CYCLOPHARM LIMITED — AGM Information 2018

Apr 26, 2018

Cyclopharm Limited Notice of Annual General Meeting and Explanatory Statement

to be held at the Boardroom of Cyclopharm Limited, Unit 4, 1 The Crescent, Kingsgrove, NSW 2208 at 11.30am, (Sydney time) on Tuesday, 29 May 2018

This document is important.

Please read the information it contains carefully. It is important that you vote on these resolutions either by attending the meeting or by completing and lodging the enclosed proxy form. If you are in doubt as to its contents, you should consult your professional advisor(s).

Cyclopharm Limited ABN 74 116 931 250 Unit 4, 1 The Crescent Kingsgrove NSW 2208

Ph: (02) 9541 0411 Fax: (02) 9543 0960

www.cyclopharm.com enquiries@cyclopharm.com.au

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TABLE OF CONTENTS

TABLE OF CONTENTS	TABLE OF CONTENTS
NOTICE OF ANNUAL GENERAL MEETING		2
1.	ORDINARY BUSINESS	2
1.1(a)	FINANCIAL STATEMENTS AND REPORTS	2
1.1(b)	RESOLUTION 1 – REMUNERATION REPORT	2
1.2	RESOLUTION 2 – RE-ELECTION OF DIRECTOR	3
1.3	RESOLUTION 3 – SHARE BUY BACK	3
1.4	RESOLUTION 4 – APPROVAL OF LOAN SHARE PLAN	3
2.	OTHER BUSINESS	4
NOTES TO NOTICE OF MEETING		5
1.	EXPLANATORY STATEMENT	5
2.	VOTING ENTITLEMENT	5
3.	QUESTIONS AND COMMENTS BY SHAREHOLDERS AT THE MEETING	5
4.	PROXIES	6
EXPLANATORY STATEMENT		8
1.	IMPORTANT NOTICE	8
2.	REPORTS AND EXPLANATION OF RESOLUTION 1 – REMUNERATION REPORT	8
3.	EXPLANATION OF RESOLUTION 2 – RE-ELECTION OF DIRECTOR	9
4.	EXPLANATION OF RESOLUTION 3 – SHARE BUY-BACK	9
5.	EXPLANATION OF RESOLUTION 4 – APPROVAL OF LOAN SHARE PLAN	12
6.	GLOSSARY OF TERMS	17
7.	SHAREHOLDER ENQUIRIES	17

	IMPORTANT DATES Close for receipt of written questions to Auditor 5.00 pm Tuesday, 22 May 2018 Close for receipt of Proxy Forms 11:30am Sunday, 27 May 2018 Determination of Entitlement to Vote 7.00 pm Friday, 25 May 2018 Meeting 11.30 am Tuesday,29 May2018

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NOTICE OF ANNUAL GENERAL MEETING OF CYCLOPHARM LIMITED

Notice is given that the Annual General Meeting of members of Cyclopharm Limited ACN 116 931 250 ( Company) will be held at the Boardroom of Cyclopharm Limited, Unit 4, 1 The Crescent, Kingsgrove, NSW 2208, Australia on Tuesday, 29 May 2018 at 11.30am Sydney time.

1. ORDINARY BUSINESS

1.1 Financial Statements and Reports

• (a) To receive and consider the financial statements and the reports of the Directors and the Auditors of the Company for the year ended 31 December 2017.

An explanation of this item is to be found in the notes to this notice and paragraph 2.1 of the Explanatory Statement.

(b) Resolution 1 – Remuneration Report

Shareholders will be asked to consider and, if thought fit, pass the following resolution as an ordinary resolution :

"That the Remuneration Report as set out in the Annual Report of the Company for the financial year ended 31 December 2017 be adopted."

An explanation of this item is to be found in paragraph 2.2 of the Explanatory Statement.

Notes:

• (1) The vote on this resolution is advisory only and does not bind the Directors or the Company.

• (2) If 25% or more of the votes that are cast are voted against the remuneration report at two consecutive AGMs, shareholders will be required to vote at the second of those AGMs on a resolution (a 'spill' resolution) that another meeting be held within 90 days at which all of the Company's directors (other than the Managing Director) must stand for re-election.

• (3) Except as set out below, a vote must not be cast (in any capacity) on Resolution 1 by or on behalf of the Company's key management personnel (KMP), details of whose remuneration are included in the Remuneration Report, and their closely related parties, whether as shareholder or as a KMP's proxy. However, a vote may be cast on Resolution 1 by a KMP, or a closely related party of a KMP, if:

• the vote is cast as a proxy;

• the appointment is in writing and specifies how the proxy is to vote on Resolution 1; and

• the vote is not cast on behalf of a KMP or closely related party of a KMP.

Further, any Undirected Proxies granted to the Chairman of the Meeting that expressly authorise the Chairman to vote on Resolution 1 despite the fact that Resolution 1 is connected with the remuneration of the KMP, may be voted in favour of that Resolution 1.

