ENTROPY NEURODYNAMICS LIMITED — AGM Information 2020

Oct 28, 2020

Exopharm Limited HMH Advisory Level 1, 888 Doncaster Road Doncaster East, Victoria, 3109 ACN: 136 765 991

https://exopharm.com/

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Exopharm Limited

Notice of 2020 Annual General Meeting Explanatory Statement | Proxy Form

Monday, 30 November 2020 11.00AM AEDT

Virtual Meeting

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.

Contents

Contents
Venue and Voting Information	2
Notice of Annual General Meeting – Agenda and Resolutions	4
Notice of Annual General Meeting – Explanatory Statement	8
Glossary	15
Proxy Form	Attached

Important Information for Shareholders about the Company’s 2020 AGM

Given the uncertainty surrounding the COVID-19 pandemic, by the time this Notice is received by Shareholders, circumstances may have changed, however, this Notice is given based on circumstances as at 29 October 2020.

Accordingly, should circumstances change, the Company will make an announcement on the ASX market announcements platform and on the Company’s website at https://exopharm.com/. Shareholders are urged to monitor the ASX announcements platform and the Company’s website.

Given the significant health concerns attributed to the COVID-19 pandemic, in addition to guidelines and restrictions issued by Australian state and federal governments, the Company considers that it is appropriate to hold the 2020 AGM as a virtual meeting, in a manner that is consistent with the temporary modifications to the Corporations Act 2001 (Cth) introduced by the Commonwealth Treasurer.

Venue and Voting Information

The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 11.00am (AEDT) on Monday 30 November 2020 as a virtual meeting .

If you are a shareholder and you wish to virtually attend the AGM (which will be broadcast as a live webinar), please pre-register in advance for the virtual meeting here:

https://us02web.zoom.us/webinar/register/WN_D9NQW6MGQ6GoxEFJW1shBA

After registering, you will receive a confirmation containing information on how to attend the virtual meeting on the day of the AGM.

Shareholders will be able to vote and ask questions at the virtual meeting.

Shareholders are also encouraged to submit questions in advance of the Meeting to the Company.

Questions must be submitted in writing to the Company Secretary at sinead.teague@exopharm.com at least 48 hours before the AGM.

The Company will also provide Shareholders with the opportunity to ask questions during the Meeting in respect to the formal items of business as well as general questions in respect to the Company and its business.

Your vote is important

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

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Voting virtually at the Meeting

Shareholders who wish to vote virtually on the day of the AGM will need to login to the Automic website (https://investor.automic.com.au/#/home) with their username and password .

Shareholders who do not have an account with Automic are strongly encouraged to register for an account as soon as possible and well in advance of the Meeting to avoid any delays on the day of the Meeting.

How do I create an account with Automic?

To create an account with Automic, please go to the Automic website

(https://investor.automic.com.au/#/home), click on ‘register’ and follow the steps. Shareholders will require their holder number (Securityholder Reference Number (SRN) or Holder Identification Number (HIN)) to create an account with Automic.

I have an account with Automic, what are the next steps?

Shareholders who have an existing account with Automic (Note: with a username and password ) are advised to take the following steps to attend and vote virtually on the day of the AGM:

1. Login to the Automic website (https://investor.automic.com.au/#/home) using your username and password .

2. ( Registration on the day ) If registration for the virtual meeting is open, click on ‘Meeting open for registration’ and follow the steps.

( Live voting on the day ) If live voting for the virtual meeting is open, click on ‘Meeting open for voting’ and follow the steps.

For further information on the live voting process please see the Registration and Voting Guide at - https://www.automicgroup.com.au/virtual agms/

Voting by proxy

To vote by proxy, please use one of the following methods:

Online	Lodge the Proxy Form online athttps://investor.automic.com.au/#/loginsah by following the instructions: Login to the Automic website using the holding details as shown on the Proxy Form. Click on ‘View Meetings’ – ‘Vote’. To use the online lodgement facility, Shareholders will need their holder number (Securityholder Reference Number (SRN) or Holder Identification Number (HIN)) as shown on the front of the Proxy Form. For further information on the online proxy lodgment process please see theOnline Proxy Lodgment Guideathttps://www.automicgroup.com.au/virtual-agms/
By post	Automic, GPO Box 5193, Sydney NSW 2001
By hand	Automic, Level 5, 126 Phillip Street, Sydney NSW 2000

Your Proxy instruction must be received not later than 48 hours before the commencement of the Meeting. Proxy Forms received later than this time will be invalid.

