LYCOPODIUM LIMITED — AGM Information 2008

Oct 27, 2008

ABN 83 098 556 159

Notice of Annual General Meeting | 2008

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Contents

Notice Of Annual General Meeting	1
Explanatory Memorandum	5
Proxy Form	13
Corporate Directory	15

LYCOPODIUM LIMITED ABN 83 098 556 159

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of Shareholders of Lycopodium Limited (Company) will be held at The Duxton Hotel, 1 St Georges Terrace, Perth, Western Australia on Thursday, 27 November 2008 at 10.00 am (Meeting).

The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form comprise part of this Notice.

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 as Shareholders on Tuesday, 25 November 2008 at 5.00 pm. Terms and abbreviations used in this Notice and the Explanatory Memorandum are defined in Schedule 1.

AGENDA

Financial, Directors’ and Auditor’s Reports

To receive the Financial Report, Directors’ Report and Auditor’s Report for the financial year ended 30 June 2008.

1. Resolution 1 – Remuneration Report

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

“That the Remuneration Report be adopted by the Shareholders on the terms and conditions in the Explanatory Memorandum.”

2. Resolution 2 – Re-election of Mr Laurie Marshall as Director

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

“That, Mr Laurie Marshall, who ceases to be a Director in accordance with Article 6.3(j) of the Constitution and, being eligible, offers himself for re-election, be re-elected as a Director.”

3. Resolution 3 – Re-election of Mr Michael Caratti as Director

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

“That, Mr Michael Caratti, who retires in accordance with Article 6.3(c) of the Constitution and, being eligible, offers himself for re-election, be re-elected as a Director.”

4. Resolution 4 – Re-election of Mr Rodney Leonard as a Director

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

“That Mr Rodney Leonard, who retires in accordance with Article 6.3(c) of the Constitution and, being eligible, offers himself for re-election, be re-elected as a Director.”

5. Resolution 5 – Adoption of Performance Rights Plan

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

“That in accordance with Exception 9 of Listing Rule 7.2, Shareholders approve the establishment of an employee option scheme to be called the “Lycopodium Limited Performance Rights Plan” and the issue of Performance Rights pursuant to this scheme on the terms and conditions in the Explanatory Memorandum”.

Voting Exclusion

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

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

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

Lycopodium Limited Notice of Meeting 2008 • 1

LYCOPODIUM LIMITED ABN 83 098 556 159 NOTICE OF ANNUAL GENERAL MEETING

6. Resolution 6 – Approve grant of Performance Rights to Mr Mark Ward

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

“Subject to Shareholders approving Resolution 5, that in accordance with Listing Rule 10.14, chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to grant 350,000 Performance Rights to Mr Mark Ward under the Lycopodium Limited Performance Rights Plan on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and if ASX has expressed an opinion under Listing Rule 10.14.3 that approval is required for participation in an employee incentive scheme by anyone else, that person or an associate of that person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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.

7. Resolution 7 – Approve grant of Performance Rights to Mr Peter De Leo

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

“Subject to Shareholders approving Resolution 5, that in accordance with Listing Rule 10.14, chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to grant 350,000 Performance Rights to Mr Peter De Leo under the Lycopodium Limited Performance Rights Plan on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and if ASX has expressed an opinion under Listing Rule 10.14.3 that approval is required for participation in an employee incentive scheme by anyone else, that person or an associate of that person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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.

8. Resolution 8 – Approve grant of Performance Rights to Mr Rodney Leonard

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

“Subject to Shareholders approving Resolutions 4 and 5, that in accordance with Listing Rule 10.14, chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to grant 250,000 Performance Rights to Mr Rodney Leonard under the Lycopodium Limited Performance Rights Plan on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and if ASX has expressed an opinion under Listing Rule 10.14.3 that approval is required for participation in an employee incentive scheme by anyone else, that person or an associate of that person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 NOTICE OF ANNUAL GENERAL MEETING

9. Resolution 9 – Approve grant of Performance Rights to Mr Robert Osmetti

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

“Subject to Shareholders approving Resolution 5, that in accordance with Listing Rule 10.14, chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to grant 250,000 Performance Rights to Mr Robert Osmetti under the Lycopodium Limited Performance Rights Plan on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and if ASX has expressed an opinion under Listing Rule 10.14.3 that approval is required for participation in an employee incentive scheme by anyone else, that person or an associate of that person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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.