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1.2 Resolution 2 – Re-election of Director

Shareholders will be asked to consider and, if thought fit, pass the following resolution as an ordinary resolution with effect from the close of the meeting:

"That, for the purposes of ASX Listing Rule 14.5 and for all other purposes, Mr Vanda Russell Gould, who retires at the close of this Annual General Meeting and, being eligible, and having consented to act, be re-elected as a Director of the Company.

An explanation of this item, and more information on Mr Gould, is to be found in paragraph 3 of the Explanatory Statement.

1.3 Resolution 3 – Share Buy-back

Shareholders will be asked to consider and, if thought fit, pass the following resolution as an ordinary resolution :

“That pursuant to and in accordance with section 257C(1) of the Corporations Act 2001 (C'wlth), as amended, and for all other purposes, the shareholders approve, with effect from when the Directors make the relevant announcement to the ASX, the on-market buy-back of up to 25% of the fully paid ordinary shares in the Company expiring on whichever is the earlier of the anniversary of the passage of this resolution or the 2019 Annual General Meeting and otherwise on the terms and conditions set out in the Explanatory Statement accompanying the 2018 Notice of Annual General Meeting.”

More information on the Share Buy-back is to be found in paragraph 4 of the Explanatory Statement.

1.4 Resolution 4 - Approval of Loan Share Plan

Shareholders will be asked to consider and, if thought fit, pass the following resolution as an ordinary resolution :

"That the Cyclopharm Loan Share Plan ( LSP ), a summary of which is set out in the Explanatory Statement, be approved for the purposes of ASX Listing Rule 7.2 (Exception 9), sections 200E, 259B(2) and 260C(4) of the Corporations Act and for all other purposes."

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast in favour of this Resolution by any Director and any of their associates. However, the Company will not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• b. it is cast by the Chairman 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.

In addition, pursuant to the Corporations Act, the Company's Key Management Personnel and their Closely Related Parties are not permitted to cast a vote as proxy for another person who is permitted to vote, unless:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• b. the proxy is the Chairman of the Meeting and he is expressly authorised to exercise the proxy even through the resolution is a Remuneration Resolution.

More information on the Approval of Loan Share Plan is to be found in paragraph 5 of the Explanatory Statement.

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2 OTHER BUSINESS

To consider any other business that may be properly brought forward at the meeting in accordance with the Constitution and the law.

By Order of the Board

James McBrayer Company Secretary

Dated: 27 April 2018

PLEASE NOTE:

The Notes to, and the Explanatory Statement and Proxy Form following this Notice of Meeting should be read in conjunction with, and form part of, this Notice.

Capitalised words have the meaning ascribed to them in the Glossary in the attached Explanatory Statement .

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NOTES TO NOTICE OF MEETING:

1. Explanatory Statement

An explanation of each resolution is included in the accompanying Explanatory Statement.

2. Voting Entitlement

• 2.1 The Board, as the convenor of the meeting, has determined that the shareholding of each member for the purpose of ascertaining voting entitlements at the Annual General Meeting will be as it appears on the register of Shareholders at 7.00pm (Sydney time) on Friday, 25 May 2018 .

• 2.2 On a show of hands, every person present and qualified to vote shall have one vote. If a Shareholder appoints one proxy, then that proxy may vote on a show of hands. However, if the Shareholder appoints 2 proxies, neither may vote on a show of hands.

If a Shareholder appoints a proxy who is also a Shareholder or also a proxy for another Shareholder, their directions may not be effective on a show of hands. However, upon a poll and upon the proxy voting on the poll then their voting direction will be fully counted. Should a poll be taken, then the Auditors, Nexia Sydney Audit Pty Ltd, will act as scrutineer.

3. Questions and Comments by Shareholders at the Meeting

• 3.1 In accordance with the Corporations Act and rule 104.3 of the Constitution, a reasonable opportunity will be given to Shareholders at the meeting to ask questions about, or make comments on, the management of the Company.

• 3.2 Similarly, in accordance with the Corporations Act and rule 104.4 of the Constitution, a reasonable opportunity will be given to Shareholders to ask the Auditors, Nexia Sydney Audit Pty Ltd, questions relevant to:

• (1) the conduct of the audit;

• (2) the preparation and content of the Auditor’s Report;

• (3) the accounting policies adopted by the Company in relation to the preparation of its financial statements; and

• (4) the independence of the Auditor in relation to the conduct of the audit.

• 3.3 Shareholders may also submit written questions to Nexia Sydney Audit Pty Ltd, via the Company, no later than 5 business days before the Annual General Meeting. Any question must be relevant to the content of Nexia Sydney Audit Pty Ltd’s Audit Report or the conduct of its audit of the Company’s financial report for the year ended 31 December 2017.

• 3.4 Relevant written questions for Nexia Sydney Audit Pty Ltd must be received no later than 5.00pm (Sydney time) on Tuesday, 22 May 2018 . A list of those relevant written questions will be made available to Shareholders attending the Annual General Meeting. Nexia Sydney Audit Pty Ltd will either answer the questions at the Annual General Meeting or table written answers to them at the Meeting. If written answers are tabled at the Meeting, they will be made available to Shareholders as soon as practicable after the Annual General Meeting.

