ALEXIUM INTERNATIONAL GROUP LIMITED — Proxy Solicitation & Information Statement 2015

Jul 16, 2015

ALEXIUM INTERNATIONAL GROUP LIMITED ACN 064 820 408

NOTICE OF GENERAL MEETING

TIME : 3.00pm (WST)

DATE : 18 August 2015 PLACE : BDO 38 Station Street Subiaco, 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.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 8 9384 3160.

CONTENTS

Business of the Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	6
Glossary	13
Schedules 1 - 4	14-19
Proxy Form	20

IMPORTANT INFORMATIO N

Time and place of Meeting

Notice is given that the Meeting will be held at 3.00pm (WST) on 18 August 2015 at:

BDO 38 Station Street Subiaco, Western Australia

Your vote is important

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

Voting eligibility

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 5:00pm (WST) on 16 August 2015.

Voting in person

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

Voting by proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

• each Shareholder has a right to appoint a proxy;

• the proxy need not be a Shareholder of the Company; and

• a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

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• if proxy holders vote, they must cast all directed proxies as directed; and

• any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes are set out below.

Proxy vote if appointment specifies way to vote

Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does :

• the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (i.e. as directed); and

• if the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands; and

• if the proxy is the chair of the meeting at which the resolution is voted on, the proxy must vote on a poll, and must vote that way (i.e. as directed); and

• if the proxy is not the chair, the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).

Transfer of non-chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

• an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and

• the appointed proxy is not the chair of the meeting; and

• at the meeting, a poll is duly demanded on the resolution; and

• either of the following applies:

• the proxy is not recorded as attending the meeting; or

• the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

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BUSINESS OF THE MEETING

AGENDA

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE – SHARES AND OPTIONS

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

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 13,000,000 Shares and 7,800,000 Options 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 associates of those persons. 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 – RE-APPROVAL OF THE EMPLOYEE SHARE OPTION PLAN

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

“That, for the purposes of ASX Listing Rule 7.2 (Exception 9(b)) and for all other purposes, Shareholders re-approve the Company’s Employee Share Option Plan, and for the issue of securities under that Employee Share Option Plan, on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in any employee incentive scheme in relation to the Company, and any associates of those Directors. 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 Chair 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.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:

(i) a member of the Key Management Personnel; or

(ii) a Closely Related Party of such a member; and

(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if the proxy is the Chair and the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

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3. RESOLUTION 3 – ELECTION OF DIRECTOR – CRAIG METZ

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

“That, for the purpose of clause 13.4 of the Constitution, ASX Listing Rule 14.4 and for all other purposes, Craig Metz, a Director who was appointed as an additional Director on 1 December 2014, retires, and being eligible, is elected as a Director.”

4. RESOLUTION 4 – ELECTION OF DIRECTOR – BRIGADIER GENERAL STEPHEN CHENEY

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

“That, for the purpose of clause 13.4 of the Constitution, ASX Listing Rule 14.4 and for all other purposes, Brigadier General Stephen Cheney, a Director who was appointed as an additional Director on 15 April 2015, retires, and being eligible, is elected as a Director.”

5. RESOLUTION 5 – ISSUE OF OPTIONS TO RELATED PARTY – CRAIG METZ

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

“That, subject to passing of Resolution 3 for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 750,000 Options to Craig Metz (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

ASX Voting Exclusion : The Company will disregard any votes cast on this Resolution by Craig Metz (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.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

(i) a member of the Key Management Personnel; or

(ii) a Closely Related Party of such a member; and

(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

(a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

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6. RESOLUTION 6 – ISSUE OF OPTIONS TO RELATED PARTY – BRIGADIER GENERAL STEPHEN CHENEY

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

“That, subject to passing of Resolution 4, for the purpose of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 750,000 Options to Brigadier General Stephen Cheney (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

ASX Voting Exclusion : The Company will disregard any votes cast on this Resolution by Brigadier General Stephen Cheney (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.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (ii) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

Dated: 9 July 2015

By order of the Board

NICHOLAS CLARK DIRECTOR

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EXPLANATORY STATEMEN T

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE – SHARES AND OPTIONS

1.1 General

On 4 May 2015, the Company announced the completion of a capital raising of $8,450,000 through the issue of 13,000,000 Shares at an issue price of $0.65 per Share, together with six free attaching Options for every 10 Shares subscribed for (amounting to 7,800,000 Options), to US intuitional investors in a private placement ( Capital Raising ).

