DATADOT TECHNOLOGY LIMITED — Board/Management Information 2009

Jun 11, 2009

DataDot Technology Limited (Company) ACN 091 908 726

Explanatory Memorandum

This Explanatory Memorandum relates to the General Meeting of the members of the Company to be held at Unit 9, 19 Rodborough Rd Frenchs Forest NSW 2086 at 10.00 am on 20 [th] July 2009.

Removal of Directors

1 Request by Member

Pursuant to section 249D(1)(a) of the Corporations Act 2001the directors of the Company have called and arranged to hold this general meeting on the request of Bannaby Investments Pty Ltd ACN 074 776 793, a member with at least 5% of the votes that may be cast at a general meeting, given on 21 May 2009.

2 Resolution for Removal of Director

Under section 203D of the Corporations Act 2001 a public company may by resolution remove a director from office despite anything in the company’s constitution, an agreement between the company and the director, or an agreement between any or all members of the company and the director.

Section 203D of the Companies Act 2001 further provides that if the director was appointed to represent the interests of particular shareholders or debenture holders, the resolution to remove the director does not take effect until a replacement to represent their interests has been appointed.

Neither Michael David George nor Connie Lo Lin Sye was appointed as a director to represent the interests of particular shareholders or debenture holders.

3 Director’s Right to Put Case to Members

Under section 203D(4) of the Corporations Act 2001, each of Michael David George and Connie Lo Lin Sye are entitled to put their case to members by giving the Company a written statement for circulation to members and speaking to the motion to remove at the meeting.

Attached to this Explanatory Memorandum are written statements from Michael David George and Connie Lo Lin Sye.

4. Voting Intention of Chairman

The Chairman considers that the resolutions that are the subject of this meeting arise as a matter among shareholders. Consequently the Chairman intends to exercise any open proxies directed to him by abstaining from voting.

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Response to s249D Notice – Connie Lo Lin Sye

You are asked to consider and vote on two resolutions to remove myself, and my fellow director Mr Michael George as directors of DDT.

I would like you to understand the circumstances around which I believe Mr Keith Kerridge of Bannaby Investments is now asking for our removal as directors.

I joined the board of DDT as an executive director in February 2008. One of my roles was to liaise with potential institutional investors and assist with capital raisings.

In late 2008, given DDT's cash level and ongoing cashflow needs, the board had identified that the company would need to have a capital raising exercise over the upcoming months in order to meets its capital needs going forward and started to explore ways of doing this.

In January 2009, the Chairman commenced discussions with KTM Capital, whose principal directors are Messrs Keith Kerridge and Todd McGrouther, with a view to engaging them to raise capital via a 15% placement of new shares to be followed by a rights issue underwritten by KTM Capital. A deal was eventually inked on 23 March 2009 with the placement and rights shares priced at $0.01 per share. This was substantially lower than the $0.025 price that had previously been discussed. The Chairman reported that he did not like the proposed pricing of the share offer at $0.01 per share but had been unable to raise the price in discussions with KTM. Directors agreed with this but decided to proceed as there was no alternative offer available.

As KTM had previously expressed to our acting CEO, Mr Ben Bootle, a lack of confidence in being able to fully place to their customers the placement shares as well as underwritten shares, and in order to facilitate the deal being done so as to enable DDT to raise the cash that it needs going forward, I had offered to the board as well as KTM to find investors for such shares that KTM would not be able to place. I spoke to potential investors in Singapore and overseas and obtained positive responses from them.

Prior to the placement agreement being signed with KTM on 23 March 2009, KTM was informed that I had contacted a number of investors in Singapore and that these parties had given a firm commitment to take a substantial part of the placement. This would have created a wider spread of shareholders in DDT.

Numerous attempts were made to contact Mr McGrouther by Mr George and I to discuss placing some of the new shares to Singaporean investors. Despite telling both Mr George and myself that he would call me, he never did.

It was only when substantial shareholders notices were lodged on 26 March that I learned that the placement had been fully taken up, and solely by entities controlled by Messrs Kerridge and McGrouther.

Board authority is required to allot and issue shares in any placement. Shares were allotted and issued to entities controlled by Messrs Kerridge and McGrouther on 24 March without the knowledge of all board members whilst cleared funds for the placement shares were received by the company on 26 March. A resolution was passed by the board on 3 April to validate the share placement and resolve that the share issue was consistent with previous authority given by the board. This resolution was carried with the use of the Chairman’s casting vote. Mr George and I had voted against the resolution as we did not accept that the resolution adopted on 23 March validly authorized the share placement and as we both felt

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the share placement had not been conducted properly. I believe that this EGM to remove the both of us as directors is the result of that position that we took.

During board meetings before the rights issue was finalized on 20 April, directors had previously discussed the issue of allocating shortfall shares.

At the board meeting on 20 April to discuss the final details of the rights issue, we were informed by our lawyers that the underwriting agreement that was signed with KTM Capital did not provide for the subscription of any shortfall shares by existing shareholders. This came as a shock to me as this was not previously disclosed to me. Mr George differed as to the interpretation of the underwriting agreement.

The Chairman then placed a call to Mr Kerridge to ascertain KTM’s position regarding a shortfall offer. The board was subsequently informed by the Chairman that Mr Kerridge had said that under no circumstances would KTM Capital agree to a change to the agreement, that it is entitled to deal with the whole of any shortfall but, in doing so, it will talk to interested parties about it.