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4. Proxies

• 4.1 A Shareholder entitled to attend and vote at this Meeting is entitled to appoint not more than 2 proxies. If 2 proxies are appointed, each proxy must be appointed to represent a specific proportion or number of the Shareholders’ voting rights. If the appointment does not specify the proportion or number of the Shareholders’ votes each proxy may exercise, each proxy may exercise one half of the Shareholders’ votes. Fractions of votes will be disregarded.

• 4.2 If Shareholders wish to appoint one proxy, please use the form provided. If you want to appoint 2 proxies, please contact the Company for an additional form and follow the instructions set out on the reverse side of the proxy form.

• 4.3 A Shareholder may appoint an individual or a body corporate as their proxy. A body corporate appointed as a proxy may then nominate an individual to exercise its powers at meetings. A proxy need not be a Shareholder of the Company.

• 4.4 To be effective a proxy form and an original or certified copy of the authority (if any) under which it is signed (such as a power of attorney or, in the case of a body corporate Shareholder, a certificate of appointment of personal representative) must be:

• delivered (by hand, mail, courier or fax) to the Company at Unit 4, 1 The Crescent, Kingsgrove, NSW 2208, Australia; or

• sent by facsimile to (+612) 9543 0960,

to arrive (in each case) no later than 11.30am (Sydney time) on Sunday, 27 May 2018 . If it is not received by that time, the appointment of proxy will not be treated as effective.

• 4.5 If a Shareholder is a body corporate, the proxy form may be signed by:

• 2 Directors;

• a Director and either a company secretary or other authorised signatory;

• in the case of a proprietary company that has a sole Director that is also the sole company secretary, by that Director, or

• the body corporate’s appointed attorney under power of attorney.

• 4.6 In the case of joint holdings a proxy may be signed by any one of the joint holders. However, if the Company receives more than one appointment for the same Share:

• an appointment signed by all joint holders will be accepted in preference to an appointment signed by the Shareholder whose name appears first in the register of Shareholders or by any other Shareholder holding the share jointly; and

• subject to the preceding paragraph, an appointment signed by the Shareholder whose name appears first in the register of Shareholders will be accepted in preference to an appointment signed by any other Shareholder or Shareholders holding the share jointly.

• 4.7 Completion of a proxy form will not prevent individual Shareholders from attending the Meeting if they wish. Where a Shareholder completes and delivers a valid proxy form and attends in person, the authority of the proxy to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.

• 4.8 A member of the Company's Key Management Personnel or their Closely Related Party must not, whether in person or by proxy, vote in their own right on Resolution 1.

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• 4.9 A person appointed as a proxy may vote or abstain from voting as he or she thinks fit except in the following circumstances:

• 4.9.1 The proxy holds a Directed Proxy Form;

• 4.9.2 Where the proxy is voting in relation to a Remuneration Resolution and the proxy is either a Key Management Personnel for the Company or a Closely Related Party of the Company and holds an Undirected Proxy Form; and

• 4.9.3 The proxy is required by law or the Company's Constitution to vote in a certain manner or abstain from voting.

• 4.10 Clause 4.9.2 does not apply if the Chairman of the meeting is appointed as proxy and the appointment expressly authorises the Chairman to exercise the proxy even if the resolution is a Remuneration Resolution.

• 4.11 The Chairman intends to vote all Undirected Proxy Forms in favour of Resolutions 1, 2, 3 and 4 and he is expressly authorised to do so.

• 4.12 Closely Related Party means the closely related parties of the Key Management Personnel as defined in the Corporations Act, including certain members of their family, dependants and companies they control.

Directed Proxy Form means a proxy form which specifies how a proxy is to vote.

Key Management Personnel of the Company are the Directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The Remuneration Report identifies the Company's Key Management Personnel for the financial year to 31 December 2017. Their Closely Related Parties are defined in the Corporations Act, and include certain members of their family, dependents and companies they control.

Remuneration Resolution means a resolution connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

Undirected Proxy Form means a proxy form which does not specify how the proxy is to vote.

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EXPLANATORY STATEMENT

1. IMPORTANT NOTICE

• 1.1 This Explanatory Statement is given to Shareholders to explain the resolutions to be considered at the Annual General Meeting ( Resolutions ) and to allow Shareholders to determine how they wish to vote on the Resolutions. The Explanatory Statement should be read in conjunction with, and forms part of, the Notice of Annual General Meeting which this Explanatory Statement accompanies.

• 1.2 Capitalised words in this Explanatory Statement have a defined meaning which appears in it or in the Glossary.

• 1.3 This Explanatory Statement is dated 27 April 2018.

2. REPORTS

• 2.1 The Corporations Act requires the financial statements and reports of the Directors and Auditors to be laid before the Meeting. These are all incorporated into the Annual Report. Neither the Corporations Act nor the Constitution requires Shareholders to vote on such statements and reports. However, Shareholders will be given ample opportunity to raise questions on the Annual Report at the Meeting. For further information see note 3 on page 4 . The Annual Report is available on the Company’s website at www.cyclopharm.com.au.

