DIGITALX LIMITED — AGM Information 2009

Oct 22, 2009

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ACN 009 575 035

NOTICE OF ANNUAL GENERAL MEETING

AND

EXPLANATORY MEMORANDUM TO SHAREHOLDERS

A PROXY FORM IS ENCLOSED

Date of Meeting Tuesday, 24 November 2009

Time of Meeting 11am (WST)

Place of Meeting Ground Floor 30 Ledgar Road BALCATTA, WESTERN AUSTRALIA

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the shareholders of Verus Investments Limited ACN 009 575 035 (" Company ") will be held at Ground Floor, 30 Ledgar Road, Balcatta, Western Australia on 24 November 2009 at 11am (WST) for the purpose of transacting the following business.

The enclosed Explanatory Memorandum accompanies and forms part of this Notice of Meeting.

AGENDA

ORDINARY BUSINESS

1. 2009 FINANCIAL REPORT

To receive and consider the financial report of the Company for the year ended 30th June 2009, together with the reports by the directors and auditors thereon.

To consider and, if thought fit, pass the following resolutions as ordinary resolutions:

2. RESOLUTION 1 - ADOPTION OF REMUNERATION REPORT

"That the Remuneration Report in the 2009 Annual Report of the Company be adopted."

3. RESOLUTION 2 – RE-ELECTION OF DIRECTOR

“That Mr David Calcei who retires by rotation and, being eligible, offers himself for re-election, be elected as a director.”

4. RESOLUTION 3 – RATIFICATION OF PRIOR SHARE ISSUE

“That, in accordance with ASX Listing Rule 7.4, this meeting ratifies the issue of 71,500,000 ordinary fully paid shares on 28 September 2009 on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by any person who participated in the September 2009 share issue, or any associate of such a person. However, the Company will not disregard a vote if:

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

b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

5. RESOLUTION 4 – APPROVAL FOR THE ISSUE OF OPTIONS AS FEE FOR CORPORATE SERVICES

“That, for the purposes of ASX Listing Rules 7.1 and all other purposes, the directors be authorised to issue up to 75,000,000 options to subscribe for shares in the Company to Cicero Corporate Services Pty Ltd, the details of which are set out in the Explanatory Memorandum forming part of the Notice of this Meeting.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by any person who participates and who might obtain a benefit from the proposed issue of securities or any associate of that person, in respect of Resolution 4. However, the Company will not disregard a vote if: a) it is cast by the person as a proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

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6. RESOLUTION 5 – APPROVAL FOR THE ISSUE OF OPTIONS TO DIRECTOR, MR A McILWAIN

“That, for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act 2001 and all other purposes, the directors be authorised to issue up to a maximum of 3,000,000 Options to subscribe for shares in the Company to Mr A McIlwain or his nominee, the details of which are set out in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by Mr A McIlwain, his nominee or his associates. However, the Company will not disregard a vote if:

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

• b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

7. RESOLUTION 6 – APPROVAL FOR THE ISSUE OF OPTIONS TO DIRECTOR, MR M MONTGOMERY

“That, for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act 2001 and all other purposes, the directors be authorised to issue up to a maximum of 3,000,000 Options to subscribe for shares in the Company to Mr M Montgomery or his nominee, the details of which are set out in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by Mr M Montgomery, his nominee or his associates. However, the Company will not disregard a vote if:

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

• b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

8. RESOLUTION 7 – APPROVAL FOR THE ISSUE OF OPTIONS TO DIRECTOR, MR G LEE

“That, for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act 2001 and all other purposes, the directors be authorised to issue up to a maximum of 3,000,000 Options to subscribe for shares in the Company to Mr G Lee or his nominee, the details of which are set out in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by Mr G Lee, his nominee or his associates. However, the Company will not disregard a vote if:

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

• b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

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9. RESOLUTION 8 – APPROVAL FOR THE ISSUE OF OPTIONS TO DIRECTOR, MR D CALCEI

“That, for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act 2001 and all other purposes, the directors be authorised to issue up to a maximum of 3,000,000 Options to subscribe for shares in the Company to Mr D Calcei or his nominee, the details of which are set out in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by Mr D Calcei, his nominee or his associates. However, the Company will not disregard a vote if:

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

• b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

10. RESOLUTION 9 - EMPLOYEE OPTION PLAN

“That in accordance with ASX Listing rule 7.2 (Exception 9) and for all other purposes approval is given to the establishment and implementation of the Verus Investments Limited Employee Option Plan (“Plan”) in the form of the document tabled at the meeting by the Chairperson and marked ‘Appendix C’ for the purposes of identification, and approval is given for the issue of options under the Plan as an exception to ASX Listing Rule 7.1.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by any director of the Company (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) or any associate of such a person. However, the Company will not disregard a vote if:

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

• b) it is cast by the person chairing the Annual General Meeting as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form to vote as the proxy decides.