Power of Attorney

If the proxy form is signed under a power of attorney on behalf of a shareholder, then the attorney must make sure that either the original power of attorney or a certified copy is sent with the proxy form, unless the power of attorney has already provided it to the Share Registry.

Corporate Representatives

If a representative of a corporate shareholder or a corporate proxy will be attending the Meeting, the representative should provide the Share Registry with adequate evidence of their appointment, unless this has previously been provided to the Share Registry.

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Notice of Annual General Meeting

Notice is hereby given that an Annual General Meeting of Shareholders of Exopharm Limited ACN 163 765 991 will be held at 11.00am AEDT on Monday, 30 November 2020 as a virtual meeting (Meeting) .

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Annual General Meeting. The Explanatory Statement and the Proxy Form forms part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders at 7.00pm (AEDT) on Saturday 28 November 2020.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

Agenda

Ordinary business

Financial statements and reports

“To receive and to consider the Annual Financial Report of the Company for the financial year ended 30 June 2020 together with the declaration of the Directors, the Directors’ Report, the Remuneration Report and the Auditor’s Report for that financial year.”

Note : This item of ordinary business is for discussion only and is not a resolution .

Pursuant to the Corporations Act, Shareholders will be given a reasonable opportunity at the Meeting to ask questions about, or make comments in relation to, each of the aforementioned reports during consideration of these items.

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Resolutions

Remuneration Report

1. Resolution 1 – Adoption of Remuneration Report

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

“That, for the purpose of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company’s Annual Financial Report for the financial year ended 30 June 2020”.

Note : The vote on this Resolution is advisory only and does not bind the Directors or the Company.

Voting Exclusion Statement : In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 1 by or on behalf of a member of the Company’s key management personnel (including the Directors), whose remuneration details are included in the Remuneration Report ( KMP ), or any of that person’s Closely Related Parties (such as close family members and any controlled companies of those persons) (collectively referred to as Restricted Voter). However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on Resolution 1; and

(b) it is not cast on behalf of a Restricted Voter.

If you appoint the person chairing the Meeting ( Chair ) and you are not a Restricted Voter, by submitting the Proxy Form you authorise the person chairing the Meeting to exercise the proxy even though Resolution 1 is connected directly or indirectly with the remuneration of a KMP, and you will be taken to have directed the Chair to vote in accordance with his or her stated intention to vote in favour of Resolution 1. If you do not want your vote exercised in favour of Resolution 1, you should direct the person chairing the Meeting to vote “against”, or to abstain from voting on, this Resolution.

Re-election of Director

2. Resolution 2 – Re-election of Jason Watson as Director

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

“That Jason Watson, a Director who retires by rotation in accordance with the Company’s Constitution and ASX Listing Rule 14.5, and being eligible offers himself for re-election as a Director of the Company, effective immediately.”

ASX Listing Rule 7.1A (Additional 10% Capacity)

3. Resolution 3 – ASX Listing Rule 7.1A Approval of Future Issue of Securities

To consider and, if thought fit, to pass the following resolution as a Special Resolution :

“That, for the purposes of ASX Listing Rule 7.1A and for all other purposes, the Shareholders approve the issue of equity securities up to 10% of the issued capital of the Company (at the time of issue) calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and otherwise on the terms and conditions set out in the Explanatory Statement which accompanies and forms part of this Notice of Meeting.”

Voting Exclusion Statement : The Company will disregard any votes cast in favour of Resolution 3 by or on behalf of:

(a) a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company); or

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(b)	an Associate of that person or those persons.
However, this does not apply to a vote cast in favour of Resolution 3 by:
(i)	a person as proxy or attorney for a person who is entitled to vote on the Resolution, in
	accordance with directions given to the proxy or attorney to vote on the Resolution in that way;
	or
(ii)	the Chair of the Meeting as proxy or attorney for a person who is entitled to vote on the
	Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the
	Chair decides; or
(iii)	a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a
	beneficiary provided the following conditions are met:
	• the beneficiary provides written confirmation to the holder that the beneficiary is not
	excluded from voting, and is not an associate of a person excluded from voting, on the
	Resolution; and
	• the holder votes on the Resolution in accordance with directions given by the beneficiary
	to the holder to vote in that way.

