New Long Term Incentive Plan For SFE Corporation’s Managing Director And CEO

SFE Corporation Limited (SFE) has agreed, conditional on shareholder approval being obtained at its next annual general meeting on 28 April 2005, to grant 1,000,000 options over ordinary shares in SFE to its Managing Director and CEO, Mr Robert Elstone.

These options will constitute the only outstanding long term incentives available to Mr Elstone after he exercises the rights, which became available on 1 November 2004 under the existing plan, to be granted 375,000 ordinary shares. Mr Elstone has indicated an intention to sell these 375,000 shares during the five day period in which a weighted average price of SFE shares on the ASX market will be used as the exercise price for the grant of the new 1,000,000 options.

The terms of the proposed grant of new options to Mr Elstone are as follows:

• 1,000,000 options over ordinary shares in SFE;
• grant to occur on approval by shareholders at 2005 annual general meeting;
• options to vest, subject to performance hurdles being met, on 1 March 2008;
• exercise price to be equal to the weighted average price of SFE shares on the ASX market in the five business days commencing on 15 November 2004.
• Options to vest only if the following conditions are met (independently):
  1. In respect of 50% of the options:
     If an ABSOLUTE hurdle is achieved, being a total shareholder return (TSR) of equal to or greater than 12% pa, the options will vest at a rate of 6.25% (62,500 options) for each percentage point exceeding 12% such that all 50% are vested if a TSR of 20% or more is achieved.
  2. In respect of the other 50% of the options:
     If a RELATIVE hurdle is achieved, being a (TSR) of equal to or greater than the 50th percentile ranking among ASX 200 companies, the options will vest at a rate of 4.00% (40,000 options) for each percentile point above 50% such that all 50% are vested if the total TSR achieved ranks in the 75th percentile or above.
• Options conditions to be retested at quarterly intervals in the event that they are not met on the three year anniversary;
• Options to be exercisable within one year after the vesting date, i.e. no later than 28 February 2009.
• Other terms to be governed by the Executive Rights Plan 2000 under which both these new options and the initial tranche were granted.