GENERAL BUSINESS

11. GENERAL BUSINESS

To transact any other business which may lawfully be brought forward.

As ordinary resolutions, Resolutions 1 to 9 must be passed by more than 50 per cent of the votes cast by members entitled to vote on the resolutions.

By order of the Board

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Mr Paul Jurman Company Secretary Dated: 13 October 2009

PROXIES - A shareholder entitled to attend and vote at the above meeting may appoint not more than two proxies to attend and vote at this meeting. Where more than one proxy is appointed, each proxy may be appointed to represent a specified proportion of the shareholder's voting rights. If two proxies are appointed and the appointment does not specify the proportion or number of votes that the proxy may exercise, each proxy may exercise half the votes. A proxy may, but need not be, a shareholder of the Company. Proxy forms must reach the Company at least 48 hours prior to the meeting. For the convenience of shareholders, a proxy form is attached.

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VERUS INVESTMENTS LTD ACN 009 575 035

EXPLANATORY MEMORANDUM

This Explanatory Memorandum is intended to provide shareholders with sufficient information to assess the merits of the resolutions contained in the accompanying Notice of Annual General Meeting.

The Directors recommend that shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

1. 2009 ANNUAL REPORT

In accordance with the requirements of the Company’s Constitution and the Corporations Act, the 2009 Annual Report will be tabled at the Annual General Meeting. Shareholders will have the opportunity of discussing the Annual Report and making comments and raising queries in relation to the Report. Representatives from the Company’s auditors, Deloitte Touche Tohmatsu, will be present to take shareholders’ questions and comments about the conduct of the audit and the preparation and content of the audit report.

As you may be aware, changes to legislation mean that companies are no longer required to mail out a hard copy of their Annual Report to shareholders. If you haven’t already made an election, you can obtain a hard copy by contacting the Company. Alternatively, it is available on the Company’s website www.verus.com.au for you to download or read online.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

The Remuneration Report is in the Director’s Report section of the Company's Annual Report. By way of summary, the Remuneration Report:

• a) explains the Company's remuneration policy and the process for determining the remuneration of its directors and executive officers;

• b) addresses the relationship between the Company's remuneration policy and the Company's performance; and

• c) sets out remuneration details for each Director and each of the Company's executives and group executives named in the Remuneration Report for the financial year ended 30 June 2009.

Section 250R(2) of the Corporations Act requires companies to put a resolution to their members that the Remuneration Report be adopted. The vote on this resolution is advisory only, however, and does not bind the Board or the Company. The Chairman will give Shareholders a reasonable opportunity at the AGM to ask questions about or to make comments on the Remuneration Report.

The Directors recommend that Shareholders vote in favour of Resolution 1.

3. RESOLUTION 2 – RE-ELECTION OF DIRECTOR

Resolution 2 relates to the election of a director. In accordance with the Company’s Constitution, Mr Calcei retires by rotation and offers himself for re-election at the Annual General Meeting.

A summary of Mr Calcei’s qualifications and experience is provided below:

Mr. David Calcei CA Non-Executive Director Appointed 18 June 2007

Mr Calcei is a Chartered Accountant with over 10 years experience. He is a director of Icon Financial Management, an accounting and tax practice providing taxation, corporate and consultancy services to small to medium sized entities and public companies, principally in the resource sector.

The Directors (excluding Mr Calcei) recommend that Shareholders vote in favour of Resolution 2.

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4. RESOLUTION 3 – RATIFICATION OF PRIOR SHARE ISSUE

General

On 15 September 2009 the Company announced the offer of 71,500,000 shares to raise new capital and, on 28 September 2009, the issue of those shares was completed.

Resolution 3 seeks ratification by shareholders pursuant to ASX Listing Rule 7.4 of this share issue.

Under ASX Listing Rule 7.1, a company may only issue a limited number of equity securities in any 12 month period. By issuing 71,500,000 shares the Company used part of its 15% placement capacity.

The Company wishes to restore its 15% placement capacity and accordingly under ASX Listing Rule 7.4, seeks subsequent shareholder approval for that prior share issue.

Specific Information required by ASX Listing Rule 7.5

For the purposes of ASX Listing Rule 7.5 information is provided as follows:

• i. 71,500,000 shares were issued on 28 September 2009.

• ii. The issue price of the shares was $0.008 each.

• iii. The shares issued are fully paid ordinary shares in the Company.

• iv. 71,500,000 shares were issued to professional and sophisticated investor clients of Alto Capital and who are not related parties of the Company.

• v. $572,000 was raised from the share issue (prior to costs of the issue) to finance the development costs associated with the Fausse Point opportunity in Louisiana.