2.2 EXPLANATION OF RESOLUTION 1 - REMUNERATION REPORT

The Directors’ Report - “Remuneration Report” ( Remuneration Report) is contained in the Company's 2017 Annual Report.

The Corporations Act requires a resolution be put to the shareholders of a listed company to adopt the Remuneration Report as disclosed in the Directors' Report component of the 2017 Annual Report (see pages 25 to 35 of the 2017 Annual Report inclusive). This Resolution is being put so as to give Shareholders a reasonable opportunity to ask questions or make comments concerning the Remuneration Report during the Meeting.

The Remuneration Report:

• explains the Board's policies in relation to the nature and level of remuneration paid to Directors, secretaries and senior managers with the Company;

• discusses the link between the Board's policies and the Company's performance;

• provides a summary of performance conditions, explaining why they were chosen and how performance is measured against them;

• sets out remuneration details for each Director and for each member of the Company's senior executive management team; and

• makes clear that the basis for remunerating non-executive Directors is distinct from the basis for remunerating executives, including executive Directors.

The vote on this resolution is advisory only and does not bind the company or its directors. No member of the key management personnel or closely related party of the key management personnel may vote on resolution 1.

Under the Corporations Act, if 25% or more of the votes that are cast are voted against the adoption of the Remuneration Report at two consecutive AGMs, shareholders will be required to vote at the second of those AGMs on a resolution (a 'spill' resolution) that another meeting be held within 90 days at which all of the Company's directors (other than the Managing Director) must go up for re-election.

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2.3 Directors' Recommendation

As the Directors have a personal interest in this proposed Resolution 1, they make no recommendations as to how shareholders should vote on the resolution.

3. EXPLANATION OF RESOLUTION 2 – RE-ELECTION OF DIRECTOR

• 3.1 Shareholders will be asked to consider and, if thought fit, pass the following Resolution as an ordinary resolution:

"That, for the purposes of ASX Listing Rule 14.5 and for all other purposes, Mr Vanda Russell Gould, who retires at the close of this Annual General Meeting and, being eligible, and having consented to act, be re-elected as a Director of the Company.

• 3.2 Rule 5.1 of the Constitution and ASX Listing Rule 14.4 require that, at each annual general meeting, one-third of the Directors must retire from office. As required by Rule 5.2 of the Constitution and in accordance with the ASX Listing Rules, Mr Gould, the longest standing director in office has offered himself for re-election.

• 3.3 The Nominations Committee (excluding Mr Gould) of the Board has conducted an assessment of Mr Gould including a review of the skills, knowledge, experience and diversity represented on the Board. Having conducted those assessments, the Board recommends to Shareholders the re-election of Mr Gould.

• 3.4 The following is a profile of Mr Vanda Gould:

• Board position : Appointed Non-Executive Director on 21 November 2005 and elected by Shareholders to the Board of the Company on 8 May 2007. Chairman of the Company since March 2006 until his voluntary redesignation on 7 October 2016.

• Committees: Member of the Audit and Risk, Board Nominations and Remuneration Committees.

Experience: Mr Gould has broad business experience having practised as a chartered accountant for more than 30 years. Mr Gould is also a nonexecutive director of Vita Life Sciences Limited (listed on the ASX) and a director of several other private companies and educational establishments. Independence: The Board considers that Mr Gould is not an independent Director as he has notified the Company and the ASX that he has 11,931,314 shares representing a substantial shareholding of approximately 17.48% of the total shares on issue as at 31 March 2018.

3.5 Directors' Recommendation

The Board, other than Mr Gould (who abstains), recommends that Shareholders vote in favour of Resolution 2.

4. EXPLANATION OF RESOLUTION 3 – SHARE BUY BACK

• 4.1 Shareholders will be asked to consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That pursuant to and in accordance with section 257C(1) of the Corporations Act 2001 (C'wlth), as amended, and for all other purposes, the shareholders approve, with effect from when the Directors make the relevant announcement to the ASX, the on-market buy-back of up to 25% of the fully paid ordinary shares in the Company expiring on whichever is the earlier of the anniversary of the passage of this resolution or the 2019 Annual General Meeting and

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otherwise on the terms and conditions set out in the Explanatory Statement accompanying the 2018 Notice of Annual General Meeting.”

4.2 Background

The Board has completed a capital management review and believes that a buy-back of shares in combination with other strategies, is the most expedient, efficient and cost effective way for the Company to enhance long term shareholder value.

In particular, an on market-buy-back gives shareholders the choice whether to hold or sell their shares over the buy-back period, whereas under other alternatives (such as an equal capital reduction or an off-market equal access buy-back) shareholder may not be given such a choice.

If, in the next 12 months, the Company is in a financial position to do so, then it will consider implementing a buy-back on the terms and conditions set out in this resolution, accordingly shareholder 'pre-approval' is sought to implement and conduct the buy-back.

4.3 Regulatory Requirements

Section 257C(1) of the Corporations Act authorises a listed company to buy-back its own shares on market if the buy-back does not materially prejudice its ability to pay its creditors and it follows the procedures set out in the Corporations Act.

