GALE PACIFIC LIMITED — Proxy Solicitation & Information Statement 2007

Jul 23, 2007

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Gale Pacific Limited ACN 082 263 778 (“Company”)

Notice of general meeting

NOTICE is given that a meeting of members of the company will be held at 10.00 am on Friday 24 August 2007 at the offices of Pitcher Partners at Level 19, 15 William Street Melbourne Victoria 3000.

ITEMS OF BUSINESS

1. Resolution 1 – Approval to issue shares to Investec

To consider and if thought fit pass the following resolution as an ordinary resolution :

“That, for the purpose of item 7 of section 611 of the Corporations Act 2001 (Cth) (“ Corporations Act ”) and for all other purposes, approval be given for the acquisition of relevant interests in voting shares in the Company (being through the issue of 30,300,000 ordinary shares in the capital of the Company at an issue price of $0.50 per share) by Investec Bank (Australia) Limited, IWPE Nominees Pty Limited as nominee of Investec Wentworth Private Equity Limited in its capacity as trustee of Investec Wentworth Private Equity Fund 2, IWPE Nominees Pty Ltd as nominee of Investec Wentworth Private Equity Limited in its capacity as trustee of MG Private Equity Unit Trust No 1 and MGB Equity Growth Pty Limited in its capacity as trustee of the MGB Equity Growth Unit Trust No 2 (collectively “ Investec ” and individually an “ Investec entity ”) on the terms and conditions set out in the Explanatory Statement accompanying this notice of meeting.”

No votes may be cast on this resolution by an Investec entity or their associates.

2. Resolution 2 – Approval of appointment of Investec nominee to the board of directors of the Company

To consider and if thought fit to pass the following resolution as an ordinary resolution :

“That in accordance with clause 7.1(c) of the Company’s constitution, subject to Resolution 1 being passed and subject to receipt of a signed consent by the Company, John Murphy is appointed to the board of directors of the Company as the nominee of Investec.”

3. Resolution 3 – Approval to issue shares to Thorney

To consider and if thought fit to pass the following resolution as an ordinary resolution :

“That, subject to Resolutions 1 and 2 being passed, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given to the issue 9,700,000 ordinary shares in the capital of the Company to Thorney Holdings Pty Ltd (“ Thorney ”) at an issue price of $0.50 per share set out in the Explanatory Statement accompanying this notice of meeting.”

Voting exclusion : The Company will disregard any votes cast on this resolution by:

• (i) Thorney;

• (ii) any associate of Thorney; and

• (iii) any person who might obtain a benefit (except a benefit solely in the capacity as a holder of ordinary securities) if the resolution is passed.

EXPLANATORY STATEMENT

The accompanying Explanatory Statement forms part of this notice of meeting and should be read in conjunction with it.

CORPORATE REPRESENTATIVE

A corporate member who has appointed a person to act as its corporate representative at the meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company and/or its share registry in advance of the meeting or handed in at the meeting when registering as a corporate representative.

PROXIES

Please note that:

1. A member entitled to attend and vote at this meeting is entitled to appoint one proxy or, if the member is entitled to cast two or more votes at the meeting, two proxies to attend and vote on behalf and instead of the member.

2. Where two proxies are appointed and the appointment does not specify the proportion or number of the member’s votes each proxy may exercise, each proxy may exercise half of the votes.

3. A proxy need not be a member.

4. A proxy form accompanies this notice. To be valid it must be received together with the power of attorney or other authority (if any) under which the form is signed, or a certified copy of that power or authority, not less than 24 hours before the time for holding the meeting, namely by 10.00 am on Thursday 23 August 2007 at Computershare Investor Services Pty Limited:

5. (a) by post at GPO Box 242, Melbourne, Victoria 3001; or

6. (b) by personal delivery at Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067; or (c) by facsimile: (03) 9473 2555.

By order of the Board

Dated: 24 July 2007

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Sophie Karzis Company Secretary

Gale Pacific Limited ACN 082 263 778 (“Company”)

Explanatory Statement

This Explanatory Statement and all annexures are important documents and should be read carefully. If you have any questions regarding the matters set out in this Explanatory Statement or the preceding notice of general meeting (“ Notice of Meeting ”), please contact the Company, your stockbroker or other professional adviser.

1. GENERAL INFORMATION

This Explanatory Statement has been prepared for the information of members in connection with the resolutions to be considered by them at the general meeting of the Company to be held on Friday 24 August 2007 at the offices of Pitcher Partners at Level 19, 15 William Street Melbourne Victoria 3000 (“ General Meeting ”).