10. Resolution 10 – Approve grant of Performance Rights to Mr Bruno Ruggiero

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

“Subject to Shareholders approving Resolution 5, that in accordance with Listing Rule 10.14, chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to grant 250,000 Performance Rights to Mr Bruno Ruggiero under the Lycopodium Limited Performance Rights Plan on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and if ASX has expressed an opinion under Listing Rule 10.14.3 that approval is required for participation in an employee incentive scheme by anyone else, that person or an associate of that person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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.

11. Resolution 11 – Approve the Execution of Directors Deeds of Indemnity, Access and Insurance for Mr Mark Ward and Mr Peter De Leo

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

Pursuant to Chapters 2D.2 and 2E of the Corporations Act and for all other purposes approval be given to the Company, to:

• (a) indemnify Mr Mark Ward and Mr Peter De Leo, during the period of their directorship and after the cessation of their directorship, in respect of certain claims should any be made against that director whilst acting in his capacity as a Director;

• (b) use its reasonable endeavours to procure an insurance policy and pay the premiums of insurance as assessed at market rates applicable from time to time for Mr Mark Ward and Mr Peter De Leo in respect of certain claims made against that Director acting in his capacity of a Director (except to the extent such insurance cannot be procured at a reasonable cost or is otherwise unavailable to the Company);

Lycopodium Limited Notice of Meeting 2008 • 3

LYCOPODIUM LIMITED ABN 83 098 556 159 NOTICE OF ANNUAL GENERAL MEETING

• (c) use its reasonable endeavours to ensure that an insurance policy for Mr Mark Ward and Mr Peter De Leo is at all times covered under an insurance policy for the period of 7 years from the date either of them ceases to be a Director (Insurance Run-Off Period), which will be on terms not materially less favourable to each of Mr Mark Ward and Mr Peter De Leo than the terms of insurance applicable at the date of termination of their directorships and to continue to pay those premiums during that Insurance Run-Off Period (except to the extent such insurance cannot be procured at a reasonable cost or is otherwise unavailable to the Company); and

• (d) provide Mr Mark Ward and Mr Peter De Leo with access, upon the cessation for any reason of either of their directorships and for a period of not less than 7 years following that cessation, to any Company records which are either prepared or provided to Mr Mark Ward and Mr Peter De Leo during the period of their directorships, and on the terms and conditions in the Explanatory Memorandum accompanying this Notice.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person to whom the Resolution would permit a financial benefit to be given (except a benefit solely in their capacity as holders of ordinary securities) if the Resolution is passed, or any associate of such a person.

However, the Company will not disregard a vote if:

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

• (b) it is cast by the person chairing the 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.

12. Resolution 12 – Section 195 Approval

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

“That, for the purposes of section 195(4) of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to complete the transactions as contemplated in this Notice of Meeting.”

Dated 16 October 2008

By Order of the Board

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Mr Keith Bakker Company Secretary

4 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at The Duxton Hotel, 1 St Georges Terrace, Perth, Western Australia on Thursday, 27 November 2008 at 10.00 am.

1. Financial, Directors’ and Auditor’s Reports

Shareholders will be offered the opportunity to discuss the Financial Report, Directors’ Report and Auditor’s Report for the financial year ended 30 June 2008 copies of which are on the Company’s website at www.lycopodium.com.au or by contacting the Company on telephone number +61 8 6210 5222. Shareholders will be offered the opportunity to ask questions or make comment on the management of the Company.

2. Resolution 1 – Remuneration Report

Pursuant to section 250R(2) of the Corporations Act, the Company is required to put the Remuneration Report to the vote of Shareholders. The Financial Report for the year ended 30 June 2008 contains a Remuneration Report which sets out the remuneration policy for the Company and reports the remuneration arrangements in place for the Managing Director, specified executives and executive Directors.