The Company issued the Shares and Options the subject of the Capital Raising without prior Shareholder approval out of its 15% annual placement capacity.

Resolution 1 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Shares and Options ( 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 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 Ratification:

• (a) 13,000,000 Shares and 7,800,000 Options were issued;

• (b) the issue price per Share was $0.65 and the issue price of the Options was nil as they were issued free attaching with the Shares on a 6 for 10 basis;

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

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• (e) the Shares and Options were issued to sophisticated and institutional investors identified by the brokers to the issue. None of these subscribers were related parties of the Company; and

• (f) the funds raised from this issue were used to:

• (i) accelerate the further development of the Company’s core environmentally friendly chemical technologies into the fire retardant building materials sector;

• (ii) support the fulfilment of anticipated significant US Government Department of Defence and commercial sector sales contracts; and

• (iii) expand the Company’s footprint and capability in international markets outside of the US.

In addition, the placement was an important step towards the Company’s planned US Listing in Q3 2015 by broadening its US institutional investor base.

2. RESOLUTION 2 – RE-APPROVAL OF THE EMPLOYEE SHARE OPTION PLAN

2.1 General

Resolution 2 seeks shareholder approval to re-approve the Employee Share Option Plan in order to provide ongoing incentives to employees of the Company.

The Employee Share Option Plan was last approved at the Company’s annual general meeting held on 30 November 2012. The Company has amended the Employee Share Option Plan to ensure that it remains current with the prevailing requirements.

The objective of the Employee Share Option Plan remains to provide the Company with a remuneration mechanism, through the issue of securities in the capital of the Company, to motivate and reward the performance of employees in achieving specified performance milestones within a specified performance period. The Board will continue to ensure that the performance milestones attached to the securities issued pursuant to the Employee Share Option Plan are aligned with the successful growth of the Company’s business activities.

2.2 ASX Listing Rule 7.1

A summary of ASX Listing Rule 7.1 is set out in section 1.1 of this Explanatory Statement.

ASX Listing Rule 7.2 (Exception 9(b)) sets out an exception to ASX Listing Rule 7.1 which provides that issues under an employee incentive scheme are exempt for a period of three years from the date on which shareholders approve the issue of securities under the scheme as an exception to ASX Listing Rule 7.1.

If Resolution 2 is passed, the Company will be able to continue to grant Options under the Employee Share Option Plan to eligible participants over a period of three years after the meeting, and to issue Shares to those employees if they achieve the performance and vesting criteria of those Options, without using the Company’s 15% annual placement capacity.

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2.3 Terms of the Plan

A summary of the terms of the Plan is provided in Schedule 4 to this Explanatory Statement. A copy of the Employee Share Option Plan will be made available free of charge to any Shareholder on request.

9,500,000 Options have been granted under the Employee Share Option Plan as at the date of this Explanatory Statement. Of these, 3,895,000 vested and were converted into Shares and 250,000 expired unvested or were cancelled.

Any future issues of Shares under the Plan to a related party or a person whose relation with the Company or the related party is, in ASX’s opinion, such that approval should be obtained will require additional Shareholder approval under ASX Listing Rule 10.14 at the relevant time.

3. RESOLUTION 3 AND RESOLUTION 4 – ELECTION OF DIRECTOR – CRAIG METZ AND BRIGADIER GENERAL STEPHEN CHENEY

Clause 13.4 of the Constitution allows the Directors to appoint at any time a person to be a Director either to fill a casual vacancy or as an addition to the existing Directors, but only where the total number of Directors does not at any time exceed the maximum number specified by the Constitution.