Issue of Annual Bonus Shares

4. Resolution 4 – Approval of Issue of Annual Bonus Shares to Dr Ian Dixon, Managing Director

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

“That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, the Shareholders of the Company approve the issue and allotment of 200,000 fully paid ordinary shares to Dr Ian Dixon (or his nominee), Managing Director, pursuant to terms of Dr Dixon’s employment agreement, and otherwise on the terms and conditions set out in the Explanatory Statement which accompanies and forms part of this Notice of Meeting.”

Voting	Exclusion Statement: The Company will disregard any votes cast in favour of Resolution 4 by
or on behalf of:
(a)	Dr Ian Dixon;
(b)	a person who will obtain a material benefit as a result of the issue of the securities (except a
	benefit solely by reason of being a holder of ordinary securities in the Company); or
(c)	an Associate of that person or those persons described in (a) or (b).
However, this does not apply to a vote cast in favour of Resolution 4 by:
(i)	a person as proxy or attorney for a person who is entitled to vote on the Resolution, in
	accordance with direction given to the proxy or attorney to vote on the Resolution in that way;
	or
(ii)	the Chair of the Meeting as proxy or attorney for a person who is entitled to vote on the
	Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the
	Chair decides; or
(iii)	a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a
	beneficiary provided the following conditions are met:
	• the beneficiary provides written confirmation to the holder that the beneficiary is not
	excluded from voting, and is not an associate of a person excluded from voting, on the
	Resolution; and
	• the holder vote on the Resolution in accordance with directions given by the beneficiary
	to the holder to vote in that way.

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• Voting Prohibition Statement : In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolution 4 if: (a) the proxy is either: (i) a member of the Company’s Key Management Personnel; or (ii) a closely related party of a member of the Company’s Key Management Personnel; and

• (b) the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

• (a) the proxy is the Chair of the Meeting; and (b) the appointment expressly authorises the Chair to exercise the proxy even if the Resolution is connected directly or indirectly with remuneration of a member of the Company’s Key Management Personnel.

BY ORDER OF THE BOARD

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Sinead Teague Company Secretary

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Explanatory Statement

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting to be held at 11.00 AM (AEDT) on Monday, 30 November 2020 as a virtual meeting .

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

If you are in any doubt about what to do in relation to the Resolutions contemplated in the Notice of Meeting and this Explanatory Statement, it is recommended that you seek advice from an accountant, solicitor or other professional advisor.

Full details of the business to be considered at the Annual General Meeting are set out below.

Agenda

Ordinary business

Financial statements and reports

In accordance with the Constitution and the Corporations Act, the business of the Annual General Meeting will include receipt and consideration of the Annual Financial Report of the Company for the financial year ended 30 June 2020 together with the declaration of the Directors, the Director’s Report, the Remuneration Report and the Auditor’s Report.

In accordance with the amendments to the Corporations Act, the Company is no longer required to provide a hard copy of the Company’s Annual Financial Report to Shareholders unless a Shareholder has specifically elected to receive a printed copy.

Whilst the Company will not provide a hard copy of the Company’s Annual Financial Report unless specifically requested to do so, Shareholders may view the Company Annual Financial Report on its website at www. exopharm.com.

No resolution is required for this item, but Shareholders will be given the opportunity to ask questions and to make comments on the management and performance of the Company.

The Company’s auditor will be present at the Meeting. During the discussion of this item, the auditor will be available to answer questions on the:

• Conduct of the audit;

• Preparation and content of the Auditor’s Report;

• Accounting policies adopted by the Company in relation to the preparation of the financial statements; and

• Independence of the auditor in relation to the conduct of the audit.

Written questions of the auditor

If you would like to submit a written question about the content of the Auditor’s Report or the conduct of the audit of the Annual Financial Report of the Company’s auditor, please send your question to the Company Secretary. A list of qualifying questions will be made available at the Meeting.

Please note that all written questions must be received at least five business days before the Meeting, which is by Monday 23 November 2020.

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Resolutions

Remuneration Report

Resolution 1 – Adoption of Remuneration Report

In accordance with section 250R(2) of the Corporations Act, the Company is required to present to its Shareholders the Remuneration Report as disclosed in the Company’s Annual Financial Report.

The vote on the Resolution is advisory only and does not bind the Directors or the Company. The Remuneration Report is set out in the Company’s Annual Financial Report and is also available on the Company’s website at https://exopharm.com/.

