DIGITALX LIMITED - Proxy Solicitation & Information Statement 2017

DIGITALX LTD

ACN 009 575 035

NOTICE OF GENERAL MEETING

Notice is given that the Meeting will be held at:

TIME : 10:00am (WST) DATE : 6 February 2017 PLACE : Level 4, 16 Milligan Street Perth, Western Australia

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

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

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 10:00am (WST) on 4 February 2017.

BUSINESS OF THE MEETING

AGENDA

1. RESOLUTION 1 – ISSUE OF SHARES TO RELATED PARTY – MR WILLIAM BRINDISE

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

“That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue such number of Shares that is equal to US$56,250 (converted to Australian Dollars at the prevailing exchange rate on the date of the Meeting) at an issue price of $0.05 to William Brindise (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

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

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE – SHARES

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

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 10,580,303 Shares on the terms and conditions set out in the Explanatory Statement.”

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

3. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

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

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 15,297,634 Shares issued under Listing Rule 7.1 on the terms and conditions set out in the Explanatory Statement.”

2916-08/1630757_4

4. RESOLUTION 4 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

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

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 16,642,366 Shares issued under Listing Rule 7.1A on the terms and conditions set out in the Explanatory Statement.”

5. RESOLUTION 5 – APPROVAL TO ISSUE PLACEMENT OPTIONS

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

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 15,970,000 Placement Options on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

6. RESOLUTION 6 – APPROVAL TO ISSUE SPP OPTIONS

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

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to such number of SPP Options to Eligible Shareholders that participate in the SPP Offer equal to one Option for every two Shares subscribed for by those Eligible Shareholders on the terms and conditions set out in the Explanatory Statement.”

7. RESOLUTION 7 – APPROVAL TO PARTICIPATE IN PLACEMENT – MR LEIGH TRAVERS

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

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue up to 500,000 Shares and 250,000 Options to Leigh Travers (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

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

Voting Prohibition Statement:

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

(a) the proxy is either: (i) a member of the Key Management Personnel; or (ii) a Closely Related Party of such a member; and (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

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

8. RESOLUTION 8 – APPROVAL TO PARTICIPATE IN PLACEMENT – MR TOBY HICKS

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

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue up to 300,000 Shares and 150,000 Options to Toby Hicks (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

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

Voting Prohibition Statement:

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

However, the above prohibition does not apply if:

9. RESOLUTION 9 – RATIFICATION OF PRIOR ISSUE

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

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 840,000 Shares, on the terms and conditions set out in the Explanatory Statement.”

Dated: 3 January 2017

By order of the Board

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Shannon Coates Company Secretary

Voting in person

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

Voting by proxy

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

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

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

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

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +61 8 9322 1587 .

EXPLANATORY STATEMENT

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

1. RESOLUTION 1 – ISSUE OF SHARES TO RELATED PARTY – MR WILLIAM BRINDISE

1.1 General

Mr Brindise retired as a Director on 30 November 2016 and the Company has agreed to seek Shareholder approval for the issue of Shares to settle final payments owing to Mr Brindise under his executive services agreement.

The Company has agreed, subject to obtaining Shareholder approval, to issue such number of Shares that is equal to US$56,250 (converted to Australian Dollars at the prevailing exchange rate on the date of the Meeting) at an issue price of $0.05 ( Brindise Shares ) to William Brindise (or his nominee) on the terms and conditions set out below.

Resolution 1 seeks Shareholder approval for the issue of the Brindise Shares to William Brindise (or his nominee).

1.2 Chapter 2E of the Corporations Act

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

(a) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and
(b) give the benefit within 15 months following such approval,

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

The issue of the Brindise Shares constitutes giving a financial benefit and William Brindise is a related party of the Company by virtue of being a past Director who resigned within the past 6 months.

The Directors consider that Shareholder approval pursuant to Chapter 2E of the Corporations Act is not required in respect of the issue of the Brindise Shares because the agreement to issue the Brindise Shares, reached as part of Mr Brindise’ final settlement, is considered reasonable remuneration in the circumstances and was negotiated on an arm’s length basis.