A voting exclusion statement is included in the Notice.

5. RESOLUTION 4 – APPROVAL FOR THE ISSUE OF OPTIONS AS FEE FOR CORPORATE SERVICES

The Directors have resolved to seek shareholder approval for the issue of up to 75 million options. The information required under ASX listing rule 7.3 is as follows:

• i. The maximum number of options that are proposed to be issued is 75,000,000. Each option entitles the holder to subscribe for and be allotted one ordinary share in the capital of the Company at a price of 10 cents per share on or before 5.00 pm Eastern Standard Time on 30 June 2010. The options are quoted on ASX as VILO. Full terms and conditions of the options are stated in Appendix A.

• ii. The securities referred to in (a) above will be issued no later than 3 months after the date of this General Meeting, and it is intended that the allotment will occur on the same day.

• iii. The options will be issued to Cicero Corporate Services Pty Ltd (Cicero) to assist with the conduct of Investor Relations promotional activity and to help raise the Company’s profile amongst investors. Cicero has established contacts throughout Australia and Europe.

The issue of options is a fee for these services and assists in conserving cash assets, which would otherwise have to be used for payment. No funds will be raised from the issue of these options, except in the event that some or all of them are exercised in the future.

The granting of approval for this proposed issue of options by shareholders excludes the issue of options from the calculation of the 15% limit on the further issue of securities by the Company for the next 12 months.

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6. RESOLUTIONS 5, 6, 7 AND 8 – ISSUE OF OPTIONS TO DIRECTORS

On 6 February 2009 the Directors announced their intention to seek shareholder approval for the issue of options to directors. Due to the prevailing economic conditions at the time, the Directors reduced their Directors’ fees from 1 January, 2009 by 30%. The exercise price of the options at the time was at a 300% premium to the 30 day weighted average trading price. Messrs McIlwain, Montgomery, Lee and Calcei are current directors of the Company to whom it is proposed to issue options over shares in the Company.

It is proposed to issue the following options to each of the Directors:

	Number of options
Andrew McIlwain	3,000,000
Michael Montgomery	3,000,000
GregLee	3,000,000
David Calcei	3,000,000

The options to be issued to directors will expire on 1 March 2012 with an exercise price of 1.5 cents each. Detailed terms and conditions of the Options are provided in Appendix B.

The purpose of the issue of options is to provide Messrs McIlwain, Montgomery, Lee and Calcei an incentive for future services and as a reward for past services. The issue of options as part of the remuneration packages of directors is an established practice of junior public listed companies and, in the case of the Company, has the benefit of conserving cash whilst properly rewarding each of the directors. Whilst the directors to whom the options are to be issued do not make a recommendation as they each have a personal interest in the proposed issue, they believe that the quantum of options together with the cash fees that they are entitled to is reasonable in the context of the size and complexity of the Company’s activities and also by comparison to other similar-sized junior public listed companies.

The ASX Listing Rules and the Corporations Act 2001 (in certain circumstances) require shareholder approval to be obtained for the issue of options to directors. Accordingly, approval for the issue of the Directors’ Options is sought in accordance with the provisions of Listing Rules 7.1 and 10.11 of the ASX Listing Rules (“Listing Rules”) and Part 2E of the Corporations Act 2001. If approval for the issue of the Directors’ Options is obtained under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

• (A) The proposed Resolutions 5, 6, 7 and 8, if passed, will issue securities to and confer financial benefits upon Messrs McIlwain, Montgomery, Lee and Calcei who are directors of the Company and the Company seeks to obtain member approval in accordance with the requirements of Chapter 2E of the Corporations Act and ASX Listing Rule 10.11. Accordingly, information required under the Listing Rules and the Corporations Act as well as information that will properly enable shareholders to consider Resolutions 5, 6, 7 and 8 is presented below.

Subject to shareholder approval, the options referred to in resolutions 5 to 8 will be issued free of charge and within one month after the date of this meeting.

(B) Potential Benefits – Issue of Options

If the Directors’ Options are issued pursuant to the proposed resolutions 5, 6, 7 and 8, the Company considers the following benefits arise:

• (i) Messrs McIlwain, Montgomery, Lee and Calcei will have a vested interest in the affairs of the Company, as the holders of Options and as shareholders upon exercise of the Options, particularly as the Options are not transferable.

• (ii) The issue of Directors’ Options to Messrs McIlwain, Montgomery, Lee and Calcei is a non-cash form of remuneration, thus conserving the Company’s cash reserves. The issue enables the Company to provide its directors with reward for services provided and an incentive for future services they will provide to the Company.