However, if at least 25% of the votes cast are against the adoption of the Remuneration Report at the Meeting (subject of this Notice of Meeting), and then again at the 2021 Annual General Meeting ( 2021 AGM ), the Company will be required to put to the vote a resolution ( Spill Resolution ) at the 2021 AGM to approve the calling of a further meeting ( Spill Meeting ). If more than 50% of Shareholders vote in favour of the Spill Resolution, the Company must convene the Spill Meeting within 90 days of the 2021 AGM. All of the Directors who were in office when the 2021 Directors’ Report was approved, other than the Managing Director, will (if desired) need to stand for re-election at the Spill Meeting.

The Remuneration Report explains the Board’s policies in relation to the nature and level of remuneration paid to KMPs (including Directors) and sets out remuneration details, service agreements and the details of any sharebased compensation.

Voting

Note that a voting exclusion applies to Resolution 1 in the terms set out in the Notice of Meeting. In particular, the Directors and other Restricted Voters must not vote on this Resolution and must not cast a vote as proxy, unless the appointment gives a direction on how to vote, or the proxy is given to the Chair and you submit the Proxy Form, authorising the Chair to exercise the proxy even though Resolution 1 is connected directly or indirectly with the remuneration of a KMP and that in doing so you will be taken to have directed the Chair to vote in accordance with the Chair’s stated intention to vote in favour of Resolution 1.

Shareholders are urged to read carefully the Proxy Form and to provide a direction to the proxy on how to vote on this Resolution.

Re-election of Director

Resolution 2 – Re-election of Mr Jason Watson as Director

The Company’s Constitution provides that:

• If the Company has 3 or more Directors, one third of the Directors (rounded down to the nearest whole number) must retire at each general meeting of the Company;

• If the Company has less than 3 Directors, one Director must retire at each annual general meeting of the Company.

The Managing Director is exempt from retirement by rotation as set out above. The Company has three Directors, one of whom is the Managing Director. Accordingly, one Director is required to retire by rotation at the 2020 AGM. The Director (excluding the Managing Director) to retire at an AGM is the Director who has held their office as Director the longest period of time since their last election or appointment to that office.

ASX Listing Rule 14.5 also provides that an entity which has Directors must hold an election of Directors at each annual general meeting.

Jason Watson was appointed as a Director of the Company on 10 August 2018 and has not sought re-election since appointment.

Under this Resolution, Jason Watson has elected to retire by rotation, and being eligible, seeks re-election as a Director of the Company at this AGM.

Mr. Watson has board and advisory experience acting with small and medium-sized enterprises, research institutes and listed companies in the life sciences and other sectors. In particular, he has assisted companies in developing, commercialising and transacting technologies through significant biotechnology licensing deals.

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Mr. Watson is principal of Elementary Law, a legal practice based in Melbourne, Australia. His practice focuses on assisting clients to achieve the best outcomes for their patents and innovations, including through corporate fundraising, protection strategies, licensing and commercialisation. In this capacity, Mr. Watson has been recognised in the Intellectual Asset Magazine Patent 1000 independent list of The World’s 1000 Leading Patent Professionals.

Mr. Watson has expertise in relation to complex transactions, including establishing multi-party engagements, research and consultancy contracts and negotiating and implementing clinical trial, licensing, assignment, manufacturing, shareholding and other commercial arrangements.

Mr. Watson has a Bachelor of Laws with Honours and a Bachelor of Commerce.

Directors’ recommendation

The Directors (excluding Mr. Watson) recommend that Shareholders vote for this Resolution.

ASX Listing Rule 7.1A

Resolution 3 – ASX Listing Rule 7.1A Approval of Future Issue of Securities

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary securities it had on issue at the start of that period.

Under Listing Rule 7.1A, however, an eligible entity can seek approval from its members, by way of a special resolution passed at its annual general meeting, to add an additional 10% capacity.

An eligible entity for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation less than the amount prescribed by ASX (currently $300 million).

As of the date of this Notice of Meeting, the Company has a market capitalisation of approximately $46.54 million and therefore is an eligible entity. If at the time of the Meeting the Company is no longer an eligible entity this Resolution will be withdrawn.

This Resolution seeks Shareholder approval by way of a special resolution for the Company to have the additional 10% capacity provided for in Listing Rule 7.1A to issue equity securities without Shareholder approval.