This Explanatory Statement should be read in conjunction with the Notice of Meeting.

2. RESOLUTION 1 AND RESOLUTION 2

At the General Meeting you will be asked to consider Resolution 1 to approve an issue of shares to Investec Bank (Australia) Limited (“ IBAL ”), IWPE Nominees Pty Ltd as nominee of Investec Wentworth Private Equity Limited (“ IWPE ”) in its capacity as trustee of Investec Wentworth Private Equity Fund 2, IWPE Nominees Pty Ltd as nominee of IWPE in its capacity as trustee of MG Private Equity Unit Trust No 1 and MGB Equity Growth Pty Limited (“ MGB ”) in its capacity as trustee of the MGB Equity Growth Unit Trust No 2 (collectively “ Investec ” and individually an “ Investec entity ”).

The purpose of the proposed share issue to Investec of 30,300,000 shares at an issue price of $0.50 per share is to raise $15,150,000 of new equity to recapitalise the Company to address the Company’s current financial requirements, refinance the Company’s existing banking facilities, provide the expansion capital necessary to restructure the Company’s New Zealand manufacturing operations and provide working capital funds for sales growth and product development.

The proposed share issue to Investec will result in Investec obtaining voting power in more than 20% of the total issued share capital of the Company.

In accordance with the Corporations Act 2001 (Cth) (“ Corporations Act ”), no votes may be cast in favour of Resolution 1 by any Investec entity or their associates.

Should Resolution 1 be passed, it is intended that Investec will appoint a director to the Company. Accordingly, at the General Meeting you will also be asked to consider, subject to Resolution 1 being passed, Resolution 2 to appoint an Investec representative director to the Company.

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3. RECOMMENDATION

All of the directors of the Company approved the proposal to put Resolutions 1 and 2 to the shareholders and unanimously recommend that shareholders vote in favour of Resolutions 1 and 2.

The directors’ recommendations are based on the following reasons:

• (a) the directors have considered a number of options to recapitalise the Company over recent months and, at the date of the Notice of Meeting, consider that the proposed share issue, in conjunction with revised banking arrangements, is the best and most viable option to address the Company’s financial requirements and to enable the Company to move forward;

• (b) their analysis of the commercial advantages, disadvantages and potential risks associated with the proposed share issue to Investec indicates that this action represents the most positive outcome for all shareholders;

• (c) the addition of an experienced Non-Executive director will add value to the Board; and

• (d) the directors commissioned an independent expert’s report (refer below) which indicated that the proposed share issue to Investec is fair and reasonable;

4. COMPLIANCE REQUIREMENTS – RESOLUTION 1

The Corporations Act and the Australian Securities and Investments Commission’s (“ ASIC ”) policy set out a number of regulatory requirements that must be satisfied in relation to Resolution 1 (the proposed share issue to Investec) specifically:

4.1 Section 606 of the Corporations Act

Under section 606 of the Corporations Act, a person is prohibited from acquiring a relevant interest in voting shares in a public company if the acquisition increases that person or someone else’s voting power in the company above 20% (or if the relevant person already holds 20% of voting power in the company, then increasing that voting power further above 20%) except in certain circumstances.

For the purposes of section 606 of the Corporations Act:

• (a) a person has a ‘ relevant interest ’ in securities if they:

• (1) are the holder of the securities;

• (2) have the power to exercise, or control the exercise of a power to dispose of, the securities; or

• (3) have the power to dispose of, or control the exercise of a power to dispose of, the securities.

The voting power of a person (including a body corporate) is determined in accordance with section 610 of the Corporations Act. The calculation of a person’s voting power in a company involves determining the voting shares in the company in which the person and the person’s associates have a relevant interest.

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The Investec entities are “associates” of each other for these purposes.

4.2 Exception to section 606 prohibition

Item 7 of section 611 of the Corporations Act provides an exception to the prohibition in section 606 of the Corporations Act outlined above, whereby a person may acquire a relevant interest in a company’s voting shares in excess of 20% of the issued share capital of a public company with shareholder approval.

The purpose of Resolution 1 is to seek shareholder approval pursuant to item 7 of section 611 of the Corporations Act, for Investec to acquire a relevant interest in more than 20% of the issued share capital of the Company.

4.3 Disclosure

The following information is required by the Corporations Act and ASIC policy to enable shareholders to assess the merits of the proposed share issue to Investec for the purposes of voting on Resolution 1:

About the Investec entities

IBAL offers a diverse range of investment banking products and services to a network of high net worth individuals and their businesses, and a niche corporate market in Australia.