1.3 ASX Listing Rule 10.11

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

As the issue of the Brindise Shares involves the issue of securities to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is

required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

1.4 Technical Information required by ASX Listing Rule 10.13

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to Resolution 1:

(a) the Brindise Shares will be issued to William Brindise (or his nominee);
(b) the number of Brindise Shares to be issued is such number of Shares that is equal to US$56,250 (converted to Australian Dollars at the prevailing exchange rate on the date of the Meeting) at an issue price of $0.05;

For example, if this had occurred on 7 December 2016, the number of Brindise Shares would have been 1,512,900, where the exchange rate at that date was 1 AUD = 0.7436 USD. Therefore US$56,250 is equal to approximately AUD$75,645.

For example, if this had occurred on 9 December 2016, the number of Brindise Shares would have been 1,508,850, where the exchange rate at that date was 1 AUD = 0.7456 USD. Therefore US$56,250 is equal to approximately AUD$75,443.

For example, if this had occurred on 14 December 2016, the number of Brindise Shares would have been 1,502,550, where the exchange rate at that date was 1 AUD = 0.74873 USD. Therefore US$56,250 is equal to approximately AUD$75,128.

(c) the Brindise Shares will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that issue of the Brindise Shares will occur on the same date;
(d) the Brindise Shares will be issued for nil cash consideration, accordingly no funds will be raised; and
(e) the Brindise Shares will be fully paid ordinary shares in the Company.

Approval pursuant to ASX Listing Rule 7.1 is not required for the issue of the Brindise Shares as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Brindise Shares to William Brindise (or his nominee) will not be included in the use of the Company’s 15% annual placement capacity pursuant to ASX Listing Rule 7.1.

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE – SHARES

2.1 General

On 7 September 2016, the Company issued 10,580,303 Shares at an issue price of $0.05 per Share to raise $529,015 under its 15% capacity as set out in ASX Listing Rule 7.1.

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

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

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

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

2.2 Technical information required by ASX Listing Rule 7.4

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

(a) 10,580,303 Shares were issued;
(b) the issue price was $0.05 per Share;
(c) the Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(d) the Shares were issued to Merchant Capital Markets Pty Ltd. None of these subscribers are related parties of the Company; and
(e) the funds raised from this issue were used for the facilitation of the share buy-back completed on 14 December 2016.

3. BACKGROUND TO CAPITAL RAISING RESOLUTIONS

3.1 Capital Raising Overview

On 28 November (and updated by an announcement on 8 December 2016), the Company announced the completion of a capital raising comprising:

(a) a placement raising approximately $1,622,000 ( Placement ); and
(b) a subsequent offer via a securities purchase plan to raise up to a further $1,000,000 ( SPP Offer ),

(together, the Capital Raising ).

The funds raised will be applied to the further development and marketing of the Airpocket product and general working capital.

As part of the Placement, the Company was delighted that Messrs Travers and Hicks, both Directors of the Company have personally agreed, subject to Shareholder approval to contribute $25,000 and $15,000 respectively.

3.2 Placement

In December, the Company announced it would raise up to $1,622,000 via a Placement of up to 32,440,000 Shares ( Placement Shares ) at an issue price of $0.05 per Share together with one (1) free attaching Option for every two (2) Shares issued ( Placement Options ). If the maximum amount of Related Party Shares are applied for by Messrs Travers and Hicks subject to Shareholder approval under Resolutions 7 and 8, the maximum number of Placement Shares to be issued will be 32,740,000.

On 8 December 2016, the Company issued 31,940,000 Shares and received $1,597,000.

3.3 Securities Purchase Plan

At the time of the Placement, the Company announced that it would be providing Shareholders with the opportunity to participate in a SPP Offer to raise up to $1,000,000 through the issue of up to 20,000,000 Shares ( SPP Shares ). Whilst the Company intends to raise $1,000,000, the Company may accept additional applications subject to Shareholder demand. However, the maximum number of SPP Shares to be issued is limited by the ASX Listing Rules to a maximum of 61,153,814 Shares, being 30% of the Company’s share capital.

Each Eligible Shareholder as at 25 November 2016 will have the right to purchase $15,000 of SPP Shares at an issue price of $0.05 per Share together with one (1) free attaching Option for every two (2) Shares subscribed for under the SPP Offer ( SPP Options ).

The Directors have informed the Company that they do not intend to participate in the SPP Offer.

The terms of the Shares and Options issued under the SPP Offer will be the same as those issued under the Placement.