If this Resolution is passed, the Company will be able to issue equity securities up to the combined 25% limit in Listing Rules 7.1 and 7.1A without any further Shareholder approval.

If this Resolution is not passed, the Company will not be able to access the additional 10% capacity to issue equity securities without Shareholder approval provided for in Listing Rule 7.1A and will remain subject to the 15% limit on issuing equity securities without Shareholder approval set out in Listing Rule 7.1.

Information Required by ASX Listing Rule 7.3A

The following information is provided to Shareholders for the purposes of Listing Rule 7.3A.

Period for which the approval will be valid

An approval under this Listing Rule 7.1A commences on the date of the annual general meeting at which the approval is obtained and expires on the first to occur of the following:

• (a) the date which is 12 months after the date of the annual general meeting at which the approval is obtained;

• (b) the time and date of the entity’s next annual general meeting; and

• (c) the time and date on which Shareholders approve a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking).

Minimum price at which the equity securities may be issued under Listing Rule 7.1A

Any equity securities issued under Listing Rule 7.1A.2 must be an existing quoted class of the Company’s equity securities and issued for cash consideration.

The issue price per equity security must not be less than 75% of the volume weighted average market price of the equity securities in that class, calculated over 15 trading days on which trades in that class were recorded immediately before:

• (a) the date on which the price at the equity securities are to be issued is agreed by the Company and the

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recipient of the equity securities; and

• (b) if the equity securities are not issued within 10 trading days of the date in paragraph (a), the date on which the equity securities are issued.

Purposes for which the funds raised by an issue of equity securities under Listing Rule 7.1A may be used

As noted above, any equity securities issued under Listing Rule 7.1A.2 must be issued for cash consideration. Accordingly, every issue of equity securities under Listing Rule 7.1A.2 will have an accompanying proposed use of funds at the time of issue.

As at the date of this Notice, the Company has not formed an intention to offer any equity securities under Listing Rule 7.1A during the Listing Rule 7.1A mandate period, if Shareholders approve this Resolution. However, if Shareholders approved this Resolution and the Company did raise funds from the issue of equity securities under Listing Rule 7.1A, based on the Company’s existing plans, the Company considers that the funds may be used for the following purposes:

• (a) to accelerate the commercialisation of the Company’s technology platforms;

• (b) to progress further pre-clinical testing and clinical trials;

• (c) to further develop additional Intellectual Property (IP); and

• (d) as general working capital.

Risk of economic and voting dilution to existing ordinary Securityholders

If this Resolution is approved, and the Company issues equity securities under Listing Rule 7.1A, the existing Shareholders’ economic and voting power in the Company will be diluted.

There is a risk that:

• (a) the market price for the Company’s equity securities in that class may be significantly lower on the issue date than on the date of the approval under Listing Rule 7.1A; and

• (b) the equity securities may be issued at a price that is at a discount (as described above) to the market price for the Company’s equity securities on the issue date,

which may have an effect on the amount of funds raised by the issue of equity securities under Listing Rule 7.1A.

The table below shows the potential dilution of existing Securityholders on the basis of 3 different assumed issue prices and values for the variable “A” in the formula in rule 7.1A.2:

Variable “A” ASX Listing Rule 7.1A.2	Variable “A” ASX Listing Rule 7.1A.2	Potential Dilution and Funds	Potential Dilution and Funds	Raised
		$0.1950 50% decrease in issue price	$0.39 issue prices(b)	$0.78 100% increase in issue price
“A” is the number of shares on issue, being 119,340,000 Shares(a)	10% voting dilution(c)	11,934,000	11,934,000	11,934,000
	Funds raised	$2,327,130	$4,654,260	$9,308,520
“A” is a 50% increase in shares on issue, being 179,010,000 Shares	10% voting dilution(c)	17,901,000	17,901,000	17,901,000
	Funds raised	$3,490,695	$6,981,390	$13,962,780
“A” is a 100% increase in shares on issue, being 238,680,000 Shares	10% voting dilution(c)	23,868,000	23,868,000	23,868,000
	Funds raised	$4,654,260	$9,308,520	$18,617,040

Notes:

• (a) Based on the total number of fully paid ordinary Shares on issue as at 26 October 2020.

• (b) Based on the closing price of the Company’s Shares on ASX as at Monday 26 October 2020.