IBAL is a wholly owned subsidiary of Investec Plc. The Investec Group comprises Investec Plc and Investec Limited. (“ Investec ”). Investec is a major multi-national specialist banking group that provides a diverse range of financial products and services to a select client base. Investec is publicly listed on the London and Johannesburg stock exchanges with a market capitalisation in excess of A$10 billion.

IWPE is IBAL’s private equity arm and its primary business involves raising and investing capital from various investors, almost all of whom are Australian. IWPE has established a strong track record in identifying, investing in, growing and realising private equity investments in Australia, New Zealand and the broader Australasian region. IWPE and its executives have been managing private equity funds for nine years, and in that time have raised six funds with a total of over $450 million in commitments.

MGB was formed in 1998, and since that time has raised two funds with similar mandates to the IWPE funds. Since 2002, funds managed by MGB have co-invested with the IWPE funds.

IWPE is the manager of all of the IWPE and MGB funds, including the Investec Wentworth Private Equity Fund 2, MG Private Equity Unit Trust No 1 and MGB Equity Growth Unit Trust No 2, which co-invest in fixed proportions.

IWPE Nominees Pty Limited (“IWPE Nominees”) is the custodian of the Investec Wentworth Private Equity Fund 2 and the MG Private Equity Unit Trust No 1. IWPE Nominees is a wholly owned subsidiary of IBAL and the holder of an Australian financial service licence. The role of the custodian is limited to holding assets as agent for the manager on behalf of unitholders in the funds.

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Investec’s voting power

As noted above, under Resolution 1, the allottees of the proposed share issue are the Investec entities. If Resolution 1 is passed, each Investec entity will be issued shares in the following proportions:

Investec entity	Number of shares	% of issued share capital 1
IBAL	6,060,000	4.43%
IWPE Nominees as nominee for IWPE in its capacity as trustee of Investec Wentworth Private EquityFund 2	12,120,000	8.86%
IWPE Nominees as nominee for IWPE in its capacity as trustee of MG Private EquityUnit Trust No 1	7,791,428	5.69%
MGB in its capacity as trustee of the MGB EquityGrowth Unit Trust No 2	4,328,572	3.16%
Total	30,300,000	22.14%

At the date of the Notice of Meeting, neither Investec nor any associates of any Investec entity, hold any shares in the Company and therefore, do not have any voting power in the Company immediately before the proposed share issue.

Immediately after the proposed share issue, Investec will hold 30,300,000 ordinary shares in the Company issued at $0.50 and representing approximately 22.14% of the Company’s issued share capital (assuming Resolution 3 is passed and 9,700,000 shares are issued to Thorney Holdings Pty Limited). The increase in Investec’s voting power, and the maximum extent of Investec’s increase in voting power, resulting from the proposed share issue, will therefore be 22.14%.

Intended directors

Should shareholder approval be given for the proposed share issue to Investec, it is intended that Investec will appoint Mr John Murphy as an additional director of the Company. Further details about Mr Murphy and Resolution 2 are set out in section 4 below.

Investec’s intentions in relation to the Company

If Resolution 1 is passed, Investec has indicated to the Company that it intends to support the board of directors and management team of the Company with its strategic initiatives to improve the operating performance of the Company, including by supporting the initiatives outlined in the Company’s announcement to ASX on 29 June 2007 in connection with the proposed recapitalisation.

Investec also intends to use its voting power in the Company to support the ongoing appointment of a nominee of Investec to the Company’s board of directors.

1 After the issue of shares to Investec and Thorney in resolution 1 and 3

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Except as set out above or elsewhere in this Explanatory Statement, none of the Investec entities has any present intention:

• (a) to change the business of the Company;

• (b) to inject further capital into the Company;

• (c) with regard to the future employment of the present employees of the Company;

• (d) to transfer any property between the Company and itself or any person associated with the Company or itself;

• (e) to redeploy any fixed assets of the Company; and

• (f) to significantly change the financial or dividend policies of the Company.

Terms of the proposed share issue

The terms of the proposed share issue to Investec are set out in a Subscription Agreement between the Company and Investec dated 29 June 2007, the terms of which are summarised in Annexure A to this Explanatory Statement.

Shareholders are urged to read the summarised terms carefully and in particular, shareholders should note the conditions precedent in item 6 of the summary and the terms of completion in item 7 of the summary.