The provisions of the Corporations Act provide that Resolution 1 need only be an advisory vote of Shareholders. Therefore, Resolution 1 is advisory only and does not bind the Directors. Of itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report. However, the Board will take the outcome of the vote into consideration when considering the remuneration policy.

The chairman of the Meeting will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on, the Remuneration Report.

3. Resolution 2 – Re-election of Mr Laurie Marshall as Director

Article 6.3(k)(iv) of the Constitution states that a director ceases to be a director if the director is an executive director (including a managing director) and ceases to be an employee of the Company.

On 1 July 2008, Mr Laurie Marshall resigned as the Company’s managing Director and was appointed a non-executive Director of the Company under Article 6.2(b) of the Constitution.

Article 6.3(j) of the Constitution states that any Director appointed in accordance with article 6.2(b) must retire at the next annual general meeting and is eligible for re-election.

Accordingly, Mr Laurie Marshall retires and seeks re-election at this annual general meeting as a Director.

A brief resume of Mr Laurie Marshall is contained in the Annual Report.

The Board believes that Mr Laurie Marshall has performed the duties and responsibilities of a director diligently and professionally, in the best interests of all Shareholders.

4. Resolution 3 – Re-election of Mr Michael Caratti as Director

Article 6.3(c) of the Constitution requires that one third of the Directors must retire at each annual general meeting (rounded down to the nearest whole number).

Article 6.3(f) provides that a Director who retires under Article 6.3(c) is eligible for re-election.

Pursuant to these Articles, Mr Michael Caratti will retire by rotation and seek re-election.

A brief resume of Mr Michael Caratti is contained in the Annual Report.

The Board believes that Mr Michael Caratti has performed the duties and responsibilities of a director diligently and professionally, in the best interests of all Shareholders.

The Board unanimously supports the re-election of Mr Michael Caratti.

5. Resolution 4 – Re-election of Mr Rodney Leonard

Article 6.3(c) of the Constitution requires that one third of the Directors must retire at each annual general meeting (rounded down to the nearest whole number).

Article 6.3(f) provides that a Director who retires under Article 6.3(c) is eligible for re-election.

Pursuant to these Articles, Mr Rodney Leonard will retire by rotation and seek re-election.

A brief resume of Mr Rodney Leonard is contained in the Annual Report.

The Board believes that Mr Rodney Leonard has performed the duties and responsibilities of a director diligently and professionally, in the best interests of all Shareholders.

The Board unanimously supports the re-election of Mr Rodney Leonard.

6. Resolution 5 - Adoption of Performance Rights Plan

Resolution 5 seeks Shareholder approval in accordance with the Listing Rule 7.2 for the establishment of the Lycopodium Limited Performance Rights Plan (Plan) and the issue of Performance Rights pursuant to the Plan.

The two main purposes of the Plan are to give an incentive to executive Directors and senior management of the Company to provide dedicated and ongoing commitment and effort to the Company aligning the interests of both employees and Shareholders and for the Company to reward eligible employees for their efforts. The Plan contemplates the issue to executive Directors and senior management of Performance Rights to subscribe for Shares.

Listing Rule 7.1 places restrictions on the number of equity securities, including Performance Rights, which a listed company may issue in any 12 months. However, certain issues are exempt from this Listing Rule and are effectively disregarded for the purposes of counting the number of securities which a company may issue.

The Board unanimously supports the re-election of Mr Laurie Marshall.

Lycopodium Limited Notice of Meeting 2008 • 5

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

Exempt issues include an issue of securities to persons participating in an employee option scheme where shareholders have approved the issue of securities under the scheme as an exemption from Listing Rule 7.1. Shareholder approval must be given in a general meeting held not more than 3 years before the date of issue where the Notice contains or is accompanied by certain prescribed information (set out below).

In order to take advantage of the exemption from Listing Rule 7.1 and allow the Company greater flexibility to issue securities, Shareholders are requested to approve the Plan as an exemption from Listing Rule 7.1.

This approval will be effective for a period of 3 years from the date Shareholders pass Resolution 5.

For the purpose of Listing Rule 7.2 Exception 9 a summary of the terms of the Plan are in Schedule 2.