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• (iii) The exercise of the Options will provide working capital for the Company at no significant cost. If all of the Directors’ Options proposed to be issued to Messrs McIlwain, Montgomery, Lee and Calcei are ultimately exercised, an amount of $180,000 would be raised.

(C) Potential Costs – Issue of Directors’ Options

The Directors’ Options are to be granted for nil consideration and thus no funds will be raised by the Company in granting those options.

The potential cost to the Company of the issue of an aggregate of 12,000,000 Options to Messrs McIlwain, Montgomery, Lee and Calcei is that there will be a dilution of the issued share capital of the Company if the Directors’ Options are exercised.

Based on 550,088,316 fully diluted shares, (not taking into account 164,196,107 existing listed options exercisable at 10 cents each on or before 30 June 2010), the exercise of the proposed directors’ options (12 million) would have a dilution effect of approximately 2.1% (with a corresponding increase in cash reserves of $180,000). As the Company presently has 1,000,000 options on issue, exercisable at 1.5 cents each, it is appropriate to measure the dilution caused by the proposed issue of options to directors by reference to fully diluted shares rather than just ordinary shares presently on issue.

The price of the Company’s shares quoted on the ASX over the past 12 months has ranged from a low of 0.1 cents on 13 March 2009 to a high of 2.2 cents 10 October 2008, with a closing price of 1.6 cents on 13 October 2009, the date on which this Explanatory Memorandum was prepared.

Accounting standard, AASB 2 “Share Based Payments” requires that these payments shall be measured at the more readily determinable fair value of the equity instrument. Under the new accounting standards this amount will be expensed in the Income Statement – ie the value attributed to the Directors’ Options (See Section D below) will be expensed in the profit and loss account of the Company. Where the grant date and the vesting date are different the total expenditure calculated will be allocated between the two dates taking into account the terms and conditions attached to the instruments and the counterparties as well as management’s assumptions about probabilities of payments and compliance with and attainment of the set out terms and conditions.

(D) Valuation of Options

The Company does not have any ASX quoted options with identical or similar terms and conditions as these proposed Directors’ Options and as such there is no comparable market value. Each Option grants the holder a right to be allotted one Share upon exercise of the Option and payment of the exercise price of the Option. Accordingly, the Directors’ Options arguably have a value at the date of their grant. The Directors’ Options may acquire future value dependent upon the extent to which the market value of Shares exceeds the exercise price of the Options during the term of the Options.

As a general proposition, options to subscribe for ordinary fully paid shares in a company have value. Various factors impact upon the value of options including things such as:

• (i) the period outstanding before the expiry date of the options;

• (ii) the exercise price of the options relative to the underlying price or value of the securities into which they may be converted;

• (iii) the proportion of the issued capital as expanded consequent upon exercise represented by the shares issued upon exercise (ie whether or not the shares that might be acquired upon exercise of the options represent a controlling or other significant interest);

• (iv) the value of the shares into which the options may be converted; and

(v) whether or not the options are listed (ie readily capable of being liquidated); and so on.

There are various formulae which can be applied to determining the theoretical value of options (including the formula known as the Black-Scholes Model option valuation formula).

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The Company has estimated the value of the Options using the Black-Scholes Model, which is the most widely used and recognised model for pricing options. The value of an option calculated by the BlackScholes Model is a function of the relationship between a number of variables, being the share price, the exercise price, the time to expiry, the risk-free interest rate and the volatility of the Company’s underlying share price.

Inherent in the application of the Black-Scholes Model are a number of inputs, some of which must be assumed. The data relied upon in applying the Black-Scholes Model in the present case were as follows:

• (i) an exercise price of the Option of 1.5 cents;

• (ii) length of period prior to conversion being 2 years and 3 months (December 2009 to February 2012). For the purposes of the analysis it was assumed that the Options would not be exercised any earlier than the expiration date, being 1 March 2012;

• (iii) the Company has not forecast any future dividend payments. For the purposes of the analysis, it was assumed that the Company’s share price is “ex-dividend”;

• (iv) the risk free rate used for the purposes of the analysis is the Reserve Bank of Australia cash rate as at 13 October 2009 being 3.25%;

• (v) a volatility measure of 285%; and

• (vi) the valuation of the Company’s share price being 1.6 cents, being the value of the Company’s share price as at 13 October 2009.

Using the Black-Scholes Model and the assumed data outlined above, the directors have valued the Options as at 6 October 2009 at 1.56 cents each.

Using this analysis (1.56 cents), the total value of the proposed Options to be granted to each of Messrs McIlwain, Montgomery, Lee and Calcei attributed to each Option is as follows:

Mr McIlwain Mr Montgomery Mr G Lee Mr Calcei TOTAL	Number of options Total Value of Options 3,000,000 $46,547 3,000,000 $46,547 3,000,000 $46,547 3,000,000 $46,547
	12,000,000 $186,188

(E) Identifying the Related Parties

The related parties to whom Resolutions 5, 6, 7 and 8 would permit financial benefits to be given are the directors of the Company, or their nominees, being Messrs McIlwain (in respect of Resolution 5), Montgomery (in respect of Resolution 6), Lee (in respect of Resolution 7), and Calcei (in respect of Resolution 8).