Timing of the proposed share issue

It is intended that the proposed share issue will take place on or about five business days following the approval of the issue of shares to Investec by the shareholders of Gale in general meeting.

Reasons for the proposed share issue

As noted above, the reason for the proposed share issue is to raise $15,150,000 of new equity to recapitalise the Company to address the current financial requirements, refinance its existing banking facilities, provide the expansion capital necessary to restructure the Company’s New Zealand manufacturing operations, and provide working capital funds for sales growth and product development.

Interests of the directors

None of the directors has an interest in the outcome of the resolutions, other than as shareholders of the Company. The Directors therefore consider that it is appropriate that they should make a recommendation to shareholders with respect to the resolutions.

Independent expert’s report

The directors commissioned Ernst & Young to prepare an independent expert’s report to analyse whether the proposed share issue to Investec is fair and reasonable when considered in the context of the interests of the shareholders, other than those shareholders involved in the proposed share issue or associated with those persons (“ non-associated shareholders ”). The independent expert’s report dated 18 July 2007 is included as Annexure B to this Explanatory Statement.

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The advantages and disadvantages of the proposed share issue are outlined in the report and are provided to the non-associated shareholders of the Company to enable them to determine whether they are better off if the proposed share issue to Investec proceeds than if it does not.

The independent expert’s report concludes that the proposed share issue to Investec on balance is fair and reasonable to the non-associated shareholders of the Company.

Shareholders are urged to carefully read the independent expert’s report to understand the scope of the report, the methodology of the valuation and the sources of information and assumptions made in producing the report.

4.4 ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company must not without prior shareholder approval, and subject to specified exceptions, issue or agree to issue during any 12 month period any equity securities (or other securities with rights to conversion to equity), if the number of those securities exceeds 15% of the number of securities in the same class on issue at the commencement of that 12 month period.

One exception to ASX Listing Rule 7.1 is in circumstances where an issue of securities has been approved for the purposes of item 7 of section 611 of the Corporations Act (ASX Listing Rule 7.2, Exception 16). The Company is therefore not required to also seek shareholder approval of the proposed share issue to Investec to satisfy ASX Listing Rule 7.1.

5. RESOLUTION 2 - APPOINTMENT OF DIRECTOR

Should shareholder approval be given for the proposed share issue to Investec, it is intended that Investec will appoint Mr John Murphy as an additional director of the Company.

Mr Murphy is the Managing Director of IWPE. He is also a director of IBAL, AAV Limited, Australian Pharmaceutical Industries Limited and Millers Retail Limited. Prior to his involvement with Investec, Mr Murphy spent 25 years with a global accounting firm, 15 years as a partner, including roles of Asia Pacific regional responsibility.

Mr Murphy’s qualifications include Bachelors and Masters degrees in Commerce. He is a member of the Institute of Chartered Accountants and a Fellow of the Australian Society of Certified Practising Accountants.

All of the directors of the Company approved the proposal to put Resolution 2 to the shareholders and unanimously recommend that shareholders vote in favour of Resolution 2.

6. RESOLUTION 3 - APPROVAL OF ISSUE OF SHARES TO THORNEY HOLDINGS PTY LTD

The Company requires an additional $4,850,000 capital to effect the proposed recapitalisation. Accordingly, at the General Meeting you will also be asked to consider Resolution 3 to approve the issue of an additional 9,700,000 ordinary shares in the capital of the Company to Thorney Holdings Proprietary Limited (“ Thorney ”) at an issue price of $0.50 per share.

Resolution 3 is conditional upon Resolutions 1 and 2 being passed.

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At the date of the Notice of Meeting, Thorney and its associates own 17,636,560 ordinary shares in the capital of the Company, representing approximately 18.21% of the Company’s issued share capital. Immediately after the proposed share issue to Thorney, Thorney and its associates will own 27,336,560 ordinary shares in the capital of the Company, representing approximately 19.98% of the Company’s issued share capital.

The proposed share issue to Thorney will not result in Thorney increasing its relevant interest above 20% of the issued share capital of the Company for the purposes of section 606 of the Corporations Act. Nor will the proposed share issue exceed 15% of the total number of fully paid ordinary shares in the capital of the Company (taking into account other issues of ordinary shares made by the Company in the previous 12 months) for the purposes of ASX Listing Rule 7.1.