The implementation of the buy-back is conditional on the approval by a resolution passed at a general meeting of the Company. This resolution is an ordinary resolution and will be passed if a majority of votes cast, in person or by proxy, attorney or representative by Shareholders at the meeting is cast in favour of the resolution.

Shareholder approval is required if the Company proposes to buy-back more than 10% of the smallest number of shares on issue at any time during the last 12 months. This limit after which a company requires shareholder approval for an on-market buy-back is called the "10/12 limit".

As the Company is proposing to buy-back up to a maximum of 25% of its issued capital, shareholder approval is sought.

If approved, it is intended that the on-market buy-back will continue until the earlier of 12 months, the day that the maximum number of shares have been bought back, or at an earlier date as determined by the Directors.

The Constitution does not, at the relevant time, preclude the buy-back of Shares or restrict the Company's power to do so. The Company will stand in the market to buy-back not more than 25% of its ordinary share capital and this can be done on a continuous basis.

If this resolution is passed, the buy-back may be implemented by the Board at any time by making the announcement to the ASX required by the ASX Listing Rules. Nevertheless, the Board may choose not to proceed, or to proceed at a later date.

4.4 Number of shares subject to the buy-back

The maximum percentage of Shares to be bought back is 25%. Based on the number of ordinary shares on issue as at the date of this notice being 68,254,316 shares, the maximum number of Shares to be bought back would be 17,063,579.

The Company will offer to buy-back shares on-market through transactions on Australian Securities Exchange ( ASX ). It is not required to buy-back a specific number of shares or a minimum specified value of shares over any period. The Company will cancel all shares which are bought back.

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4.5 Price

The shares will be bought back at the quoted selling price of the Company's shares on the ASX. In accordance with ASX Listing Rule 7.33, the price payable by the Company to buyback shares cannot be more than 5% above the volume weighted average market price per share calculated over the last 5 days on which sales were recorded before the day of the buyback.

The volume weighted average market price means in relation to the Company's shares for a particular period, the volume weighted average price of trading in those shares on the ASX and the Chi-X Market over that period, excluding block trades, large portfolio trades, permitted trades during the pre-trading hours period, permitted trades during the post-trading hours period, out of hours trades and exchange traded option exercises.

Historical share price information is below:

**Information **	Price	Date
ClosePrice	$1.185	2 April 2018
High for 12 Months	$1.195	19March 2018
Low for 12 Months	$0.705	25 September 2017
30 dayVolumeWeightedAverage	$1.146	4 March 2018 to2 April 2018
60DayVolumeWeightedAverage	$1.012	2 February2018 to2 April 2018

4.6 Funding

The cost to the Company of the buy-back is dependent on the number and price of shares bought back.

By way of example, an on-market buyback offer at $1.185 per Share would require maximum funding of approximately $20,220,341 (assuming full acceptance of the buy-back offer 25%).

The financial effect of the proposed buy-back will be to deplete the Company's cash reserves and/or to increase its borrowings depending upon the appropriate funding mix utilised by the Directors at the time the offer proceeds. A copy of the latest audited accounts for the year ended 31 December 2017 is available on the Company’s website at www.cyclopharm.com.au and on www.asx.com.au.

Against this, the share capital of the Company will be reduced with a likely beneficial increase

of net tangible asset backing per share.

The offer will not proceed if the buy-back would materially prejudice the Company's ability to

pay its creditors.

The Company intends to utilise its cash reserves to pay for the Shares it buys-back when making the on-market offer and to supplement some with borrowings. The break-up between one and the other will depend on the circumstances of the Company at the time the offer is made and will be detailed in the relevant announcement to the ASX.

No decision has been made in relation to the proposed funding, as noted earlier, this approval is sought in anticipation of the Company being in a financial position to implement and fund the buy-back without materially prejudicing its ability to repay creditors.

4.7 Discussion and analysis

Advantages of Introducing a Share Buy-back

The key advantages of the buy-back being allowed to proceed are as follows:

1. increase the liquidity of the Shares;

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1. an efficient use of any surplus capital that becomes available to the Company in a market where finding suitable investments proves difficult;

2. the buy-back is structured as an on-market buy-back which gives shareholders the choice whether to hold or sell their shares over the buy-back period;

3. increasing price competition for the Shares; and

4. the promotion of a more efficient capital structure.

Disadvantages of Introducing a Share Buy-back

The key disadvantages of the buy-back being allowed to proceed are as follows:

1. it reduces the cash reserves of the Company. The use of those funds for the buy-back means that they will not be available for use in the Company's ordinary course of business;

2. it is structured as an on-market buy-back which means not all shareholders will participate; and

3. there is uncertainty about the funding strategy of the buy-back, this means the debt/equity mix has not yet been determined and the Company is unable to advise shareholders what the precise financial effect of the on-market buy-back will be.

4.8 Other considerations

Accepting the on-market Share buy-back may have financial, taxation, or other ramifications for Shareholders depending upon each such Shareholders’ personal circumstances and the Board recommends that before accepting any on-market offer, Shareholders should obtain their own professional advice.

The Company is satisfied that this notice of meeting and explanatory statement set out all the information known to the Company that is material to the decision how to vote on the resolution.

