ALEXIUM INTERNATIONAL GROUP LIMITED — Proxy Solicitation & Information Statement 2011

Aug 16, 2011

ALEXIUM INTERNATIONAL GROUP LIMITED ACN 064 820 408

NOTICE OF GENERAL MEETING

TIME : 10:00am (WST) DATE : 16 September 2011 PLACE : Suite 7, Norfolk House 85 Forrest Street Cottesloe, Western Australia

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

CONTENTS PAGE

Notice of General Meeting (setting out the proposed resolutions)	3
Explanatory Statement (explaining the proposed resolutions)	6
Glossary	12
Schedule 1 – Terms and Conditions of Options	13
Schedule 2 – Terms and Conditions of Director Options	14
Schedule 3 – Valuation of Director Options	16

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The general meeting of the Shareholders to which this Notice of Meeting relates will be held at 10:00am (WST) on 16 September 2011 at:

Suite 7, Norfolk House 85 Forrest Street Cottesloe Western Australia

YOUR VOTE IS IMPORTANT

The business of the General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

• (a) post to Computershare Investor Services Pty Limited, GPO Box 242, Melbourne VIC 3001; or

• (b) facsimile to Computershare Investor Services Pty Limited on facsimile number (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555,

so that it is received not later than 10.00am (WST) on 14 September 2011.

Proxy Forms received later than this time will be invalid.

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NOTICE OF GENERAL MEETING

Notice is given that the general meeting of Shareholders will be held at 10:00am (WST) on 16 September 2011 at Suite 7, Norfolk House, 85 Forrest Street, Cottesloe, Western Australia.

The Explanatory Statement provides additional information on matters to be considered at the General Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company at 7.00pm (EST) on 14 September 2011.

Terms and abbreviations used in this Notice of Meeting are defined in the Glossary.

AGENDA

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE - PLACEMENT SHARES

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 13,500,000 Shares on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE OF SHARES TO CENTURION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 2,086,714 Shares to Centurion Private Equity, LLC ( Centurion ) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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3. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO BEAUFORT INTERNATIONAL ASSOCIATES LIMITED

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 540,000 Options to Beaufort International Associates Limited ( Beaufort ) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

4. RESOLUTION 4 – ISSUE OF DIRECTOR OPTIONS TO CRAIG SMITH-GANDER

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to allot and issue 1,000,000 Director Options to Craig Smith-Gander (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Craig Smith-Gander (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

5. RESOLUTION 5 – ISSUE OF DIRECTOR OPTIONS TO GAVIN REZOS

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to allot and issue 2,000,000 Director Options to Gavin Rezos (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Gavin Rezos (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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6. RESOLUTION 6 – ISSUE OF DIRECTOR OPTIONS TO STEFAN SUSTA

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to allot and issue 2,000,000 Director Options to Stefan Susta (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Stefan Susta (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

DATED: 8 AUGUST 2011

BY ORDER OF THE BOARD

NICHOLAS CLARK COMPANY SECRETARY

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 10:00am (WST) on 16 September 2011 at Suite 7, Norfolk House, 85 Forrest Street, Cottesloe, Western Australia.

This purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolution in the Notice of Meeting.

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE - PLACEMENT OF SHARES

1.1 General

On 22 June 2011, the Company announced to ASX a placement pursuant to which the Company placed 13,500,000 Shares at an issue price of 10 cents each to raise $1,350,000. The Company has placed these Shares with US and European institutional investors via Beaufort International Associates Limited.

The subscribers pursuant to the placement were not related parties of the Company.

Resolution 1 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Shares ( Share Placement Ratification ).

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in a general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and provided that the previous issue did not breach ASX Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of ASX Listing Rule 7.1.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

1.2 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the Share Placement Ratification:

• (a) 13,500,000 Shares were issued and allotted;

• (b) the issue price of the Shares was 10 cents each;

• (c) the Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (d) the Shares were allotted and issued to US and European institutional investors identified by Beaufort International Associates Limited. No Shares were issued to any related parties or associates of the Company; and

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• (e) as announced on 22 June 2011, the funds raised from this issue will be applied towards supporting the Uniform Integrated Protective Ensemble tender, new commercial sector development in the textile fire retardant area, work in filters, glass and composites and for general working capital requirements.

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE OF SHARES TO CENTURION

2.1 General

As announced to the market on 24 June 2011, the Company has issued 2,086,714 Shares to Centurion Private Equity, LLC ( Centurion ) as consideration for Centurion supplying an $8,000,000 equity line of credit to the Company pursuant to a three year equity facility agreement.