The Company is nevertheless seeking shareholder approval for the proposed share issue to Thorney for the purposes of Listing Rule 7.1 to refresh the capacity of the Company to issue additional securities in the future (up to the limits specified in the Corporations Law) without the need to seek further shareholder approval. This will afford the Company greater flexibility when considering issuing further securities. However, as shareholder approval of the share issue to Thorney is not specifically required, if Resolution 3 is not passed by the shareholders at the General Meeting, but Resolutions 1 and 2 are passed, the Company will proceed with the proposed share issue to Thorney, notwithstanding that it has not refreshed its capital for the purposes of future share issues.

In accordance with ASX Listing Rule 7.3 the following additional details set out below are required to be disclosed to the holders of ordinary securities when seeking approval for Resolution 3 (the issue of ordinary shares to Thorney) for the purposes of ASX Listing Rule 7.1:

Date of allotment and issue	Type of security	Number issued and allotted	Issue Price	Terms	Allottees	Intended use of funds
On or about 2 business days after the date that the resolutions are approved by shareholders at the General Meeting and, in any event, no later than 3 months after the date of the General Meeting, or such later time as ASX may permit	Ordinary shares	9,700,000	$0.50 per share	Ordinary shares ranking equally with existing ordinary shares on issue pursuant to a subscription agreement	Thorney Holdings Pty Ltd	To recapitalise the Company

In accordance with the ASX Listing Rules, Thorney, any associate of Thorney and any person who might obtain a benefit (except a benefit solely in the capacity as a holder of ordinary securities) if Resolution 3 is passed, are excluded from voting on Resolution 3 to approve the proposed share issue to Thorney. This voting exclusion statement is contained in the Notice of Meeting.

All of the directors of the Company approved the proposal to put Resolution 3 to the shareholders and recommend that shareholders vote in favour of Resolution 3.

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ANNEXURE A

Summary of Subscription Agreement

1. Parties:

Investec Bank (Australia) Limited (“ IBAL ”)

Investec Wentworth Private Equity Limited (“ IWPE ”) in its capacity as trustee of Investec Wentworth Private Equity Fund 2

IWPE in its capacity as trustee of MG Private Equity Unit Trust No 1

MGB Equity Growth Pty Limited (“ MGB ”) in its capacity as trustee of the MGB Equity Growth Unit Trust No 2

(collectively “ Subscribers ”)

Gale Pacific Limited (“ Gale ”)

2. Date:

3. Subject matter:

4. Execution:

5. Subscription:

29 June 2007

The Subscription Agreement records the terms and conditions of the subscription by the Subscribers of shares in Gale.

The Subscription Agreement has been executed by all parties.

The Subscribers have agreed to subscribe for a total of 30,300,000 shares in the capital of Gale for a total subscription price of $15,150,0000 (being an amount of A$0.50 per share to be fully paid on issue) in the proportions set out opposite each Subscriber’s name in the following table:

Subscriber	Number of shares	Subscription price
IBAL	6,060,000	$3,030,000
IWPE in its capacity as trustee of Investec Wentworth Private EquityFund 2*	12,120,000	$6,060,000
IWPE in its capacity as trustee of MG Private Equity Unit Trust No 1*	7,791,428	$3,895,714
MGB in its capacity as trustee of the MGB Equity Growth Unit Trust No 2	4,328,572	$2,164,286
Total	30,300,000	$15,150,000

*Pursuant to a letter from Investec subsequent to the Subscription Agreement, it has been agreed that IWPE Nominees as custodian for Investec Wentworth Private Equity Fund 2 and MG Private Equity Unit Trust No 1 will be the registered holder of these shares upon issue.

6. Conditions:

The subscription is conditional upon Foreign Investment Review Board approval.

Completion of the subscription is conditional upon satisfaction of the following conditions precedent:

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• (a) shareholders in general meeting approving the issue of the subscription shares and the appointment of a Subscriber representative to the Gale board of directors;

• (b) the Gale board unanimously recommending that shareholders vote in favour of the subscription and the appointment of the Subscriber representative to the Gale board of directors;

• (c) in principle approval from ASX indicating that it will grant official quotation to the subscription shares;

• (d) Gale making provision in its financial accounts for the year ending 30 June 2007 for:

• (i) restructuring of the Gale Group’s New Zealand manufacturing operations; and

• (ii) European assets,

in accordance with the ASX announcement of 29 June 2007 titled “Recapitalisation update and outlook”;

• (e) Gale obtaining a final letter of offer to refinance its existing Australian debt facilities on substantially the same terms as set out in a terms sheet from the Commonwealth Bank of Australia; and

• (f) a number of events not happening in respect of Gale between the date of the Subscription Agreement and the date of completion of the subscription including Gale converting all/any shares, Gale reducing its share capital, Gale buying back any shares, Gale adopting/modifying its constitution or the chairman, CEO, CFO or any other senior executive of Gale resigns or their employment is terminated.