• (c) The table assumes that the Company issues the maximum number of ordinary Shares available to be issued under Listing Rule 7.1A.

• (d) The table does not show an example of dilution that may be caused to a particular Shareholder by reason of issues of equity securities under Listing Rule 7.1A based on that Shareholder’s holding at the date of this Explanatory Statement.

• (e) The table shows the effect of an issue of equity securities under Listing Rule 7.1A only, not under the Company’s 15% placement capacity under Listing Rule 7.1.

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Allocation policy for issues under Listing Rule 7.1A

The Company’s allocation policy and the identity of the allottees of equity securities under Listing Rule 7.1A will depend on a number of factors, including:

• (a) the Company’s intentions in relation to the possible issue of equity securities (for cash consideration) during the Listing Rule 7.1A mandate period;

• (b) the structure and timeframe of the capital raising opportunities available to the Company and any alternative methods for raising funds that are available to the Company (such as a pro rata offer or an offer under a share purchase plan);

• (c) the potential effect on the control of the Company;

• (d) the Company’s financial position and the likely future capital requirements; and

• (e) advice from the Company’s corporate or financial advisors.

Based on the Company’s historical cashflow reports and capital raising activities in the past 12 months, the Company considers that it may raise funds during the Listing Rule 7.1A mandate period, although this cannot be guaranteed. As of the date of this Notice, no specific intention to issue equity securities in relation to any parties, investors or existing Securityholders have been formed. In addition, no intentions have been formed in relation to the possible number of issues, or the time frame in which the issues could be made. Subject to the requirements of the Listing Rules and the Corporations Act, the Board of Directors reserve the right to determine at the time of any issue of equity securities under Listing Rule 7.1A, the allocation policy that the Company will adopt for that issue.

If and when the determination is made to proceed with an issue of equity securities during the Listing Rule 7.1A mandate period, details regarding the allottees and purposes of issue will be disclosed pursuant to the Company’s obligations under Listing Rules 3.10.3 and 7.1A.4.

Offers made under Listing Rule 7.1A may be made to parties (excluding any related parties) including professional and sophisticated investors, existing Shareholders of the Company, clients of Australian Financial Service Licence holders and/or their nominees, or any other person to whom the Company is able to make an offer of equity securities.

Issue or agreement to issue equity securities under Listing Rule 7.1A in the 12 months prior to AGM

The Company has issued or agreed to issue equity securities under Listing Rule 7.1A.2 in the 12 months preceding the AGM. Details of these issues or agreements to issue are set out in the table below:

Number/Class of equity securities issued	Terms of the securities issued	Price and discount to closing market price on the date of issue (if any)	Consideration details	Allottees of the Securities
Issued on 8 September 2020
9,547,200 fully paid ordinary shares	Issue of shares to sophisticated and professional investors under a placement announced on 27 August 2020. The placement was completed by utilising existing capacity under ASX Listing Rule 7.1 and 7.1A. The shares were fully paid on issue and ranked equally in all aspects with all existing fully paid ordinary shares previously issued by the Company.	Issue price of 24 cents per share Closing market price on the date of issue was 33 cents, which represents a discount of 27.27%.	Cash Consideration of $2,291,328 The Funds will be used to accelerate the commercialisation of the company’s technology platform using exosomes as a new form of medicine to progress further testing and clinical trials and further develop intellectual property	Sophisticated and professional investors

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Total equity securities issued or agreed to be issued under Listing Rule 7.1A.2 in the 12 months prior to AGM (“A”)	9,547,200
Percentage that “A” represents based on the total number of equity securities on issue at the commencement of that 12 month period (fully diluted)	10%

This Resolution is a Special Resolution. For a Special Resolution to be passed, at least 75% of the votes validly cast on the resolution by Shareholders (by number of ordinary shares) must be in favour of this Resolution.

Directors’ recommendation

The Board of Directors recommend that Shareholders vote for this Resolution.

Issue of Annual Bonus Shares

Resolution 4 – Approval of Issue of Annual Bonus Shares to Dr Ian Dixon, Managing Director

Background

As announced to the ASX on 26 November 2019 as part of Dr Ian Dixon’s employment contract, in CY 2020 Dr Dixon is eligible for an at-risk bonus consisting of $80,000 cash ( Cash Bonus ) and 200,000 share bonus ( Share Bonus ) based on achievement of key performance indicators ( KPIs ) that would be monitored by the Board.