Centurion is not a related party of the Company.

Resolution 2 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Shares ( Share Ratification ).

A summary of ASX Listing Rules 7.1 and 7.4 are set out in Section 1.1.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

2.2 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the Share Ratification:

• (a) 2,086,714 Shares were allotted;

• (b) the Shares were issued for nil cash consideration;

• (c) the Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (d) the Shares were allotted and issued to Centurion;

• (e) Centurion is not a related party of the Company; and

• (f) no funds were raised from this issue as the Shares were issued as consideration to Centurion for Centurion providing the Company with an $8,000,000 equity line of credit.

3. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO BEAUFORT INTERNATIONAL ASSOCIATES LIMITED

3.1 General

On 24 June 2011, the Company issued 540,000 Options to Beaufort International Associates Limited ( Beaufort ) as part of the consideration for Beaufort placing the Shares the subject of Resolution 1.

Beaufort is not a related party of the Company.

Resolution 3 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Options ( Option Ratification ).

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A summary of ASX Listing Rules 7.1 and 7.4 is set out in Section 1.1 above.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

3.2 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the Option Ratification:

• (a) 540,000 Options were allotted;

• (b) the Options were issued for nil cash consideration;

• (c) the Options were issued on the terms and conditions set out in Schedule 1;

• (d) the Options were allotted and issued to Beaufort; and

• (e) no funds were raised from this issue as the Options were issued as part of the consideration for placing the Shares the subject of Resolution 1.

4. RESOLUTIONS 4, 5 AND 6 – ISSUE OF DIRECTOR OPTIONS TO CRAIG SMITH-GANDER, GAVIN REZOS AND STEFAN SUSTA

4.1 General

The Company has agreed, subject to obtaining Shareholder approval, to allot and issue a total of 5,000,000 Options ( Director Options ) to Messrs Smith-Gander, Rezos and Susta ( Related Parties ) on the terms and conditions set out below.

For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

• (a) obtain the approval of the public company’s members in the manner set out in Sections 217 to 227 of the Corporations Act; and

• (b) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in Sections 210 to 216 of the Corporations Act.

In addition, ASX Listing Rule 10.11 also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose relationship with the entity or a related party is, in ASX’s opinion, such that approval should be obtained unless an exception in ASX Listing Rule 10.12 applies.

The grant of the Director Options to the Related Parties requires the Company to obtain Shareholder approval because the grant of Director Options constitutes giving a financial benefit and as Directors, Messrs Smith-Gander, Rezos and Susta are related parties of the Company.

It is the view of the Directors that the exceptions set out in Sections 210 to 216 of the Corporations Act and ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the grant of Director Options to the Related Parties.

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4.2 Shareholder Approval (Chapter 2E of the Corporations Act and Listing Rule 10.11)

Pursuant to and in accordance with the requirements of Sections 217 to 227 of the Corporations Act and ASX Listing Rule 10.13, the following information is provided in relation to the proposed grant of Director Options:

• (a) the related parties are Messrs Smith-Gander, Rezos and Susta and they are all related parties by virtue of being Directors;

• (b) the maximum number of Director Options (being the nature of the financial benefit being provided) to be granted to the Related Parties is:

• (i) 1,000,000 Director Options to Craig Smith-Gander;

• (ii) 2,000,000 Director Options to Gavin Rezos; and

• (iii) 2,000,000 Director Options to Stefan Susta;

• (c) the Director Options will be granted to the Related Parties no later than 1 month after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated the Director Options will be issued on one date;

• (d) the Director Options will be granted for nil cash consideration, accordingly no funds will be raised;

• (e) the terms and conditions of the Director Options are as set out in Schedule 2:

• (f) the value of the Director Options and the pricing methodology is set out in Schedule 3;

• (g) the relevant interests of the Related Parties in securities of the Company are set out below:

Related Party	Shares	Options	Performance Shares
Craig Smith- Gander	114,286	1,000,000 1	Nil
Gavin Rezos	12,785,957	7,400,000 2	2,500,000 3
Stefan Susta	Nil	1,500,000 4	Nil

1 1,000,000 Options exerciseable at $0.30 each on or before 26/02/2012.

2 1,350,000 Options exercisable at $0.10 each on or before 31/12/2012, 2,250,000 Options exercisable at $0.30 each on or before 26/02/2012, 2,500,000 Options exercisable at $0.30 each on or before 31/12/2014 and 1,300,000 Options exercisable at $0.10 each on or before 31/12/2012.

3 1,250,000 Class A Performance Shares and 1,250,000 Class B Performance Shares.