Pursuant to clause 13.4 of the Constitution and ASX Listing Rule 14.4, any Director so appointed holds office only until the next following general meeting and is then eligible for election by Shareholders but shall not be taken into account in determining the Directors who are to retire by rotation (if any) at that meeting.

Craig Metz, having been appointed on 1 December 2014 will retire in accordance with clause 13.4 of the Constitution and ASX Listing Rule 14.4 and being eligible, seeks election from Shareholders.

Mr. Metz is a partner at Nelson, Mullins, Riley and Scarborough LLP with over 20 years experience in legislative and regulatory affairs. He served as Chief of Staff to the late Congressman Floyd Spence (R-SC). He held staff positions in the United States Senate and House of Representatives. Mr. Metz was appointed to senior positions in the Executive Branch of the Federal Government.

Brigadier General Stephen Cheney, having been appointed on 15 April 2015 will retire in accordance with clause 13.4 of the Constitution and ASX Listing Rule 14.4 and being eligible, seeks election from Shareholders.

General Cheney is the former Inspector General of the Marine Corps and Commanding General of Parris Island Marine Base. He is also the former Deputy Executive Secretary to U.S. Defense Secretary Dick Cheney under President George H.W. Bush. He currently sits on Secretary of State John Kerry’s Foreign Affairs Policy Board.

4. RESOLUTION 5 AND RESOLUTION 6 – ISSUE OF OPTIONS TO RELATED PARTY – CRAIG METZ AND BRIGADIER GENERAL STEPHEN CHENEY

4.1 General

The Company has agreed, subject to obtaining Shareholder approval, to issue a total of 1,500,000 Options ( Related Party Options ) to Messrs Metz and Cheney ( Related Parties ) on the terms and conditions set out below.

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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.

The grant of the Related Party Options constitutes giving a financial benefit and Messrs Metz and Cheney are related parties of the Company by virtue of being Directors.

The Directors (other than Mr Metz in relation to Resolution 5 and Brigadier General Cheney in relation to Resolution 6 who has a material personal interest in the Resolution) consider that Shareholder approval pursuant to Chapter 2E of the Corporations Act is not required in respect of the grant of Related Party Options because the agreement to grant the Related Party Options was reached as part of the appointment of each of the two Related Parties and is considered reasonable remuneration in the circumstances, having also been negotiated on an arm’s length basis in accordance with appropriate governance policies..

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.

It is the view of the Company that the exceptions set out in Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the grant of Related Party Options to the Related Parties under Listing Rule 10.11.

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

Pursuant to and in accordance with the requirements of section 219 of the Corporations Act and ASX Listing Rule 10.13, the following information is provided in relation to the proposed grant of Related Party Options:

• (a) the related parties are Messrs Metz and Cheney and they are related parties by virtue of being Directors of the Company;

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

• (i) 750,000 Related Party Options to Craig Metz; and

• (ii) 750,000 Related Party Options to Brigadier General Stephen Cheney;

• (c) the Related Party 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)

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and it is anticipated the Related Party Options will be issued on one date;

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

• (e) the terms and conditions of the Related Party Options are set out in Schedule 2;

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

• (g) neither of Messrs Metz or Cheney have any the relevant interests in securities of the Company as at the date of this Notice;

• (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 Metz	US$27,000	US$15,750
Brigadier General Stephen Cheney	US$27,000	US$5,830

(i) if the Related Party Options granted to the Related Parties are exercised, a total of 1,500,000 Shares would be issued. This will increase the number of Shares on issue from 261,350,490 to 262,850,490 (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 0.57%, comprising 0.29% by Craig Metz and 0.29% by Brigadier General Stephen Cheney.

The market price for Shares during the term of the Related Party Options would normally determine whether or not the Related Party Options are exercised. If, at any time any of the Related Party Options are exercised and the Shares are trading on ASX at a price that is higher than the exercise price of the Related Party 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 is set out below:

	Price	Date
Highest	$0.835	23 March 2015
Lowest	$0.082	23 July 2014
Last	$0.59	13 July 2015

(k) the Board acknowledges the grant of Related Party Options to Messrs Metz and Cheney is contrary to Recommendation 8.3 of The Corporate Governance Principles and Recommendations with 2010 Amendments (3[nd] Edition) as published by The ASX Corporate Governance Council.