If approval of Resolution 4 is not given, the Company is still able to buy-back on market the maximum number of Shares permitted under the 10/12 limit without Shareholder approval.

The Chairman intends to vote all Undirected Proxies in favour of Resolution 3.

4.9 Directors' Intentions

At the date of this explanatory statement, no Director had determined whether he will accept a buy-back offer in respect of shares in which he has an interest. Any participation by Directors will be disclosed to the market.

4.10 Directors' Recommendation

The Board unanimously recommends that Shareholders vote in favour of Resolution 3.

5. EXPLANATION OF RESOLUTION 4 - APPROVAL LOAN SHARE PLAN

The Company's Board has adopted a new Loan Share Plan ( LSP ).

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The Board adopted the LSP to retain, motivate and attract employees and to better align the interests of employees with those of the Company and its shareholders by providing an opportunity for eligible participants to acquire shares subject to the terms and conditions of the LSP ( Plan Shares ).

The Plan Shares will be issued or transferred to the participants in the LSP at an issue price determined by the Board in its absolute discretion. The Company may provide a limited recourse loan to employees who are invited to participate in the LSP to assist them to purchase Plan Shares ( Loan ).

The Company is now seeking shareholder approval for the LSP.

5.1

Listing Rules

Listing Rule 7.1 generally restricts listed companies from issuing more than 15% of their issued capital in any 12 month period without shareholder approval. There are however, a number of exceptions to this restriction including Listing Rule 7.2 (Exception 9).

Listing Rule 7.2 (Exception 9) provides that Listing Rule 7.1 will not apply to an issue to a participant under an employee incentive scheme (e.g. the LSP), if within three years before the date of issue, holders of ordinary securities have approved the issue of securities under the scheme as an exception to this rule.

If this resolution is passed, the Company will be able to issue securities under the LSP to participants during the next 3 years without the need to seek further shareholder approval (subject to Chapter 10 of the ASX Listing Rules).

5.2 Corporations Act

(a) Section 259B – Taking security over company shares

Under the Corporations Act, subject to certain exceptions, a company must not take security over shares in itself. However, a company is permitted to take security over shares in itself under an employee share scheme that has been approved by shareholders under section 259B(2) of the Corporations Act.

Accordingly, if the LSP is approved by shareholders, the Company will be able to take security over shares in itself where those shares (or rights or interests in them) are acquired by participants under the LSP.

(b) Section 260C – Exempted financial assistance

The provision of loans by the Company to enable LSP participants to acquire shares in the Company is considered the provision of financial assistance by the Company for the acquisition of shares in the Company.

Unless an exemption applies, under section 260A of the Corporations Act a company may only financially assist a person to acquire shares in the company if:

• i. the giving of the assistance will not materially prejudice the interests of shareholders or the Company’s ability to pay its creditors; or

• ii. shareholder approval has been granted.

However, an exemption to section 260A of the Corporations Act applies to financial assistance given under an employee share scheme that has been approved by a resolution passed by shareholders.

Accordingly, the passing of this resolution will provide approval for the giving of financial assistance to the acquisition of shares under an employee share scheme pursuant to section 260C(4) of the Corporations Act.

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(c) Section 200E – retirement benefit

Section 200B of the Corporations Act requires shareholder approval by ordinary resolution, and in accordance with the provisions of section 200E of the Corporations Act, in order to access the exemption from the prohibition on a company giving a person a benefit in connection with that person's retirement from an office or employment in that company where that person is, or was in the three years prior to his or her retirement, in a managerial or executive office in that company.

The LSP allows the Board, in its discretion to, determine that some or all of the Plan Shares are deemed to have vested in the event a Participant's employment ceases ( Accelerated Vesting ).

In the circumstance of Accelerated Vesting, the value of the termination benefits that the Board may give under the LSP cannot be determined in advance, as many of the factors that will or are likely to affect that value will not be known until the benefit is decided to be given (if at all). The Board has not determined whether it will exercise discretion to grant any Accelerated Vesting or, in what circumstances, it will exercise its discretion.

Specifically, the value of an Accelerated Vesting will depend on a number of factors, including the Company's share price at the time of vesting of the Plan Shares and the number of Plan Shares that the Board determines to vest early (if any).

It is therefore proposed that this resolution will approve, under section 200E of the Corporations Act any 'termination benefit' that may be provided to a participant under the LSP (including where the Board exercises its discretion in relation to Accelerated Vesting).

5.3 Other information

The terms of the LSP to be adopted by shareholders under this resolution are summarised below. No securities have previously been issued under this LSP.

Eligibility	•A person is eligible to participate in the LSP if he or she is a Director, officer or employee of a group company (Eligible Person). •The Board may at any time make invitations to Eligible Persons to participate in the LSP specifying the total number of Plan Shares being offered or the manner for determining that number, the closing date for applications, the issue price, vesting conditions and any other specific terms and conditions of issue (Invitation).
Plan Shares	•Each Plan Share entitles the participant to one fully paid ordinary Share in the Company. •Unless otherwise specified in an Invitation, Plan Shares issued or transferred to a participant will rank equally with all existing shares from the date of issue or transfer. •Unless the Board resolves otherwise, the Company will apply for official quotation of Plan Shares issued.
Loan	•The Company may provide a limited recourse loan to a participant to allow them to fund the full consideration for the Plan Shares (Loan). The terms of the Loan will be set out in a separate loan agreement. •A participant's obligation to repay the Loan will be the lesser of the Loan balance or the market value of the relevant Plan Shares.