4 1,500,000 Options exerciseable at $0.30 each on or before 26/02/2012.

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(h) the remuneration and emoluments from the Company to the Related Parties for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out below:

Related Party	Current Financial Year	Previous Financial Year
Craig Smith-Gander	$27,250	$27,250
Gavin Rezos	$65,400	$65,400
Stefan Susta	US$155,000	US$155,000

(i) if the Director Options granted to the Related Parties are exercised, a total of 5,000,000 Shares would be allotted and issued. This will increase the number of Shares on issue from 88,101,259 to 93,101,259 (assuming that no other Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 5.37%, comprising 1.07% by the exercise of his Director Options by Gavin Smith-Gander, 2.15% by the exercise of his Director Options by Gavin Rezos and 2.15% by the exercise of his Director Options by Stefan Susta.

The market price for Shares during the term of the Director Options would normally determine whether or not the Director Options are exercised. If, at any time any of the Director Options are exercised and the Shares are trading on ASX at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company.

(j) the trading history of the Shares on ASX in the 12 months before the date of this Notice of General Meeting is set out below:

	Price	Date
Highest	19.5 cents	20 September 2010
Lowest	7 cents	5 August 2011
Last	7 cents	5 August 2011

(k) the primary purpose of the grant of Director Options to each of the Related Parties is to provide a market linked incentive component in the remuneration package for the Related Parties to motivate and reward the performance of the Related Parties in their respective roles as Directors. The Board considers that the grant of the Director Options is an effective method of maintaining the Company’s cash reserves, whilst linking any future increase in remuneration caused through the exercise of the Director Options to the market performance of the Company during the term of the Director Options;

(l) Craig Smith-Gander declines to make a recommendation to Shareholders in relation to Resolution 4 due to his material personal interest in the outcome of the Resolution. However, in respect of Resolutions 5 and 6, Craig Smith-Gander recommends that Shareholders vote in favour of those Resolutions for the following reasons:

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• (i) the issue of Director Options is a reasonable and appropriate method to provide cost effective remuneration as the non-cash form of this benefit will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Related Parties; and

• (ii) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Director Options upon the terms proposed;

• (m) Gavin Rezos declines to make a recommendation to Shareholders in relation to Resolution 5 due to his material personal interest in the outcome of the Resolution. However, in respect of Resolutions 4 and 6, Gavin Rezos recommends that Shareholders vote in favour of those Resolutions for the reasons set out in subparagraphs (l)(i) and (l)(ii);

• (n) Stefan Susta declines to make a recommendation to Shareholders in relation to Resolution 6 due to his material personal interest in the outcome of the Resolution. However, in respect of Resolutions 4 and 5, Stefan Susta recommends that Shareholders vote in favour of those Resolutions for the reasons set out in subparagraphs (l)(i) and (l)(ii);

• (o) in forming their recommendations, each Director considered the experience of each other Related Party, the current market practices when determining the number of Director Options to be granted as well as the vesting conditions and vesting period of those Director Options;

• (p) the Board acknowledges the grant of Director Options to Craig SmithGander is contrary to Recommendation 8.2 of the ASX Corporate Governance Principles and Recommendations. However, the Board considers the grant of Director Options to Craig Smith-Gander reasonable in the circumstances, given the necessity to attract the highest calibre of professionals to the Company, whilst maintaining the Company’s cash reserves; and

• (q) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 4 to 6.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to the Related Parties as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Director Options to the Related Parties will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

5. ENQUIRIES

Shareholders are requested to contact Nicholas Clark on (+ 61 8) 6467 0100 if they have any queries in respect of the matters set out in these documents.

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GLOSSARY

$ means Australian dollars.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Company means Alexium International Group Limited (ACN 064 820 408).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Director Option means an Option granted pursuant to Resolutions 4, 5 and 6 with the terms and conditions set out in Schedule 2.

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

General Meeting or Meeting means the meeting convened by the Notice.

Notice or Notice of Meeting or Notice of General Meeting means this notice of general meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share with the terms and conditions set out in Schedule 1.

Optionholder means a holder of an Option or Director Option as the context requires.

Proxy Form means the proxy form accompanying the Notice.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

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SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

The Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Option gives the Optionholder the right to subscribe for one Share.

• (b) The Options will expire at 5.00pm (WST) on 24 June 2016 ( Expiry Date ). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• (c) The amount payable upon exercise of each Option will be $0.10 ( Exercise Price ).

• (d) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (e) An Optionholder may exercise their Options by lodging with the Company, before the Expiry Date: (i) a written notice of exercise of Options specifying the number of Options being exercised; and

• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

( Exercise Notice ).

