] at[     ].12.
    
    We represent and warrant that subject to the disclosures contained in the annexure to this
Drawdown Notice:
 (a)
    
    All materially price sensitive information regarding the Company and its
Subsidiaries required to be disclosed under the Listing Rules has been disclosed to
ASX;(b)
    
    the representations and warranties in the Facility Agreement (other than
those set out in clauses 5.12 to 5.17 are true as though they had been made at the
date of this Drawdown Notice and will be as at the Closing Date specified above in
respect of the facts and circumstances then subsisting; and(c)
    
    no Event of Default or Potential Event of Default is subsisting or will
result from the provision of the Drawing.
 13.
    
    Expressions defined in the Facility Agreement have the same meaning in this Drawdown Notice.
 Dated this
    
    day of
    
    20
 38




---



##### 



Metal Storm Limited
 Signature of Director
    
    Signature of *Director/*Company SecretaryPrint full name
    
    Print full name
 
 *
    
    Delete whichever is not applicable 39




---



##### 



Schedule 2
 Form of Resolution of Directors (clause 2.4.2)
 Facility Agreement
 Resolutions
  
    
    the Company give GEM a Drawdown Notice for [      ] Shares;
    
    the tabled draft Listing Application be and is hereby approved noting that the
final number of Shares for which quotation is sought may change once the final number of
Drawdown Shares is known;
    
    the Company pay GEM Advisors [insert commitment fee]on the Closing Date, by the
issue of [insertshares] [Note  required only for first Drawdown after shareholder approval];
    
    it was the opinion of the directors that the drawdown and the transactions
required as conditions of the drawdown:
 
    
    are in the best interests of the Company as a whole; and
    
    do not materially prejudice:
 
    
    the interests of the Company or its shareholders as a whole;
or
    
    the Companys ability to pay its creditors.
  40




---



##### 



Schedule 3
 New issue announcement, Application for quotation of additional securities and agreement (Appendix
3B of the Listing Rules) (clause 2.4.3)
  41




---



##### 



Schedule 4
 Share Lending Agreement
 attached
 42




---



##### 



Schedule 5
 Form of closing statement (clause 4.3.1(a))
 To:
    
    The SecretaryMetal Storm LimitedACN 064 270 006
 Closing Statement  Drawdown dated [ ]
 [insert date]
 Calculation of Purchase Price
 Closing trade price (disregarding theTrading Days during Pricing Period
    
    
    closing trade price below the Threshold Price)[insert date of Day 1][insert date of Day 2][etc][insert date of Day 15]Average closing trade price
 43




---



##### 



Calculation of number of Drawdown Shares to be subscribed
  
  
  
  
 Total Purchase Price (Purchase Price x number of Drawdown Shares to be subscribed)
 
 Less:
 
 Less:
 
 44




---



##### 



Net amount payable to the Company
 
  
   (a)
    
    consents to the issue of the Drawdown Shares to it;(b)
    
    consents to become a member of the Company; and(c)
    
    agrees to be bound by the Companys constitution on the issue of the
Drawdown Shares to it.
 45




---



##### 



Schedule 6
 Option terms and conditions (clause 10)
  46




---



##### 



Option Certificate
 Metal Storm Limited
 Registered Office:
    
    Unit 4, 848 Boundary Road, Richlands, Queensland, AustraliaOption Certificate No:This is to certify thatName:Address
  Date of grant
    
    
    No of options
  Metal Storm Limited
 Signature of Director
    
    Signature of *Director/*Company SecretaryPrint full name
    
    Print full name
 
 *
    
    Delete whichever is not applicable 47




---



##### 



Option terms and conditions of issue
 Entitlement
 1.
    
    Subject to and conditional upon any adjustment in accordance with these conditions,
each Option entitles the holder to subscribe for one fully paid ordinary share upon payment of
the Exercise Price.
 Exercise Price
 2.
    
    The Exercise Price of each Option is $0.035.
 Exercise Period
 3.
    
    An Option is exercisable at any time on or before 5.00pm (Sydney time) on the third
anniversary of the date of grant (the Expiry Date). Options not exercised by the Expiry Date
lapse.
 Manner of exercise of Options
 4.
    
    Each Option may be exercised by notice in writing addressed to the Companys
registered office. The minimum number of Options that may be exercised at any one time is
1,000. Payment of the Exercise Price for each Option must accompany each notice of exercise
of option. All cheques must be payable to the Company and be crossed not negotiable.
 Ranking of Shares
 5.
    
    Shares issued on the exercise of Options will rank equally with all existing shares
on and from the date of issue in respect of all rights issues, bonus share issues and
dividends which have a record date for determining entitlements on or after the date of issue
of those shares
 Timing of issue of shares
 6.
    
    After an Option is validly exercised, the Company must as soon as possible:
 (a)
    
    issue and allot the share as soon as possible; and(b)
    
    do all such acts matters and things to obtain the grant of quotation for
the shares on ASX no later than 5 business days from the date of exercise of the
Option.
 Options transferrable
 7.
    
    Options may be transferred in the same manner as shares and may be exercised by any
other person or body corporate.
 48




---



##### 



Participation in new issues
 8.
    
    An Option holder may participate in new issues of securities to holders of shares
only if and to the extent that:
 (a)
    
    an Option has been exercised; and(b)
    
    a share has been issued in respect of the exercise before the record date
for determining entitlements to the new issue.
 9.
    
    The Company must give notice to the Option holder of any new issue not less than 10
Business Days before the record date for determining entitlements to the issue.
 Adjustment for bonus issues of shares
 10.
    
    If the Company makes a bonus issue of shares or other securities to existing
shareholders (other than an issue in lieu or in satisfaction, of dividends or by way of
dividend reinvestment):
 (a)
    
    the number of shares which must be issued on the exercise of a Option
will be increased by the number of shares which the Option holder would have
received if the Option holder had exercised the Option before the record date for
the bonus issue; and(b)
    
    no change will be made to the Exercise Price.
 Adjustment for rights issue
 11.
    
    If the Company makes an issue of shares pro rata to existing shareholders (other
than an issue in lieu of in satisfaction of dividends or by way of dividend reinvestment) the
Exercise Price of a Option will be reduced according to the following formula:New exercise price = O - E[P-(S+D)]
  O
    =
    the old Exercise Price of the Option.E
    =
    the number of underlying shares into which one Option is exercisable.P
    =
    the average market price per share (weighted by reference to volume)
of the underlying shares during the 5 trading days ending on the day before the ex
rights date or ex entitlements date.S
    =
    the Purchase Price of a share under the pro rata issue.D
    =
    the dividend due but not yet paid on the existing underlying shares
(except those to be issued under the pro rata issue).N
    =
    the number of shares with rights or entitlements that must be held to
receive a right to one new share.
 49




---



##### 



Reconstructions
 12.
    
    If there is any reconstruction of the issued share capital of the Company, the
number of shares to which the Option holder is entitled, and/or the Exercise Price, must be
reconstructed in a manner which will not result in any benefits being conferred on the Option
holder which are not conferred on shareholders (subject to the provisions with respect to
rounding of entitlements as sanctioned by the meeting of shareholders approving the
reconstruction of capital), but in all other respects, the terms for the exercise of a Option
will remain unchanged.
 Interpretation
 13.
    
    These terms and conditions of issue must be interpreted in the same way as the
Equity Line Facility Agreement under which the Option was issued.
 50