(F) Financial Benefit

The nature of the financial benefit is:

• (i) in respect of Resolution 5, the grant of 3,000,000 Options to Mr McIlwain for no consideration;

• (ii) in respect of Resolution 6, the grant of 3,000,000 Options to Mr Montgomery for no consideration;

• (iii) in respect of Resolution 7, the grant of 3,000,000 Options to Mr Lee for no consideration; and

• (iv) in respect of Resolution 8, the grant of 3,000,000 Options to Mr Calcei for no consideration.

(G) Related Parties' Existing Interest

Excluding the Directors’ Options the subject of resolutions 5, 6, 7 and 8, the current interests of Messrs McIlwain, Montgomery, Lee and Calcei (and entities associated with them) in the Company’s securities are as follows:

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Director Mr McIlwain Mr Montgomery Mr G Lee Mr Calcei TOTAL	Shares Options 550,709 - 200,000 - 2,000,000 666,667 1,000,000 -
	3,750,709 666,667

No Options have previously been issued to existing directors as part of their remuneration packages.

(H) Directors' Emoluments

Other than the Options, the directors' current remuneration is as follows:

Director	Position	Annual Remuneration
Mr McIlwain	Non - Executive Chairman	$38,150
Mr Montgomery	Non - Executive Director	$24,500
Mr G Lee	Non - Executive Director	$24,500
Mr Calcei	Non - Executive Director	$24,500

In February 2009, the Company announced that in light of the continuing deterioration in market conditions at the time, the Directors completed a comprehensive review of activities and investments with the objective of conserving current cash reserves and maximizing the potential investment returns. It was resolved that all Director fees would be reduced by 30% effective from 1 January 2009.

Mr McIlwain and Mr Lee have in place consultancy agreements for the provision of services outside the scope of duties as a director. Remuneration by way of consulting fees is calculated on the basis of a daily rate. The term of the consultancy agreement is not fixed, and has an allowance for either party to terminate the agreed arrangements by the giving of 30 days notice.

(I) Directors' Recommendation

Messrs McIlwain, Montgomery, Lee and Calcei express no opinion and make no recommendation in respect of the resolutions that apply to them respectively. Otherwise, each of the directors recommend that shareholders approve resolutions 5, 6, 7 and 8 for the reasons set out in this Explanatory Memorandum, including:

• (i) Messrs McIlwain, Montgomery, Lee and Calcei will have a vested interest in the affairs of the Company, as the holders of Options and as shareholders upon exercise of the Options, particularly as the Options are not transferable;

• (ii) The issue of Options to Messrs McIlwain, Montgomery, Lee and Calcei is a non-cash form of remuneration, thus conserving the Company’s cash reserves. The issue enables the Company to provide its directors with reward for services provided and provide an incentive with respect to future services they will provide to the Company to further progress the Company,

and on the basis that, in their opinion, the proposed issue of options is fair and reasonable having regard to the terms of the Options.

(J) Other Information

No stamp duty will be payable in respect of the grant of the Directors’ Options. No GST will be payable by the Company in respect of the grant of the Directors’ Options (or if it is then it will be recoverable as an input credit).

Other than the information above and otherwise set out in this Explanatory Memorandum and the accompanying cover letter, the directors believe that there is no other information known to the Company or its directors that will be reasonably required by shareholders to make a decision in relation to benefits contemplated by the proposed resolutions 5, 6, 7 and 8.

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7. RESOLUTION 9 – EMPLOYEE OPTION PLAN

Approval is being sought to establish the Verus Investments Limited Employee Option Plan (“Plan”). The Plan will be established by the Board to provide incentives, assist in the recruitment, reward, retention of employees and provide opportunities for employees (both present and future) to participate directly in the equity of the Company. Such Plans have been adopted by many companies as part of their remuneration systems and to provide incentives for employee performance.

Participants in the Plan would only generally benefit from the receipt of options if wealth is also created in the Company or in the form of an increase in the price of the Company’s shares on the ASX for the benefit of all shareholders. A summary of the terms of the Plan is contained in Appendix C.

Under ASX Listing Rule 7.1, the prior approval of the shareholders of the Company is required to an issue of shares or grants of options if the securities will, when aggregated with securities issued by the Company during the previous 12 months, exceed 15% of the number of securities on issue at the commencement of the 12 month period.