• (f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.

• (h) The Options are not transferable.

• (i) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.

• (j) The Company will not apply for quotation of the Options on ASX. However, the Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 Business Days after the date of allotment of those Shares.

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

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

• (m) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

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SCHEDULE 2 – TERMS AND CONDITIONS OF DIRECTOR OPTIONS

The Director Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Director Option gives the Optionholder the right to subscribe for one Share.

• (b) Craig Smith-Gander will be allotted:

• (i) 500,000 Director Options that will vest on the date which is 12 months from the date of issue, exercisable at $0.15 and expiring at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (ii) 500,000 Director Options that will vest on the date which is 24 months from the date of issue, exercisable at $0.15 and expiring at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (c) Gavin Rezos will be allotted:

• (i) 1,000,000 Director Options that will vest on the date on which the Company completes a capital raising, exercisable at $0.15 and will expire at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (ii) 1,000,000 Director Options that will vest on the date which is 24 months from the date of issue, exercisable at $0.15 and expiring at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (d) Stefan Susta will be allotted:

• (i) 1,000,000 Director Options that will vest on the date which is 12 months from the date of issue, exercisable at $0.15 and expiring at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (ii) 1,000,000 Director Options that will vest on the date which is 24 months from the date of issue, exercisable at $0.15 and expiring at 5:00pm (WST) on 31 December 2015 ( Expiry Date );

• (e) The Director Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (f) An Optionholder may exercise their Director Options by lodging with the Company, before the Expiry Date:

• (i) a written notice of exercise of Director Options specifying the number of Director Options being exercised; and

• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Director Options being exercised;

( Exercise Notice ).

• (g) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (h) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Director Options specified in the Exercise Notice.

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• (i) The Director Options are not transferable.

• (j) All Shares allotted upon the exercise of Director Options will upon allotment rank pari passu in all respects with other Shares.

• (k) The Company will not apply for quotation of the Director Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Director Options on ASX within 10 Business Days after the date of allotment of those Shares.

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

• (m) There are no participating rights or entitlements inherent in the Director Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Director Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Director Options prior to the date for determining entitlements to participate in any such issue.

• (n) A Director Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director Option can be exercised.

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SCHEDULE 3 – VALUATION OF OPTIONS

The Director Options to be issued to the Related Parties pursuant to Resolutions 4, 5 and 6 have been independently valued.

Using the theoretical Black & Scholes option model and based on the assumptions set out below, the Director Options were ascribed a value range, as follows:

Assumptions:
Valuation date	12 July 2011
Market price of Shares	10 cents
Exercise price	15 cents
Expiry date	31 December 2015
Risk free interest rate	5.17%
Volatility	30%
Indicative value per Director Option	0.02 cents
Total Value of Director Options
Craig Smith-Gander	$20,020
Gavin Rezos	$40,042
Stefan Susta	$40,042

Note: The valuation noted above is not necessarily the market price that the Director Options could be traded at and they are not automatically the market prices for taxation purposes.

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A L E X I U M

Alexium International Group Limited ABN 91 064 820 408

Lodge your vote:

By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

000001 000 AJX MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

 For your vote to be effective it must be received by 10:00am (WST) Wednesday 14 September 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

 Turn over to complete the form



View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN: I9999999999

 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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I9999999999

Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

I 9999999999 I ND

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Proxy Form

to indicate your directions

Please mark

Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Alexium International Group Limited hereby appoint

 PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

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the Chairman OR of the Meeting

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the General Meeting of Alexium International Group Limited to be held at Suite 7, Norfolk House, 85 Forrest Street, Cottesloe, Western Australia on Friday, 16 September 2011 at 10:00am (WST) and at any adjournment of that meeting.

Important for Resolution 5: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Resolution 5 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Resolution 5 and your votes will not be counted in computing the required majority if a poll is called on this Resolution. The Chairman of the Meeting intends to vote undirected proxies in favour of Resolution 5.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

 PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your Items of Business behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

			For	Again	st Abstain
Resolution	1	Ratification of Prior Issue - Placement Shares
Resolution	2	Ratification of Prior Issue of Shares to Centurion
Resolution	3	Ratification of Prior Issue of Options to Beaufort International Associates Limited
Resolution	4	Issue of Director Options to Craig Smith-Gander
Resolution	5	Issue of Director Options to Gavin Rezos
Resolution	6	Issue of Director Options to Stefan Susta

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

SIGN

Signature of Securityholder(s) This section must be completed.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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1 3 5 2 1 1 A

A J X