The non-conflicted directors, have made careful assessment as to whether Dr Ian Dixon has satisfied the KPIs as set by the Board for the relevant period and have satisfied themselves that Dr Dixon has achieved the KPIs as set by the Board.

Accordingly, this Resolution seeks Shareholder approval to issue and allot 200,000 fully paid ordinary shares ( Annual Bonus Shares ) to Dr Ian Dixon (or his nominee).

Listing Rule 10.11

ASX Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, the Company, as a listed company, must not issue equity securities to persons in a position of influence without Shareholder approval.

A person in a position of influence for the purposes of Listing Rule 10.11 includes:

• (a) a related party;

• (b) a person who is, or was at any time in the 6 months before the issue of agreement, a substantial (30%+) holder in the Company;

• (c) a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holder in the Company and who has nominated a director to the board of the Company pursuant to a relevant agreement which gives them a right or expectation to do so;

• (d) an Associate of a person referred to in (a) to (c) above; and

• (e) a person whose relationship with the Company or a person referred to in (a) to (d) above is such that, in the ASX’s opinion, the issue or agreement should be approved by Shareholders.

As Dr Ian Dixon is a Director of the Company, he is considered a person in a position of influence for the purposes of Listing Rule 10.11. The proposed issue does not fall within any of the exceptions in Listing Rule 10.12, and therefore requires the approval of the Company’s Shareholders under Listing Rule 10.11.

To this end, this Resolution seeks the required Shareholder approval to issue the Annual Bonus Shares to Dr Dixon under and for the purposes of Listing Rule 10.11.

If approval is obtained under Listing Rule 10.11, in accordance with Listing Rule 7.2 (exception 14), separate approval is not required under Listing Rule 7.1.

If this Resolution is passed, the Company will be able to proceed with the proposed issue and Dr Dixon will be issued with the Annual Bonus Shares.

If this Resolution is not passed, the Company will not be able to proceed with the proposed issue and Dr Dixon

Exopharm Limited | Annual General Meeting – Notice of Meeting and Explanatory Statement

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will not be issued with the Annual Bonus Shares.

Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

• (a) the giving of the financial benefit falls within one of the exceptions to the provisions; or

• (b) Shareholder approval is obtained prior to the giving of the financial benefit.

The proposed issue of Annual Bonus Shares (which is a type of equity security, for the purposes of the Chapter 2E of the Corporations Act) constitutes the giving of a financial benefit.

A “related party” for the purposes of the Corporations Act and the Listing Rules is widely defined and includes a director of a public company, a spouse of a director of a public company or an entity controlled by a director of a public company. The definition of “related party” also includes a person whom there is reasonable grounds to believe will become a “related party” of a public company.

The non-conflicted Directors of the Company (being Messrs. Jason Watson and David Parker) carefully considered the issue of these Annual Bonus Shares to Dr Dixon and formed the view that the giving of this financial benefit as part of his remuneration would be reasonable, given that the terms of proposed issue were captured in Dr Dixon’s employment agreement (as announced on 26 November 2019), the circumstances of the Company, the quantum and terms of the Annual Bonus Shares, and the responsibilities held by Dr Dixon in the Company.

Accordingly, the non-conflicted Directors of the Company believe that the issue of these Annual Bonus Shares to Dr Dixon fall within the “reasonable remuneration” exception as set out in section 211 of the Corporations Act, and relies on this exception for the purposes of this Resolution. Therefore, the proposed issue of the Annual Bonus Shares to Dr Dixon requires Shareholder approval under and for the purposes of Listing Rule 10.11 only.

Information required by ASX Listing Rule 10.13

The following information in relation to the issue of the Annual Bonus Shares to Dr Ian Dixon is provided to Shareholders for the purposes of ASX Listing Rule 10.13:

• (a) The allottee is Dr Ian Dixon (or his nominee), Managing Director.

• (b) Dr Dixon is a Director of the Company, accordingly, as a related party of the Company, Dr Dixon satisfies Listing Rule 10.11.1.

• (c) The maximum number of fully paid ordinary shares to be issued is 200,000.

• (d) The Annual Bonus Shares will be fully paid on issue and rank equally in all aspects with all existing fully paid ordinary shares previously issued by the Company.

• (e) The Annual Bonus Shares will be issued within 1 month of Shareholder approval being obtained by the Company (or otherwise, as determined by the ASX in the exercise of their discretion).