ASX Listing Rule 7.2 (Exception 9) provides that ASX Listing Rule 7.1 does not apply to an issue of securities under an employee incentive scheme if, within three years before the date of issue, the holders of ordinary securities have approved the issue of securities under the employee incentive scheme as an exception to ASX Listing Rule 7.1.

The Company wishes for the issues of Options under the Plan not to be included in the calculation when undertaking the calculation pursuant to ASX Listing Rule 7.1 should there be a requirement for an issue of securities other than under the Plan. Accordingly, the Company is seeking shareholder approval as required under Exception 9 to Listing Rule 7.2.

No options have been issued under the Plan as at the date of this Notice.

A copy of the proposed Employee Option Plan is available for inspection by Shareholders at the registered office of the Company during normal business hours until the meeting. In addition, any shareholder wishing to inspect a copy of the Employee Option Plan prior to the meeting will be sent a copy on request.

Cautionary Notes

The directors recognise and acknowledge the importance of shareholders making their decision on the basis of the best possible information. However, once this Explanatory Memorandum is prepared and despatched to shareholders, the Company has no legal obligation to continuously update the content of this material, nor is it practical or logistically possible to do that and inform each shareholder individually.

From the time of preparing this material to the date of the Annual General Meeting the Company’s share price may go up or down. The Company will continue to comply with its continuous disclosure obligations and make appropriate announcements to the ASX.

Shareholders are strongly encouraged to keep track of any announcements that the Company may make and of the Company’s share price up to the date of the Annual General Meeting as that information may have an effect on the calculations and the data that is provided in this Explanatory Memorandum in relation to Resolutions 5, 6, 7 and 8. If you do not understand the effect of such information, you should consult your professional advisor.

Enquiries - Shareholders are invited to contact Mr Paul Jurman, Company Secretary, on (08) 9240 2836 if they have any queries in respect of the matters set out in these documents.

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VERUS INVESTMENTS LTD (ACN 009 575 035)

PROXY FORM

Shareholder’s Name and Address

Please write you name(s) above

Please write your address above

Appointment of Proxy

I/We being a member/s of Verus Investments Limited and entitled to attend and vote hereby appoint:

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If you are not appointing the Chairman of The Chairman the Meeting as your proxy please write of the Meeting OR here the full name of the individual or (mark with an “X”) body corporate (excluding the registered Securityholder) you are appointing as your proxy.

Or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Verus Investments Limited to be held on 24 November 2009 and at any adjournment of that meeting.

and/or failing him

Appointing a Second Proxy

Name and address of person you are appointing as your second proxy (if not the meeting Chairman)

Proxy 1 is appointed to represent ……..% of my voting right, or if 2 proxies are appointed, Proxy 1 represents ……..% and Proxy 2 represents ……..% of my total votes. My total voting right is …………….. shares. Note : If the appointment does not specify the proportion or number of votes that the proxy may exercise, each proxy may exercise half the votes.

If you do not wish to direct your proxy how to vote, please place a mark in the box �� �

By marking this box, you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of the resolutions and votes cast by him other than as proxy holder will be disregarded because of that interest. The Chairman of the Meeting intends to vote any such undirected proxies in favour of all the resolutions, with the exception of resolutions 5, 6, 7 and 8, where they will be treated as abstentions.

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

Vot	ing directions to your proxy –please mark⌧to indicate your d	irections
	RESOLUTIONS	FOR	AGAINST	ABSTAIN
1.	Adoption of the Remuneration Report	�	�	�
2.	Re-election of Mr D Calcei	�	�	�
3.	Ratification of Prior Share Issue	�	�	�
4.	Approval for the Issue of Options as fee for Corporate	�	�	�
	Services
5.	Issue of Options to a Director, Mr A McIlwain	�	�	�
6.	Issue of Options to a Director, Mr M Montgomery	�	�	�
7.	Issue of Options to a Director, Mr G Lee	�	�	�
8.	Issue of Options to a Director, Mr D Calcei	�	�	�
9.	Approval of Employee Option Plan	�	�	�

• If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

PLEASE SIGN HERE- This section_must_be signed in accordance with the instructions overleaf to enable your directions to be implemented. Shareholder 1 Shareholder 2 Shareholder 3 Sole Director/Secretary/Director Director/Secretary Sole Director and Secretary Dated: //2009 Contact Email address Contact Telephone Number ( )	PLEASE SIGN HERE- This section_must_be signed in accordance with the instructions overleaf to enable your directions to be implemented. Shareholder 1 Shareholder 2 Shareholder 3 Sole Director/Secretary/Director Director/Secretary Sole Director and Secretary Dated: //2009 Contact Email address Contact Telephone Number ( )	PLEASE SIGN HERE- This section_must_be signed in accordance with the instructions overleaf to enable your directions to be implemented. Shareholder 1 Shareholder 2 Shareholder 3 Sole Director/Secretary/Director Director/Secretary Sole Director and Secretary Dated: //2009 Contact Email address Contact Telephone Number ( )
		( )

Proxies may be lodged either by facsimile on (08) 9240 2406, by mail to PO Box 717, Balcatta, 6914, Western Australia or delivery to the Registered Office of the Company at 30 Ledgar Road, Balcatta, Western Australia. To be valid, a proxy form must be received by the Company no later than 48 hours before the time appointed for the Annual General Meeting. For assistance in completing this form, please refer below.