3.4 Issues of securities under Capital Raising

The Capital Raising issue comprises of:

(a) 31,940,000 Placement Shares to institutional and professional investors to raise approximately $1,597,000;
(b) 15,970,000 Placement Options to institutional and professional investors subject to Shareholder approval under Resolution 5;
(c) such number of SPP Options to Eligible Shareholders that participate in the SPP Offer equal to one (1) Option for every two (2) Shares subscribed for by those Eligible Shareholders, subject to Resolution 6;

(together the Capital Raising Options ),

(d) such number of SPP Shares to Eligible Shareholders that participate in the SPP Offer, up to a maximum of $15,000 each;
(e) by participating in the Placement up to 800,000 Shares ( Related Party Shares ) to Messrs Travers and Hicks subject to Shareholder approval under Resolutions 7and 8; and

(f) by participating in the Placement up to 400,000 Options ( Related Party Options ) to Messrs Travers and Hicks subject to Shareholder approval under Resolutions 7 and 8.

The Company issued 31,940,000 Placement Shares without prior Shareholder approval out of its 15% placement capacity and its additional 10% placement capacity, the Company is seeking to ratify this issue under Resolutions 3 and 4 of this Notice ( Tranche 1 Placement ). The remaining Capital Raising Options, Related Party Shares and Related Party Options remain subject to Shareholder approval (Resolutions 5 to8).

4. RESOLUTIONS 3 AND 4 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

4.1 General

On 8 December 2016, the Company issued 31,940,000 Shares at an issue price of $0.05 per Share to raise approximately $1,597,000.

16,642,366 Shares were issued pursuant to the Company’s capacity under ASX Listing Rule 7.1A which was approved by Shareholders at the annual general meeting held on 30 November 2015 and 15,297,634 Shares were issued pursuant to the Company’s capacity under ASX Listing Rule 7.1.

Resolutions 3 and 4 seek Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Placement Shares ( Ratification ).

4.2 Resolution 3 – ASX Listing Rule 7.1

A summary of ASX Listing Rule 7.1 is set out in section 2.1 above.

A summary of ASX Listing Rule 7.4 is set out in section 2.1 above.

4.3 Resolution 4 – ASX Listing Rule 7.1A

ASX Listing Rule 7.1A provides that in addition to issues permitted without prior shareholder approval under ASX Listing Rule 7.1, an entity that is eligible and obtains shareholder approval under ASX Listing Rule 7.1A may issue or agree to issue during the period the approval is valid a number of quoted equity securities which represents 10% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period as adjusted in accordance with the formula in ASX Listing Rule 7.1.

Where an eligible entity obtains shareholder approval to increase its placement capacity under ASX Listing Rule 7.1A then any ordinary securities issued under that additional placement capacity:

(a) will not be counted in variable “A” in the formula in ASX Listing Rule 7.1A; and
(b) are counted in variable “E”,

until their issue has been ratified under ASX Listing Rule 7.4 (and provided that the previous issue did not breach ASX Listing Rule 7.1A) or 12 months has passed since their issue.

By ratifying the issue the subject of Resolution 4, the base figure (ie variable “A”) in which the Company’s 15% and 10% annual placement capacities are calculated will be a higher number which in turn will allow a proportionately higher number of securities to be issued without prior Shareholder approval.

4.4 Technical information required by ASX Listing Rule 7.4

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

(a) 31,940,000 Placement Shares were issued;
(b) the issue price was $0.05 per Placement Share;
(c) the Placement Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(d) the Placement Shares were issued to sophisticated and professional investors who are clients of Merchant Capital Markets Pty Ltd. None of these subscribers are related parties of the Company; and
(e) the funds raised from the Tranche 1 Placement were used for the marketing and development of the Airpocket product.

5. RESOLUTIONS 5 AND 6 – APPROVAL TO ISSUE PLACEMENT OPTIONS AND SPP OPTIONS PURSUANT TO CAPITAL RAISING

5.1 General

Resolutions 5 and 6 seeks Shareholder approval for the issue of up to:

(a) 15,970,000 Placement Options for nil consideration to subscribers under the Placement on the basis of one (1) Placement Option for every two (2) Placement Shares subscribed for and issued; and
(b) such number of SPP Options for nil consideration to Eligible Shareholders that participate in the SPP Offer equal to one (1) Option for every two (2) Shares subscribed for by those Eligible Shareholders.

As set out in the announcement dated 8 December 2016, it is a term of the Placement and the SPP Offer that the Company seek Shareholder approval to issue the Placement Options and the SPP Options.