• (f) Each of the 200,000 Annual Bonus Shares will be offered for nil cash consideration.

• (g) Funds will not be raised from the issue of these Annual Bonus Shares as the issue is proposed to be made as part of Dr Dixon’s remuneration following fulfillment of his KPI’s for the relevant period (pursuant to the terms his employment agreement).

• (h) As noted above, the issue of the Annual Bonus Shares forms part of Dr Dixon’s remuneration (as announced on 26 November 2019). As at the date of this Notice, Dr Dixon’s current total remuneration package consists of base remuneration of $280,000 per annum (inclusive of superannuation), in addition to bonus remuneration (which consists of the at-risk Cash Bonus, and the at-risk Share Bonus).

Enquiries

Shareholders are asked to contact the Company Secretary at sinead.teague@exopharm.com if they have any queries in respect of the matters set out in these documents.

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Glossary

AEDT means Australian Eastern Daylight Time as observed in Sydney, New South Wales.

Annual Bonus Shares means the Securities that may be granted by the Company to Dr Ian Dixon as contemplated in Resolution 4.

Annual Financial Report means the 2020 Annual Report to Shareholders for the period ended 30 June 2020 as lodged by the Company with ASX on 14 September 2020.

Annual General Meeting or AGM or Meeting means an Annual General Meeting of the Company and, unless otherwise indicated, means the meeting of the Company’s members convened by this Notice of Meeting.

ASIC means Australian Securities and Investment Commission.

Associate has the meaning given to it by the ASX Listing Rules.

ASX means ASX Limited ACN 008 624 691 or the financial market operated by it, as the context requires, of 20 Bridge Street, Sydney, NSW 2000.

ASX Listing Rules or Listing Rules means the official ASX Listing Rules of the ASX and any other rules of the ASX which are applicable while the Company is admitted to the official list of the ASX, as amended or replaced from time to time, except to the extent of any express written waiver by the ASX.

Auditor’s Report means the auditor’s report of William Buck dated 26 August 2020 as included in the Annual Financial Report.

Board means the current board of Directors of the Company.

Business Day means a day on which trading takes place on the stock market of ASX.

Chair means the person chairing the Meeting.

Closely Related Party of a member of the KMP means:

• (a) a spouse or child of the member;

• (b) a child of the member’s spouse;

• (c) a dependant of the member or of the member’s spouse;

• (d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealings with the Company;

• (e) a company the member controls; or

• (f) a person prescribed by the Corporation Regulations 2001 (Cth).

Company means Exopharm Limited ACN 163 765 991

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth) as amended or replaced from time to time.

Director means a current director of the Company.

Directors’ Report means the report of Directors as included in the Annual Financial Report.

Dollar or “ $ ” means Australian dollars.

Explanatory Statement means the explanatory statement accompanying this Notice of Meeting.

KMP means key management personnel (including the Directors) whose remuneration details are included in the Remuneration Report.

Notice of Meeting or Notice of Annual General Meeting means this notice of annual general meeting dated 29 October 2020 including the Explanatory Statement.

Ordinary Resolution means a resolution that can only be passed if at least 50% of the total votes cast by Shareholders entitled to vote on the resolution are voted in its favour at the meeting.

Proxy Form means the proxy form attached to this Notice of Meeting.

Remuneration Report means the remuneration report as set out in the Annual Financial Report.

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

Restricted Voter means a member of the Company’s KMP and any Closely Related Parties of those members.

Securities mean Shares and/or Options (as the context requires).

Securityholder means a holder of Securities.

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

Shareholder means a holder of a Share.

Share Registry means Automic Registry Services.

Special Resolution means a resolution that can only be passed if at least 75% of the total votes cast by Shareholders entitled to vote on the resolution are voted in its favour at the meeting.

Spill Meeting means the meeting that will be convened within 90 days of the 2021 AGM if a threshold of votes is cast against the adoption of the Remuneration Report at the Meeting and the 2021 AGM.

Spill Resolution means the resolution required to be put to Shareholders at the 2021 AGM if a threshold of votes is cast against the adoption of the Remuneration Report at the Meeting and the 2021 AGM.

Trading Day has the meaning given to that term in ASX Listing Rule 19.12.

VWAP means the volume weighted average market (closing) price, with respects to the price of Shares.

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