INSTRUCTIONS FOR COMPLETION OF THE PROXY FORM

Shareholders Name

This is the name of the shareholder as it appears on the Company’s share register. In accordance with regulation 7.11.37 of the Corporations Regulations 2001, the Company determines that ordinary shares held as at 5.00pm on 20 November 2009 will be taken, for the purposes of the Annual General Meeting, to be held by the persons who held them at that time.

Appointment of Proxy

A shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two other persons (whether shareholders or not) as proxy or proxies to attend in the shareholder’s place at the Annual General Meeting. The proxy has the same right as the shareholder to speak and vote at the Annual General Meeting. If you leave this section blank, the Chairman of the meeting will be your proxy to vote your shares even if you attend the Annual General Meeting (unless you revoke your proxy before the meeting).

and accompany this form. Only duly authorised officer(s) can sign on behalf of a Company. Please sign in the boxes provided which state the office held by the signatory.

Delivery of Proxy

To be effective, forms to appoint proxies must be received by the Company no later than 48 business hours before the time appointed for the holding of this Annual General Meeting, that is by 11am on 22 November 2009 , by post or facsimile to the respective addresses stipulated in this proxy form.

Chairman's Voting Intentions

The Chairman of the Meeting intends to vote any such undirected proxies in favour of all the resolutions, with the exception of resolutions 5, 6, 7 and 8, where they will be treated as abstentions.

Vote on Resolutions

You may direct your proxy how to vote by placing a mark in one of the boxes opposite the resolution/s you wish to direct your proxy to vote on. If you do so, all your shares will be voted in accordance with your direction. You can split your vote on any resolution/s by inserting the number/s of shares you wish to vote in the appropriate box/es. Please ensure you clearly mark the box in black or blue ink by placing a mark or the number of shares you are voting.

Appointing a Second Proxy

If a shareholder appoints two proxies, each proxy may be appointed to represent a specific proportion of the shareholder’s voting rights. If such appointment is not made then each proxy may exercise half of the shareholder’s voting rights. Fractions shall be disregarded.

Contact Telephone

This will help us if there are any problems with your proxy form.

Signature(s)

Each shareholder must sign this form. If your shares are held in joint names, all shareholders must sign in the boxes. If you are signing as an Attorney, then the Power of Attorney must have been noted by the Company or be duly stamped

Appendix A Terms and Conditions of Options the subject of Resolution 4

The New Options will be issued with the following terms and conditions:

• a) Each Option entitles the holder to subscribe for and be allotted one Share. The exercise price of each Option is $0.10.

• b) The Options are exercisable at any time prior to 5.00pm AEST on 30 June 2010 ( the Expiry Date ) by notice in writing to the Company accompanied by payment of the exercise price as detailed in (a) above.

• c) The Options are transferable and an application will be made to the ASX for Official Quotation of the Options.

• d) Shares allotted and issued pursuant to the exercise of an Option will be allotted and issued not more than 10 Business Days after receipt of a properly executed notice of exercise of the Option and payment of the requisite application moneys.

• e) All Shares issued upon exercise of the Options will rank pari passu in all respects with the Company's fully paid ordinary shares. The Company will apply for Official Quotation by ASX of all Shares issued upon exercise of the Options within three Business Days after the date of allotment of those Shares.

• f) There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered or made to shareholders during the currency of the Options. However, the Company will send a notice to each option holder at least nine Business Days before the record date for any proposed issue of capital on a pro-rata entitlement basis. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue

• g) There are no rights to a change in exercise price, or in the number of Shares over which the Options can be exercised, in the event of a bonus issue by the Company prior to the exercise of any Options.

• h) In the event of any reorganisation of the issued capital of the Company on or prior to the Expiry Date, the rights of an Option holder will be changed to the extent necessary to comply with the applicable ASX Listing Rules at the time of the reorganisation.

• i) The Company will, at least 20 Business Days before the Expiry Date, send notices to the Option holders stating the name of the Option holder, the number of Options held and the number of securities to be issued on exercise of the Options, the exercise price, the due date for payment and the consequences of non-payment.