A summary of ASX Listing Rule 7.1 is at section 2.1 above.

The effect of Resolutions 5 and 6 will be to allow the Company to issue the Placement Options pursuant to the Placement and the SPP Options pursuant to the SPP Offer during the period of 3 months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity or its additional 10% annual placement capacity.

5.2 Technical information required by ASX Listing Rule 7.1

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to Resolutions 5 and 6:

(a) the maximum number of Placement Options to be issued is 15,970,000;

(b) the maximum number of SPP Options to be issued is such number of Options to Eligible Shareholders that participate in the SPP Offer equal to one (1) Option for every two (2) Shares subscribed for by those Eligible Shareholders up to a maximum of 30,576,902 as prescribed for by the ASX Listing Rules;
(c) the Placement Options and SPP Options will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that issue of the Placement Options and SPP Options will occur on the same date;
(d) the issue price of the Placement Options and SPP Options will be nil, as they will be issued free attaching with the Placement Shares and SPP Shares pursuant to the Capital Raising on a 1:2 basis;
(e) the Placement Options will be issued to the subscribers in the Placement as announced on ASX on 8 December 2016 on the basis of one (1) Placement Option for every two (2) Placement Shares subscribed for and issued;
(f) the SPP Options will be issued to Eligible Shareholders who participated in the SPP Offer on the basis of one (1) SPP Option for every two (2) SPP Shares, who are not related parties of the Company;
(g) the Placement Options and SPP Options will be issued on the same terms and conditions set out in Schedule 1; and
(h) no funds will be raised from the issue of the Placement Options or the SPP Options as they are being issued for nil cash consideration. However, funds raised from the Capital Raising will be used to fund the marketing and development of the Airpocket product and for general working capital.

6. RESOLUTIONS 7 AND 8 – PARTICIPATION OF DIRECTORS IN PLACEMENT

6.1 General

Resolutions 7 and 8 seek Shareholder approval for the issue of up to 800,000 Related Party Shares (together with 400,000 Related Party Options) (together the Related Party Securities ) to Messrs Travers and Hicks ( Related Parties ) on the terms and conditions set out below.

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

(a) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and
(b) give the benefit within 15 months following such approval,

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

The issue of the Related Party Securities constitutes giving a financial benefit and Messrs Travers and Hicks are related parties of the Company by virtue of being Directors.

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

It is the view of the Company that the exceptions set out in sections 210 to 216 of the Corporations Act and ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the issue of Related Party Securities.

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

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

(a) the related parties are Messrs Travers and Hicks (or their nominees) and they are related parties by virtue of being Directors of the Company;
(b) the maximum number of Related Party Shares and Related Party Options (being the nature of the financial benefit being provided) to be issued to the Related Parties is:
(i) 500,000 Related Party Shares at an issue price of $0.05 to Mr Leigh Travers;
(ii) 250,000 Related Party Options to Mr Leigh Travers;
(iii) 300,000 Related Party Shares at an issue price of $0.05 to Mr Toby Hicks; and
(iv) 150,000 Related Party Options to Mr Toby Hicks;
(c) if the maximum number of Related Party Shares are applied for by Messrs Travers and Hicks, the maximum amount of Placement Shares issued will be 32,740,000 Shares;
(d) the Related Party Securities will be issued to the Related Parties no later than 1 month after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated the Related Party Securities will be issued on one date;
(e) the Related Party Securities will be issued on the same terms and conditions under the Placement and accordingly a maximum of $40,000 will be raised by the issue of the Related Party Securities;
(f) the Related Party Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(g) the terms and conditions of the Related Party Options are set out in Schedule 1;
(h) the value of the Related Party Shares is $0.05 per Share, being the price payable for those Shares;

(i) the value of the Related Party Options and the pricing methodology is set out in Schedule 2;
(j) the relevant interests of the Related Parties in securities of the Company are set out below:

Related Party	Shares	Options
Mr Leigh Travers	311,111	Nil
Mr Toby Hicks	Nil	Nil

Notes

AS highlighted in section 3.3 above, the Directors have informed the Company that they do not intend to participate in the SPP Offer.
(k) the remuneration and emoluments from the Company to the Related Parties for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out below:

Related Party	Current Financial Year	Previous Financial Year
Mr Leigh Travers	AUD$120,0001	US$9,167
Mr Toby Hicks	AUD$60,0002	Nil

Notes

Mr Leigh Travers was appointed as Vice President of Business Development and Investor Relations effective 1 June 2016 and was appointed as a Director of the Company effective 24 July 2016.
Mr Toby Hicks was appointed Director of the Company on 28 July 2016.