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However, the Board considers the grant of Related Party Options to Messrs Metz and Cheney reasonable in the circumstances for the reason set out in paragraph (m);

• (l) the primary purpose of the grant of the Related Party Options to the Related Parties is to provide a performance 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;

• (m) Craig Metz declines to make a recommendation to Shareholders in relation to Resolution 5 due to his material personal interest in the outcome of the Resolution on the basis that he is to be granted Related Party Options in the Company should Resolution 5 be passed. However, in respect of Resolution 6, recommends that Shareholders vote in favour of those Resolutions for the following reasons:

• (i) the grant of Related Party Options to the Related Parties will align the interests of the Related Parties with those of Shareholders;

• (ii) the grant of the Related Party 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

• (iii) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in granting the Related Party Options upon the terms proposed;

• (n) Brigadier General Stephen Cheney declines to make a recommendation to Shareholders in relation to Resolution 6 due to his material personal interest in the outcome of the Resolution on the basis that he is to be granted Related Party Options in the Company should Resolution 6 be passed. However, in respect of Resolution 5, recommends that Shareholders vote in favour of those Resolutions for the reasons set out in paragraph (m);

• (o) with the exception of Messrs Metz and Cheney, no other Director has a personal interest in the outcome of Resolution 5 and Resolution 6;

• (p) the Directors who are not related parties recommend that Shareholders vote in favour of Resolution 5 and Resolution 6, for the reasons set out in paragraph (m)(ii);

• (q) in forming their recommendations, each Director considered the experience of each other Related Party, the current market price of Shares, the current market practices when determining the number of Related Party Options to be granted as well as the exercise price of $0.75 and expiry date of those Related Party Options; and

• (r) 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 Resolution 5 and Resolution 6.

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Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Related Party Options to the Related Parties as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Related Party 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.

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GLOSSARY

$ means Australian dollars.

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

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.

Chair means the chair of the Meeting.

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

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors mean the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

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

Notice or Notice of Meeting means this notice of 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 Related Party Option as the context requires.

Proxy Form means the proxy form accompanying the Notice.

Related Party Option means an Option granted pursuant to Resolution 5 and Resolution 6 with the terms and conditions set out in Schedule 2.

Resolutions means the resolutions set out in the Notice, 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 registered 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

1. Each Option entitles the holder to one ordinary fully paid Share.

The Options are exercisable at any time prior to 5.00pm Perth Time on 7 May 2018 (the Expiry Date ) by completing the Option Exercise Form and delivering it together with the payment for the number of shares in respect of which the Options are exercised to the registered office of the Company. Any Option that has not been exercised prior to the Expiry Date automatically lapses.

1. The exercise price of the Options is AUD$0.75 (seventy five Australian cents) per Option payable in full on exercise.

2. Subject to the Corporations Act, the Listing Rules and the Constitution of the Company, the Options are freely transferable.

3. All ordinary fully paid Shares issued upon exercise of Options will rank pari passu in all respects with, and will have the same terms as, the Company’s then issued ordinary fully paid Shares. The Company will apply for Official Quotation by ASX of all Shares issued upon exercise of Options, subject to any restriction obligations imposed by ASX.

4. The Options will not give any right to participate in dividends until Shares are issued pursuant to the exercise of the relevant Options.

5. The Company shall not affect any exercise of an Option, and a holder shall not have the right to exercise any portion of an Option, to the extent that after giving effect to such issuance after exercise, such holder (together with the Holder’s affiliates), would beneficially own (calculated in accordance with Section 13(d) of the United States Exchange Act of 1934, and the rules and regulations promulgated thereunder) in excess of 4.99% of the number of ordinary shares of the Company outstanding immediately after giving effect to the issuance of ordinary shares issuable upon exercise of such Option.