The board was faced with a decision as to whether or not it should proceed with the rights issue under these conditions. The board subsequently decided to proceed on this basis for fear that any failure to do so may result in a lawsuit by KTM Capital.

The potential investors that I had previously found were still available and willing at the time of rights issue and would have absorbed some of the shortfall. KTM was advised of this. In this instance I was not even asked by DDT or KTM to assist in finding investors willing to take-up some of the shortfall.

Following the close of the rights issue, all shortfall shares were subsequently fully taken up once again by entities controlled by Messrs Kerridge and McGrouther.

With the benefit of hindsight now, I believe that the intention of KTM from the beginning was to enable Messrs Kerridge and McGrouther to gain a substantial stake in our company at a price substantially lower than the prevailing market price.

Whether the circumstances referred to above in relation to the sub-underwriters and the rights issue give rise to unacceptable circumstances is now being considered by the Takeovers Panel.

In exercising your right as a valued shareholder to vote on the resolutions to remove both Mr George and myself as directors as put forth by Mr Kerridge, I ask that you consider the circumstances as well as the actions of Messrs Kerridge and McGrouther in relation to placement and the rights issue and vote against the resolutions.

Thank you

Connie Lo

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Response to s249D notice – Michael David George

The party requesting the extraordinary general meeting and resolutions to be passed at it, Bannaby Investments Pty Limited (Bannaby), is one of the two beneficiaries of the extraordinary behaviour engaged in by KTM Capital Pty Limited (KTM), the underwriter of both the share placement and rights issue recently conducted by DDT.

I was elected as a director at the last AGM. Since that time the board has tried to put in place effective management for DDT and put the company on a better financial footing. The board’s object has been to achieve a period of stability and hopefully growth.

I was, as were all the other directors, fully cognizant that DDT required further capital. In order to do this a number of routes were explored. Finally the board were advised by Mr Farrar and Mr Bootle (the acting CEO) that the only viable offer of finance available to DDT was that proposed by KTM consisting of:

1. a 15% placement at 1 cent per share;

2. a fully underwritten 1 for 1 rights issue at 1 cent per share.

While this proposal was less than optimal and could be viewed as opportunistic the board accepted the position that it was the only option. At all times during this process I and the other directors wished to ensure that existing shareholders be allowed to participate in the placement and the rights issue to the fullest extent. To this end:

1. Mr Farrar advised Mr McGrouther, a principal of KTM, that certain shareholders in both Singapore and Australia had expressed a desire to take substantial amounts of the shares to be placed in accordance with their proportionate shareholdings in DDT.

2. I advised Mr McGrouther that Ms Lo had, as part of her contractual arrangements with DDT, found potential new shareholders willing to take at least 10 million shares on offer under the placement.

3. Mr McGrouther agreed that he would contact Ms Lo and other shareholders in relation to this potential take-up. As far as I am aware McGrouther, despite assurances that he would do so, never contacted Ms Lo or any other shareholder other than Bannaby Investments.

4. I believe KTM had no intention of contacting any existing shareholders or potential investors to participate in the share placement.

5. On 24 March 2009 DDT Chairman Mr Farrar executed a mandate authorising KTM to conduct a share placement. Within two hours cheques and applications for the entirety of the share placement were received by DDT.

6. The principals of KTM, Mr Kerridge and Mr McGrouther, did not reply to numerous phone calls and emails from myself until after the registry issued share holding statements to TM Consulting Pty Limited (TM Consulting) and Bannaby. As recorded in the minutes of the board meeting of 3 April Ms Lo and Myself questioned whether there had been a valid issue of shares to TM Consulting and Bannaby. The board discussed the differing legal advice on this point and the share issue was subsequently ratified by the board over the objections of myself and Ms Lo.

7. Any objections to KTM were met by correspondence from KTM’s solicitors contaning denials and threats of legal action.

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1. Having entered into an underwriting agreement with KTM, DDT was required to carry out a rights issue with KTM as underwriters.

2. Both I and Ms Lo pushed for the rights issue to contain a shortfall facility to allow shareholders to subscribe for shares in excess of their entitlement. KTM refused to agree to any shortfall facility and impliedly threatened legal action against DDT for breach of contract. Reluctantly the board approved a rights issue without a shortfall facility.

3. Based on KTM’s statements it was my expectation that KTM would endeavour to place the shortfall with new shareholders or with existing shareholders who were excluded from participating in the rights issue, some of whom had expressed interest in doing so. In the event none of this happened. KTM appropriated the entire shortfall to Bannaby and TM Consulting, companies controlled by Messrs Kerridge and McGrouther, the principals of KTM.

4. During the course of finalising the rights issue offer KTM had been requested to acknowledge whether if it has as underwriter wound up with a substantial shareholding and whether it would seek to influence the composition of the board. KTM advised that it did not intend to do so.

5. Now Bannaby, a company controlled solely by Mr Kerridge has taken this action.

6. I invite shareholders to question whether they wish to support the actions of a substantial shareholder who, together with TM Consulting, have obtained their shareholding in DDT in the manner I have described. Are these the people that shareholders wish to align themselves with?

7. At least one shareholder seems to agree with me if the action now before the Takeovers Panel is an indication.

8. Bannaby proposes no alternative to me and Ms Lo. In my view the whole purpose of this exercise seems to be as a result of Ms Lo and myself having the temerity to try to have KTM and Messrs Kerridge and McGrouther account for their actions. I ask you to vote against the resolutions.

Thank you

Michael George