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	•Any after-tax value of cash distributions (including dividends) received in respect of Plan Shares must be applied to repayment of the Loan.
Vesting	The Plan Shares will vest on the satisfaction of any applicable performance condition, service requirement or other conditions specified in an Invitation.
Change of control	In the event of a change of control of the Company, the Board may in its absolute discretion, determine the manner in which any or all of the participant's unvested Plan Shares will be dealt with.
Disposal restrictions	•A participant must not dispose of a Plan Share until the Plan Share has vested, the loan balance relating to that Plan Share has been repaid or discharged or any other disposal restrictions set out in the Invitation have expired. •The Company may implement any procedure it deems appropriate to ensure the compliance by the participant with the disposal restrictions (i.e. may implement a holding lock in respect of the Plan Shares).
Compulsory divestment	•Plan Shares may be compulsorily divested in a number of circumstances, including non-satisfaction of vesting conditions, fraudulent or dishonest actions, insolvency, termination of employment, non-repayment of a Loan or any other circumstances expressly set out in an Invitation. •Where in the reasonable opinion of the Board, a Plan Share has vested in fraudulent or dishonest circumstances, the Board may take any action to ensure no unfair benefit is obtained by the participant as a result of those circumstances.
Capital events	• Bonus issues- If the Company undertakes a pro-rata bonus issue of shares to shareholders and shares are issued to a participant in respect of Plan Shares, those shares are deemed to be Plan Shares for the purposes of the LSP, and will be subject to the same vesting conditions as the Plan Shares to which they relate. • Rights issues– Participants may elect to take up their rights at their cost. Shares allotted to the Participant as a result of exercising such rights are not subject to the vesting conditions or the Plan Rules. • Other variations of capital- If there is a variation of capital, including a capitalisation, sub-division, consolidation or reduction in share capital. The Board may, subject to the Corporations Act and Listing Rules, make such adjustments as it considers appropriate to ensure that the consequences of application are fair as between the participants and other shareholders.
Administration	The LSP is administered by the Board. The Board may make regulations and determine procedures to administer and implement the LSP and may also terminate or suspend the operation of the LSP at its discretion.

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Amendment	•The Board may at any time amend any rules governing the operation of the LSP or waive or modify the application of the rules in relation to any participant. •However, the Board may not amend the rules in a way that would decrease a participant's rights in respect of Shares acquired by them, other than amendments required to comply or conform to legislation or Listing Rules, to correct any manifest error or mistake or to take into account any possible adverse tax implications.
Termination	The LSP may be terminated or suspended at any time by a resolution of the Board, provided the termination or suspension does not materially adversely affect the rights of persons holding shares or options issued under the plan at that time.
Other terms and conditions	The LSP contains other customary terms and conditions relating to the operation and administration of the LSP.

A copy of the LSP is available from the Company Secretary on request.

A voting exclusion applies to Resolution 4, please see the notes to Resolution 4 in the Notice of Meeting.

5.4 Directors' Recommendation

The Board recommends that Shareholders vote in favour of Resolution 4.

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6. GLOSSARY OF TERMS

In this explanatory statement, the following expressions have the following meanings:

Annual Report means the report to Shareholders containing, amongst other things, the financial statements, report of the Directors, the remuneration report and the report of the Auditors to which reference is made in this explanatory statement;

ASIC means the Australian Securities and Investments Commission;

ASX means ASX Ltd trading as Australian Securities Exchange;

ASX Listing Rules means the listing rules of ASX;

Auditors means Nexia Sydney Audit Pty Ltd, Chartered Accountants, the Company’s external auditors;

Board means the Directors of the Company from time to time;

Closely Related Party means the closely related parties of the Key Management Personnel as defined in the Corporations Act, including certain members of their family, dependents and companies they control;

Company means Cyclopharm Limited ACN 116 931 250 the registered office of which is located at Unit 4, 1 The Crescent, Kingsgrove, NSW 2208 Australia;

Constitution means the Constitution of the Company adopted by the Shareholders dated 31 October 2005 and the amendments approved at the annual general meeting convened on 26 May 2011;

Corporations Act means the Corporations Act 2001 (Cth), as amended;

Directed Proxy Form means a proxy form which specifies how a proxy is to vote;

Directors means the Directors of the Company from time to time sitting as the Board or individually as the case requires;

Key Management Personnel means the Directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly;

Meeting or Annual General Meeting means the annual general meeting of Shareholders convened by the Notice of Meeting;

Notice of Meeting means the notice of annual general meeting dated 27 April 2018 which accompanies this explanatory statement;

Remuneration Resolution means a resolution connected directly or indirectly with the remuneration of a member of the Key Management Personnel;

Resolution means an ordinary resolution referred to in the Notice of Meeting;

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

Shareholders means the holders of Shares in the Company as recorded in the register at 7.00 pm (Sydney time) on Friday, 25 May 2018;

Share Registry means NextRegistries of Level 16, 1 Market Street, Sydney, NSW, 2000; and

Undirected Proxy Form means a proxy form which does not specify how the proxy is to vote.