6. There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Options. The Company will ensure that Option holders will be allowed at least the number of days notice required by the Listing Rules of ASX to allow for the conversion of Options prior to the record date in relation to any offer of securities made to shareholders.

7. In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, the number of Options or the exercise price of the Options or both shall be reconstructed in accordance with the Listing Rules applying to a reorganisation of capital at the time of the reconstruction.

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SCHEDULE 2 – TERMS AND CONDITIONS OF RELATED PARTY OPTIONS

The terms and conditions of the Related Party Options (referred to as Options below) are as follows:

(a) Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option.

The Options held by each holder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

(b) Exercise Price

Subject to paragraph (j), the amount payable upon exercise of each Option will be $0.75 per Option ( Exercise Price ).

(c)

Expiry Date

Each Option will expire at 5:00 pm (WST) on the date that is 5 years from the date of issue ( Expiry Date ). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d)

Exercise Period

The Options are exercisable at any time on or prior to the Expiry Date ( Exercise Period ).

(e)

Notice of Exercise

The Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate ( Notice of Exercise ) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

(f)

Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds ( Exercise Date ).

(g) Timing of issue of Shares on exercise

Within 10 Business Days after the Exercise Date, the Company will:

• (i) allot and issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company; and

• (ii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options.

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(h) Shares issued on exercise

Shares issued on exercise of the Options rank pari passu in all respects with the issued shares of the Company.

(i) Quotation of Shares issued on exercise

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.

(j) Reconstruction of capital

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.

(k) Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

(l) Change in exercise price

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.

(m) Transferability

The Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws.

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SCHEDULE 3 – VALUATION OF RELATED PARTY OPTIONS

The Related Party Options to be issued to the Related Parties pursuant to Resolution 5 and Resolution 6 have been independently valued.

Using the Black & Scholes option model and based on the assumptions set out below, the Related Party Options were ascribed the following value:

Assumptions:
Valuation date	2 July 2015
Market price of Shares	_$0.65_cents
Exercise price	_$0.75_cents
Expiry date (length of time from issue)	5 years
Risk free interest rate	2.39
Volatility (discount)	40%
Indicative value per Related Party Option	_$0.22_cents
Total Value of Related Party Options	$329,351
-Craig Metz	$165,000
-Stephen Cheney	$165,000

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

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SCHEDULE 4 – TERMS AND CONDITIONS OF EMPLOYEE SHARE OPTION PLAN

The main terms of the Plan are summarised below and a full copy of the Plan is available for Inspection at the Company's registered office until the date of the General Meeting.

The Plan will be administered by the Directors who may grant Options to acquire Shares in the Company to any of the Company's employees ( Employees ).

The key terms and conditions applying to any issue of Options under the Plan include:

Objectives

The objective of the Plan is to assist in the recruitment, reward, retention and motivation of employees of the Company.

Consideration

Each Option issued under the Plan ( Employee Option ) will be Issued free of charge.

Exercise Price

The exercise price for Employee Options granted under the Plan will be fixed by the Board prior to the grant of the Employee Option.

Exercise Restrictions

The options granted under the Plan may be subject to such other restrictions on exercise as may be fixed by the Directors prior to grant of the Employee Options including, without limitation, length of service by the employee and threshold prices at which Shares are traded on the ASX. Any restrictions so imposed by the Directors must be set out on the Employee Option certificate.

Participation in Dividends, Rights issues and Bonus issues

The Employee Options granted under the Plan do not give any right to participate In dividends or rights issues until Shares are allotted pursuant to the exercise of the relevant Employee Option. The number of Shares Issued on the exercise of Employee Options will be adjusted for bonus Issues made prior to the exercise of the Employee Options.

Eligibility

The Directors may invite full or part time employees to participate in the Plan and receive Employee Options. An employee may receive the Employee Options or nominate a relative or associate to receive the Employee Options.

Employees do not possess any rights to participate in the Plan, as participation is solely determined by the Board. Directors are not eligible to participate In the Plan.