7. Completion:

• Completion is to take place 5 business days after the last condition precedent is satisfied (which is anticipated to be five business days following shareholder approval of the subscription).

As soon as practicable after completion Gale must use its best endeavours to obtain official quotation of the subscription shares and deliver to the Subscribers the holding statement for the subscription shares.

The Subscribers are not required to complete on the completion date if Gale is insolvent, a warranty is not correct or misleading in a material respect or trading in shares of Gale is suspended for more than 3 days

8. Parties’ obligations:

Gale must do a number of things as part of the subscription including:

• (a) state in the notice of meeting and the ASX announcement that each of the directors of Gale’s board recommends to shareholders that they vote in favour of the subscription and the appointment of the Subscriber representative to the Gale board of directors; and

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• (b) use its reasonable endeavours to procure that subject to the Corporations Act and the ASX Listing Rules each member of the Gale board votes any shares they hold in favour of the subscription and the appointment of the Subscriber representative to the Gale board of directors and each member of the Gale board does not change that voting intention.

The Subscribers must do a number of things as part of the subscription including procure and provide to Gale the written consent of the Subscriber representative to the Gale board of directors prior to the dispatch of the notice of meeting to shareholders.

(a) Warranties:

Gale has given a number of warranties to the Subscribers in respect of itself and its subsidiaries including in respect of:

• (a) incorporation and power to carry on the business of the group;

• (b) power to enter into the Subscription Agreement, enforceability of the Subscription Agreement and no breach of other obligations as a result of the Subscription Agreement;

• (c) ASX disclosure;

• (d) solvency;

• (e) current or pending litigation to which Gale or its subsidiaries might be a party;

• (f) the subscription shares; and

• (g) compliance with any relevant laws by Gale and its subsidiaries with respect to the conduct of the business of the group and the committing of offences by Gale, its subsidiaries and the directors of Gale and its subsidiaries.

Gale has indemnified the Subscribers against all loss arising from an incorrect or misleading warranty.

Each Subscriber has given a number of warranties to Gale in respect of itself including in respect of:

• (a) power to enter into the Subscription Agreement, enforceability of the Subscription Agreement and no breach of other obligations as a result of the Subscription Agreement;

• (b) solvency; and

• (c) not acquiring the subscription shares with the purposes of selling/transferring them and will not sell them within 12 months of the completion date.

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• (d) Conduct of business:

From the date of the Subscription Agreement to the date of completion, Gale has an obligation to conduct the business in the ordinary and proper course and in particular:

• (a) must maintain its business and assets;

• (b) must keep available the services of its officers and employees;

• (c) must maintain its third party relationships (such as customer contracts and suppliers);

• (d) must ensure there is no material decrease in cash (other than in the ordinary course of business or as a result of reasonable costs associated with the subscription);

• (e) must not increase the remuneration of, vary the employment agreements with, accelerate the rights to benefits of or pay termination payments to any of its directors/employees;

• (f) must not amend in any material respect any arrangements with its financial advisers in respect of the subscription;

• (g) must not announce, declare or pay any dividends; and

• (h) must not convert all/any shares, reduce its share capital, buy back any shares, adopt/modify its constitution or the chairman, CEO, CFO or any other senior executive of Gale resigns or their employment is terminated.

• (i) Exclusivity and During the period between the date of the Subscription Agreement to confidentiality: the earlier of termination of the Subscription Agreement and 30 September 2007 (“ Exclusivity Period ”), Gale and its related entities and representatives must not solicit, invite, encourage or initiate any negotiations or discussions or indicate any intention to do so with a view to obtaining any offer/expression of interest from any entity in relation to a competing transaction.

Unless the Gale board determines in good faith that a bona fide competing transaction would be superior to that offered by the Subscribers, during the Exclusivity Period Gale and its related entities and representatives must not negotiate or enter into or participate in negotiations or discussions with any other person regarding a competing transaction even if that transaction was not solicited by Gale.

The parties are subject to reciprocal confidentiality obligations in respect of confidential information exchanged between the parties under the Subscription Agreement or during negotiations. The Subscribers are also restricted from doing anything which results or could result in Gale or in relation to the securities of Gale or the protected confidential information being in breach of the Corporations Act.

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ANNEXURE B

Independent Expert’s Report

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