(l) if the maximum amount of Related Party Shares are issued and the maximum amount of Related Party Options issued to the Related Parties are exercised, a total of 1,200,000 Shares would be issued. This will increase the number of Shares on issue from 203,846,045 to 205,046,045 (assuming that no other Options are exercised and no other Shares are issued with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 0.59%, comprising 0.37% by Mr Leigh Travers and 0.22% by Mr Toby Hicks.

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

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

	Price	Date
Highest	22 cents	17 February 2016
Lowest	4.4 cents	11 November 2016
Last	4.7 cents	30 December 2016

(n) the primary purpose of the issue of the Related Party Securities to the Related Parties is to enable the Related Parties to participate in the Placement and raise funds in the Company;
(o) Mr Leigh Travers declines to make a recommendation to Shareholders in relation to Resolution 7 due to his material personal interest in the outcome of the Resolution on the basis that he is to be issued Related Party Securities in the Company should Resolution 7 be passed. However, in respect of Resolution 8, he recommends that Shareholders vote in favour of that Resolution for the following reasons:
(i) the participation of the Related Parties in the Placement is a show of support by the Related Parties in the Company; and
(ii) other Shareholders are not disadvantaged as they can participate in the SPP Offer on the same terms and conditions;
(p) Mr Toby Hicks declines to make a recommendation to Shareholders in relation to Resolution 8 due to his material personal interest in the outcome of the Resolution on the basis that he is to be issued Related Party Securities in the Company should Resolution 8 be passed. However, in respect of Resolution 7 recommends that Shareholders vote in favour of those Resolutions for the reasons set out in paragraph (o);
(q) with the exception of Mr Leigh Travers and Mr Toby Hicks, no other Director has a personal interest in the outcome of Resolutions 7 and 8;
(r) Mr Faisal Khan recommends that Shareholders vote in favour of Resolutions 7 and 8 for the reasons set out in paragraph (o)(ii);
(s) in forming their recommendations, each Director considered the experience of each other Related Party, the current market price of Shares, the current market practices when determining the number of Related Party Shares and Related Party Options to be issued as well as the exercise price of $0.08 and expiry date of those Related Party Options; and
(t) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 7 and 8.

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

7. RESOLUTION 9 – RATIFICATION OF PRIOR ISSUE – ISSUE OF SHARES TO STOCKS DIGITAL IN CONSIDERATION FOR SERVICES PROVIDED

7.1 General

On 8 December 2016, the Company issued 840,000 Shares in consideration for marketing services provided to the Company.

Resolution 9 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Shares ( Stocks Digital Ratification ).

A summary of ASX Listing Rule 7.4 is set out in section 2.1.

7.2 Technical information required by ASX Listing Rule 7.4

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

(a) 840,000 Shares were issued;
(b) the Shares were issued for nil cash consideration in satisfaction of marketing services provided by Stocks Digital to the Company;
(c) the Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(d) the Shares will be issued to Stocks Digital, who is not a related party of the Company;
(e) no funds will be raised from this issue as the Shares were issued in consideration for marketing services provided by Stocks Digital to the Company.

GLOSSARY

$ means Australian dollars.

Airpocket means the mobile bill payment and remittance application.

ASIC means the Australian Securities & Investments Commission.

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

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

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

Chair means the chair of the Meeting.

Company means DigitalX Ltd (ACN 009 575 035).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

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

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

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

Optionholder means a holder of an Option or Placement Option or Related Party Option as the context requires.

Placement Options means the 15,970,000 Options to be issued as part of the Placement.

Placement Shares means the 31,940,000 Shares to be issued as part of the Placement.

Proxy Form means the proxy form accompanying the Notice.

Related Party Option means an Option issued pursuant to Resolutions 7 and 8 with the terms and conditions set out in Schedule 1.

Related Party Shares means the issue of up to 800,000 Shares to Messrs Travers and Hicks.

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

Section means a section of the Explanatory Statement.

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

Shareholder means a registered holder of a Share.