7. SHAREHOLDER ENQUIRIES

Shareholders with questions regarding this Notice of Meeting and Explanatory Statement should contact the Company Secretary, James McBrayer, on +61 2 9541 0411 during normal office hours. He will attempt to answer your questions or refer you to someone who can do so, but no person is authorised by the Company to give any information, or make any representation, in connection with the Notice or Explanatory Statement not contained in them.

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Cyclopharm Limited ABN 74 116 931 250

PROXY FORM

TO: The Company Secretary Cyclopharm Limited (Company) Unit 4, 1 The Crescent, Kingsgrove, NSW 2208 FAX: (+612 9543 0960)

Appointment of Proxy I/We, _____________[Name of member(s)]

of _____________[Address]

being a member(s) of the Company and entitled to attend and vote appoint as my/our proxy

____________ [Name of Proxy]

of ___________[Address of Proxy]

or, failing the individual or body corporate named, or if left blank, the Chairman of the Annual General Meeting of the Company to be held on Tuesday, 29 May 2018 at 11.30 am (Sydney time) at the Boardroom of Cyclopharm Limited, Unit 4, 1 The Crescent, Kingsgrove, NSW 2208, Australia to act generally at the meeting on my/our behalf and to vote for me/us at that meeting and at any adjournment of it.

Appointing a Second Proxy - If you wish to appoint two proxies, see overleaf, item 4.

Voting directions to your proxy – please mark  to indicate your directions

Chairman's voting intentions

By appointing the Chairman of the Meeting as your proxy, you expressly authorise the Chairman to vote in favour of Resolutions 1 and 4 (except where you have indicated a different voting intention below), even though the Resolutions are connected directly or indirectly with the remuneration of Key Management Personnel.

The Chairman of the Meeting intends to vote all available undirected proxies in favour of each resolution.

If you appoint the Chairman as your proxy and you do not wish the Chairman to vote in favour of Resolution 1 and/or Resolution 4, or any other Resolution, you may direct the Chairman to vote against that Resolution or abstain from voting on that Resolution by marking the appropriate box opposite that item below.

**No. **	Resolutions	**For **	Against	**Abstain ***
1	Adoption of the Remuneration Report			
2	Re-election of Non-Executive Director (Mr V R Gould)			
3	Approval for Share Buy-back			
4	Approval of Loan Share Plan			

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Authorised signature/s

This section must be signed in accordance with the instructions below to enable your directions to be implemented.

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

How to complete this Proxy Form

1 Your Name and Address

The Annual Report and Notice of Meeting documents have been sent to your name and address as it appears on the share register of Cyclopharm Limited. If this information is incorrect, please advise the Company of your new details. Shareholders sponsored by a broker should advise their broker of any changes . Please note you cannot change ownership of your Shares using this form.

2 Appointment of a Proxy

If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy and vote on your behalf. A proxy need not be a Shareholder of Cyclopharm Limited.

3 Votes on items of Business

You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given resolution, your proxy will vote as they choose. If you mark more than one box on a resolution your vote on that resolution will be invalid.

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4 Appointment of a Second Proxy

If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Company on (+612 9541 0411) or you may copy this form.

To appoint a second proxy you must:

• (a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If two Proxy Forms are received but no percentage or number of votes is indicated, each proxy may exercise half your votes. Fractions of votes will be disregarded; and

• (b) return both forms together in the facsimile transmission or in the same envelope.

5 Authorised Signature(s)

You must sign this form as follows in the spaces provided:

Joint Holding : where the holding is in more than one name all of the holders must sign.

Power of Attorney : to sign under a power of attorney, you must have already lodged the power of attorney with the share registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the power of attorney to this form when you return it.

Companies : a Director can sign jointly with another Director or a Company Secretary. A sole Director who is also a sole Company Secretary (or where there is no Company Secretary) can also sign. Please indicate the office held by signing in the appropriate space.

If a representative of corporate shareholder or proxy is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission. A form of the certificate may be obtained from the Company or share registry.

6 Lodgement of Proxy

To be valid the form appointing the proxy and the power of attorney or other authority (if any) under which it is signed (or an attested copy of it) must be lodged with the Company:

• (a) at the registered office at Unit 4, 1 The Crescent, Kingsgrove, NSW 2208, Australia; or (b) by faxing it to fax number (+612) 9543 0960,

not later than 11.30am (Sydney time) on Sunday, 27 May 2018 , being 48 hours before the holding of the Meeting.

Documents may be lodged by posting, delivery or Unit 4, 1 The Crescent, Kingsgrove, NSW 2208, facsimile to Cyclopharm Limited at the address Australia opposite: Facsimile: (+612) 9543 0960

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