Term of Employee Options

The Employee Options granted under the Plan have a term specified on the face of each certificate.

Subdivision or Consolidation

If the Company, after having granted any Employee Option, reduces its Issued Share capital or subdivides or consolidates its Shares, the number of the Shares Issued to the

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option holder on exercise of an Employee Option will be reduced, subdivided or consolidated, as the case may be, in accordance with the ASX Listing Rules.

Restrictions on Transfer

Employee Options are not transferable.

Limitation on offers

If the Company makes an offer under the Plan where:

• (a) the total number of Shares to be received on exercise of Options the subject of that offer exceeds the limit set out in ASIC Class Order 03/184; or

• (b) the Offer does not otherwise comply with the terms and conditions set out In ASIC Class Order 03/184,

the Company must comply with Chapter 6D of the Corporations Act at the time of that Offer.

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PROXY FORM

ALEXIUM INTERNATIONAL GROUP LIMITED ACN 064 820 408

GENERAL MEETING

I/We

of:

being a Shareholder entitled to attend and vote at the Meeting, hereby appoint:

Name:

OR: the Chair of the Meeting as my/our proxy.

or failing the person so named or, if no person is named, the Chair, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting to be held at 3.00pm (WST), on 18 August 2015 at BDO, 38 Station Street, Subiaco, Western Australia, and at any adjournment thereof.

AUTHORITY FOR CHAIR TO VOTE UNDIRECTED PROXIES ON REMUNERATION RELATED RESOLUTIONS

Where I/we have appointed the Chair as my/our proxy (or where the Chair becomes my/our proxy by default), I/we expressly authorise the Chair to exercise my/our proxy on Resolutions 2, 5 and 6 (except where I/we have indicated a different voting intention below) even though Resolutions 2, 5 and 6 are connected directly or indirectly with the remuneration of a member of the Key Management Personnel, which includes the Chair.

CHAIR’S VOTING INTENTION IN RELATION TO UNDIRECTED PROXIES

The Chair intends to vote undirected proxies in favour of all Resolutions. In exceptional circumstances the Chair may change his/her voting intention on any Resolution. In the event this occurs an ASX announcement will be made immediately disclosing the reasons for the change.

Voting on business of the Meeting	Voting on business of the Meeting	FOR	AGAINST	ABSTAIN
Resolution 1	Ratification of Prior Issue – Shares and Options
Resolution 2	Re-approval of Employee Share Option Plan
Resolution 3	Election of Director – Craig Metz
Resolution 4	Election of Director – Brigadier General Stephen Cheney
Resolution 5	Issue of Options to Related Party – Craig Metz
Resolution 6	Issue of Options to Related Party – Brigadier General Stephen Cheney

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is:	If two proxies are being appointed, the proportion of voting rights this proxy represents is:	If two proxies are being appointed, the proportion of voting rights this proxy represents is:	If two proxies are being appointed, the proportion of voting rights this proxy represents is:				%
Signature of Shareholder(s):
Individual or Shareholder 1	Shareholder 2		Shareholder 3
Sole Director/Company Secretary	Director		Director/Company Secretary
Date:
Contact name:	Contact ph (daytime):
	Consent for contact by e-mail
E-mail address:	in relation to this Proxy Form:			YES		NO

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Instructions for completing Proxy Form

1.

( Appointing a proxy ): A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.

2.

( Direction to vote ): A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.

3. ( Signing instructions ):

• ( Individual ): Where the holding is in one name, the Shareholder must sign.

• ( Joint holding ): Where the holding is in more than one name, all of the Shareholders should sign.

• ( Power of attorney ): If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.

• ( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.

• ( Attending the Meeting ): Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.

• ( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

• (a) post to Alexium International Group Limited PO Box 512 Cottesloe WA 6911; or

• (b) facsimile to the Company on facsimile number +61 8 6314 1623; or

• (c) email to the Company at klucraft@alexiuminternational.com,

so that it is received not less than 48 hours prior to commencement of the Meeting.

Proxy Forms received later than this time will be invalid.

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