SPP Options means the Options issued to Eligible Shareholders that participate in the SPP Offer equal to one (1) Option for every two (2) Shares subscribed for by those Eligible Shareholders.

SPP Shares means Shares issued to Eligible Shareholders that participate in the SPP Offer, up to a maximum of $15,000 each.

Tranche 1 Placement means the issue of 31,940,000 Shares under the Placement.

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

SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

(a) Entitlement

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

(b) Exercise Price

Subject to paragraph (i), the amount payable upon exercise of each Option will be $0.08 ( Exercise Price ).

(c)

Expiry Date

Each Option will expire at 5:00 pm (WST) on the date that is one (1) year from the date of their issue ( Expiry Date ). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Exercise Period

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

(e) Notice of Exercise

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

(f) Exercise Date

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

(g) Timing of issue of Shares on exercise

Within 15 Business Days after the later of the following:

(i) the Exercise Date; and
(ii) when excluded information in respect to the Company (as defined in section 708A(7) of the Corporations Act) (if any) ceases to be excluded information,

but in any case no later than 20 Business Days after the Exercise Date, the Company will:

(iii) allot and issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;
(iv) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the

Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and

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

If a notice delivered under g(iv) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

(h) Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

(i) Reconstruction of capital

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

(j)

Participation in new issues

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

(k) Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised.

(l) Quotation

The Company will not apply for quotation of the Options on ASX.

(m) Transferability

The Options are not transferable without the consent of the Company.

SCHEDULE 2 – VALUATION OF RELATED PARTY OPTIONS

The Related Party Options to be issued to the Related Parties pursuant to Resolutions 7 and 8 have been valued by internal management.

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

Assumptions:

Valuation date	21/12/2016
Market price of Shares	_4.6_cents
Exercise price	_8_cents
Expiry date (length of time from issue)	1 year from date of issue (assumed 28/2/18)
Risk free interest rate	1.76%
Volatility (discount)	74.30%

Indicative value per Related Party Option	_0.71_cents

Total Value of Related Party Options	$2,840

-Mr Leigh Travers	$1,775
-Mr Toby Hicks	$1,065

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

PROXY FORM

DIGITALX LTD ACN 009 575 035

GENERAL MEETING

I/We

of:

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

Name:

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

or failing the person so named or, if no person is named, the Chair, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting to be held at DigitalX Ltd, Level 4, 16 Milligan Street, Perth WA 6000, on 6 February 2017 at 10:00am (WST), and at any adjournment thereof.

AUTHORITY FOR CHAIR TO VOTE UNDIRECTED PROXIES ON REMUNERATION RELATED RESOLUTIONS

Where I/we have appointed the Chair as my/our proxy (or where the Chair becomes my/our proxy by default), I/we expressly authorise the Chair to exercise my/our proxy on Resolutions 7 and 8 (except where I/we have indicated a different voting intention below) even though Resolutions 7 and 8 are connected directly or indirectly with the remuneration of a member of the Key Management Personnel, which includes the Chair.

CHAIR’S VOTING INTENTION IN RELATION TO UNDIRECTED PROXIES

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

Voting on business of the Meeting	Voting on business of the Meeting	FOR	AGAINST	ABSTAIN
Resolution 1	Issue of shares to Related Party – Mr William Brindise
Resolution 2	Ratification of prior issue – September Placement Shares
Resolution 3	Ratification of prior issue – Tranche 1 Placement Shares
Resolution 4	Ratification of prior issue – Tranche 1 Placement Shares
Resolution 5	Approval to issue Placement Options pursuant to Capital
	Raising
Resolution 6	Approval to issue SPP Options Pursuant to Capital Raising
Resolution 7	Approval to participate in Placement – Mr Leigh Travers
Resolution 8	Approval to participate in Placement – Mr Toby Hicks
Resolution 9	Ratification of prior issue – issue of Shares in consideration
	for services provided to Stocks Digital

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

If two proxies are being appointed, the proportion of voting rights this proxy represents is:

Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Shareholder 2 Shareholder 3 Director Director/Company Secretary Contact ph (daytime): Consent for contact by e-mail in relation to this Proxy Form: YES NO	Shareholder 3

Instructions for completing Proxy Form

( Appointing a proxy ): A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.
( Direction to vote ): A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.