• j) Option holders do not participate in any dividends unless the Options are exercised and the resultant shares of the Company are issued prior to the record date to determine entitlements to the dividend.

• k) The terms of the Options shall only be changed if holders (whose votes are not to be disregarded) of ordinary Shares in the Company approve of such a change. However, the terms of the Options shall not be changed to reduce the Exercise Price, increase the number of Options or change any period for exercise of the Options.

Appendix B Terms and Conditions of Options the subject of Resolutions 5, 6, 7 and 8

The material terms and conditions of the options are as follows:

• a) Each option entitles the holder to subscribe for and be allotted one ordinary share in the capital of Verus Investments Limited (the “Company”) at a price of 1.5 cents per share until 1 March 2012 (“the Expiry Date”).

• b) The options are exercisable at any time during the exercise period noted above by notice in writing to the Directors accompanied by payment of the exercise price.

• c) Shares will be allotted and issued pursuant to the exercise of options not more than 10 business days after receipt of a properly executed notice of exercise and payment of the requisite application moneys.

• d) The options are not transferable, except to a spouse of the Optionholder or a company wholly owned by the Optionholder and his or her spouse.

• e) Shares issued upon exercise of the options will rank pari passu in all respects with the Company’s fully paid ordinary shares. The Company will apply for Official Quotation by ASX of all Shares issued upon the exercise of options within 3 business days after the date of allotment of those shares.

• f) There are no participating rights or entitlements inherent in the options and holders will not be entitled to participate in new issues of capital offered or made to the shareholders during the currency of the options. However, the Company will send a notice to each Optionholder at least 9 business days before the record date for any proposed issue of capital on an entitlement basis. This will give Optionholders the opportunity to exercise their options (subject to the exercise period referred to above) prior to the date for determining entitlements to participate in any such issue.

• g) There are no rights to a change in the exercise price, or in the number of shares over which the options can be exercised, in the event of a bonus issue by the Company prior to the exercise of any options.

• h) In the event of any reorganisation of the issued capital of the Company on or prior to the Expiry Date, the rights of an Optionholder will be changed to the extent necessary to comply with the applicable ASX Listing Rules at the time of the reorganisation.

Appendix C SUMMARY OF THE VERUS INVESTMENT LIMITED OPTION PLAN (“Option Plan”)

• a) The offer of options under the Plan is at the discretion of the Board. The Board may invite applications for options from employees, consultants and contractors of the Company or certain associated or related companies of the Company. Directors of the Company and their associates are not eligible to participate in the Plan.

• b) Offers of options must specify the terms of issue.

• c) Subject to satisfaction of any exercise conditions determined by the and at the discretion of the Board at the time of grant, the options granted will be exercisable after the first anniversary of the date of grant but before the third anniversary (“Expiry Date”) of the date of grant. The period for exercise of the options is reduced in certain circumstances.

• d) Any options not exercised at Expiry Date will lapse.

• e) The options issued under the Plan will be issued free of charge and entitle the holder to purchase one ordinary share at an exercise price as the Directors deem appropriate in light of surrounding circumstances but not less than any price prescribed under the ASX Listing Rules from time to time. In any case, the exercise price shall be no less than 80% of the average market price for shares over the last five (5) trading days immediately preceding the date on which the options are issued.

• f) No options may be granted if such options when aggregated with options previously issued under the Plan (or any other employee incentive scheme) would exceed 5% of the total number of issued shares in the Company.

• g) The options must be accepted by the completion of the acceptance form.

• h) Options may only be exercised by notice in writing (in the form prescribed by the Board) given by the optionholder to the Company.

• i) If an optionholder ceases employment with the Company or otherwise ceases to provide services to the Company, options held at that time and capable of being exercised will lapse unless exercised within thirty days of cessation of employment (or cessation of service), except where employment / service has ceased as a result of special circumstances such as death or disablement.

• j) Options must not be assigned, transferred or otherwise dealt with except with the approval of the Board or in the case of a takeover offer or a Scheme of Arrangement.

• k) The options will not be listed on ASX, although the Company will apply for the official quotation of any shares which are issued as a result of exercise of options.

• l) In the event of any reconstruction of the capital of the Company, the number and exercise price of options issued under the Plan will be dealt with in accordance with ASX listing rules.

• m) The Corporations Act 2001 and the ASX Listing Rules have precedence over the Terms and Conditions of the Plan. Therefore, the grant or exercise of options will not be permitted if either (or both) would contravene them.

• n) The Plan may be terminated at any time by the Board, but this will not affect any accrued rights of the option holders at that time.

• o) There are no participating rights or entitlements inherent in the options and the holder will not be entitled to participate in new issues of capital offered or made to the shareholders during the currency of the options unless the options are first exercised prior to any record date, subject to vesting rules..