GENERAL: RAK: Rakon Long Term Share Incentive Plans

25 Jun 2010 10:19 am

RAK 25/06/2010 GENERAL

REL: 1019 HRS Rakon Limited

GENERAL: RAK: Rakon Long Term Share Incentive Plans

Rakon Limited Long Term Share Incentives

Rakon's Board of Directors has resolved to grant 1.35 million restricted shares to senior executives in the company to align and reward them with successful realisation of Rakon's growth objectives over the next 3 to 5 years ("Restricted Share Plan"). Rakon's Board has also resolved to issue 850,000 share options to key managers and employees ("Share Option Plan"). These Plans replace recently expired employee share schemes.

Key elements of the Restricted Share Plan are as follows:

- Rakon will issue ordinary shares in the Company for the benefit of the executives, which will be funded by an interest-free limited recourse loan. Shares will be issued at $1 per share.

- The issued shares will be held by a trustee on trust for the executives until certain performance hurdles are satisfied. Provided these performance hurdles are satisfied, shares will be awarded to the executive and the associated loan will be repaid through a cash bonus paid by the Company.

- The performance hurdles are based on annual earnings per share targets for the 2011, 2012 and 2013 financial years. Assuming these targets are met an award will be made annually from the share grant. The shares will then transfer to the executives 2 years following the award (i.e. if awarded, shares will transfer to the executives in May of 2013, 2014 and 2015).

Key elements of the Share Option Plan are as follows:

- Options will be issued with the right to acquire ordinary shares at the 20 day VWAP of the share price as at the issue date.

- Share options vest evenly over a three year period with the first 1/3 vesting in May 2011.

- In order to exercise the option to acquire shares, Rakon's share price must achieve at least a benchmark return from the issue date. This benchmark return has been set at 20% compound per annum thereafter.

Rakon's Chairman Bryan Mogridge commented that the Board was very pleased to put the Plans in place. He noted the performance of the group of executives and employees covered by the Plans were critical to Rakon realising the substantial growth opportunities that exist and resultant increases in the company's earnings over the next 3 years. Rakon recently reported that it was comfortable with analysts' consensus estimate of EBITDA of NZ$25 to NZ$30 million for the FY11 year. Based upon market opportunities that exist the Board are planning for solid earnings growth in FY12 and FY13. Mogridge noted that the issue price and target returns for the Restricted Share Plan were established to ensure rewards were realised only if actual returns met the Board's expectation over the next three years rather than just a simple improvement in company's share price which is not currently reflecting the company's immediate and future earnings prospects.

Rakon's two most senior executives, Brent Robinson and Darren Robinson are not participants of the Plan due to the fact they are substantial shareholders of Rakon. End CA:00196522 For:RAK Type:GENERAL Time:2010-06-25:10:19:56

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