( Signing instructions ):

( Individual ): Where the holding is in one name, the Shareholder must sign.
( Joint holding ): Where the holding is in more than one name, all of the Shareholders should sign.
( Power of attorney ): If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.
( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
(a) post to DigitalX Ltd, Suite 5, 62 Ord Street, West Perth WA 6005.; or
(b) facsimile to the Company on facsimile number +61 8 9322 5230;
(c) email to: [email protected]

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

Proxy Forms received later than this time will be invalid.

1630757_4_DCC Final NOM (03 01 17) FINAL PRINT

AI assistant

DIGITALX LIMITED — Proxy Solicitation & Information Statement 2017

64762_rns_2017-01-04_d60ecfd8-e61d-4eb0-97c2-f1b1eeb36e15.pdf

DIGITALX LTD

NOTICE OF GENERAL MEETING

AGENDA

1. RESOLUTION 1 – ISSUE OF SHARES TO RELATED PARTY – MR WILLIAM BRINDISE

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE – SHARES

3. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

4. RESOLUTION 4 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

5. RESOLUTION 5 – APPROVAL TO ISSUE PLACEMENT OPTIONS

6. RESOLUTION 6 – APPROVAL TO ISSUE SPP OPTIONS

7. RESOLUTION 7 – APPROVAL TO PARTICIPATE IN PLACEMENT – MR LEIGH TRAVERS

Voting Prohibition Statement:

8. RESOLUTION 8 – APPROVAL TO PARTICIPATE IN PLACEMENT – MR TOBY HICKS

Voting Prohibition Statement:

9. RESOLUTION 9 – RATIFICATION OF PRIOR ISSUE

Dated: 3 January 2017

By order of the Board

Shannon Coates Company Secretary

Voting in person

Voting by proxy

EXPLANATORY STATEMENT

1. RESOLUTION 1 – ISSUE OF SHARES TO RELATED PARTY – MR WILLIAM BRINDISE

1.1 General

1.2 Chapter 2E of the Corporations Act

1.3

ASX Listing Rule 10.11

1.4 Technical Information required by ASX Listing Rule 10.13

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE – SHARES

2.1 General

2.2 Technical information required by ASX Listing Rule 7.4

3. BACKGROUND TO CAPITAL RAISING RESOLUTIONS

3.1 Capital Raising Overview

(together, the Capital Raising ).

3.2 Placement

3.3 Securities Purchase Plan

3.4 Issues of securities under Capital Raising

(together the Capital Raising Options ),

4. RESOLUTIONS 3 AND 4 – RATIFICATION OF PRIOR ISSUE – TRANCHE 1 PLACEMENT SHARES

4.1 General

4.2 Resolution 3 – ASX Listing Rule 7.1

4.3 Resolution 4 – ASX Listing Rule 7.1A

4.4 Technical information required by ASX Listing Rule 7.4

5. RESOLUTIONS 5 AND 6 – APPROVAL TO ISSUE PLACEMENT OPTIONS AND SPP OPTIONS PURSUANT TO CAPITAL RAISING

5.1 General

5.2 Technical information required by ASX Listing Rule 7.1

6. RESOLUTIONS 7 AND 8 – PARTICIPATION OF DIRECTORS IN PLACEMENT

6.1 General

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

Notes

Notes

7. RESOLUTION 9 – RATIFICATION OF PRIOR ISSUE – ISSUE OF SHARES TO STOCKS DIGITAL IN CONSIDERATION FOR SERVICES PROVIDED

7.1 General

7.2 Technical information required by ASX Listing Rule 7.4

GLOSSARY

SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

(a) Entitlement

(b) Exercise Price

(c)

Expiry Date

(d) Exercise Period

(e) Notice of Exercise

(f) Exercise Date

(g) Timing of issue of Shares on exercise

(h) Shares issued on exercise

(i) Reconstruction of capital

(j)

Participation in new issues

(k) Change in exercise price

(l) Quotation

(m) Transferability

SCHEDULE 2 – VALUATION OF RELATED PARTY OPTIONS

PROXY FORM

DIGITALX LTD ACN 009 575 035

GENERAL MEETING

AUTHORITY FOR CHAIR TO VOTE UNDIRECTED PROXIES ON REMUNERATION RELATED RESOLUTIONS

CHAIR’S VOTING INTENTION IN RELATION TO UNDIRECTED PROXIES

Instructions for completing Proxy Form

( Signing instructions ):

DIGITALX LIMITED Proxy Solicitation & Information Statement 2017