7. Resolutions 6 to 10 - Approve grant of Performance Rights to Executive Directors

7.1 General

• Resolutions 6 to 10 seek the approval of Shareholders pursuant to Listing Rule 10.14 and Chapter 2E of the Corporations Act for the Directors to grant up to 1,450,000 Performance Rights to executive Directors under the Company’s Performance Rights Plan as follows:

Mr Mark Ward 350,000 Performance Rights Mr Peter De Leo 350,000 Performance Rights Mr Rodney Leonard 250,000 Performance Rights Mr Robert Osmetti 250,000 Performance Rights Mr Bruno Ruggiero 250,000 Performance Rights.

• Shareholder approval is required under Listing Rule 10.14 and section 208 of the Corporations Act for the proposed issue of the Performance Rights under the Company’s Performance Rights Plan because the Executive Directors are related parties of the Company.

• Resolutions 6 to 10 are ordinary resolutions. Resolutions 6 to 10 are subject to Shareholders passing Resolution 5 (approval of the Performance Rights Plan). Resolution 8 is also subject to Shareholders passing Resolution 4 (Re-election of Mr Rodney Leonard).

• 7.2 Specific Information Required by Listing Rule 10.15 and section 219 of the Corporations Act

• For the purposes of Listing Rule 10.15 and section 219 of the Corporations Act, information is provided as follows:

• (a) The maximum number of Performance Rights the Company can issue under Resolutions 6 to 10 is 1,450,000 Performance Rights (and 1,450,000 Shares on exercise of the Performance Rights) to the Executive Directors as follows:

Executive Director

Performance Rights

Mr Mark Ward 350,000 Performance Rights Mr Peter De Leo 350,000 Performance Rights Mr Rodney Leonard 250,000 Performance Rights Mr Robert Osmetti 250,000 Performance Rights Mr Bruno Ruggiero 250,000 Performance Rights

• (b) Each Performance Right will be granted for nil consideration.

• (c) As the Company’s Performance Rights Plan is being approved by Shareholders under Resolution 5, no other parties to whom Listing rule 10.14 applies have participated in the Performance Rights Plan nor is approval sought for any others to participate.

• (d) The Company will grant the Performance Rights no later than 12 month after the date of the Meeting.

• (e) A voting exclusion statement is included in this Notice.

• (f) Each Performance Right entitles the holder to subscribe for one Share and has the further terms and conditions in Schedule 2.

• (g) The maximum number of performance rights that could vest, and hence be exercised by the Executive Directors, would be the number in section 7.2(a). For this to occur, each performance hurdle (as specified in Schedule 3) would need to be met and the Executive would need to continue as an executive of the Company until the various vesting periods expire. See the terms and conditions of the Performance Rights Plan in Schedule 2 and the Performance Hurdles in Schedule 3 for more details.

• (h) The Company has been advised by an independent accountant that the appropriate method to value the performance rights is determined by the following formula:

• Value of Performance Rights = Maximum number of Performance Rights to be issued x Share price at date of grant x number of Performance Rights likely to vest.

• (i) In order to calculate the number of Performance Rights likely to vest, it is necessary to determine the probability of the Performance Hurdles being met. The Directors are of the view that for the purposes of Shareholders assessing the value of the Performance Rights it is not appropriate to ascribe a probability to the Performance Hurdles being satisfied. Rather for the purposes of the valuation of the Performance Rights below the Directors have assumed that all of the Performance Rights will achieve the Performance Hurdles so that Shareholders can understand the maximum value that may be attributed to the Performance Rights.

6 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

• (j) The maximum value of the Performance Rights (assuming all Performance Hurdles will be satisfied and using the Lycopodium Share price as at 10 October 2008) calculated using the above formula is as follows:

	closing share price as at 10 October 2008	x maximum number of performance rights	= maximum value of performance rights
Mark Ward	$3.20	350,000	$1,120,000
Peter De Leo	$3.20	350,000	$1,120,000
Rodney Leonard	$3.20	250,000	$800,000
Robert Osmetti	$3.20	250,000	$800,000
Bruno Ruggiero	$3.20	250,000	$800,000

• (k) Shareholders should note that the maximum value may change where the actual price on the date of grant of the Performance Rights is different to the price on 10 October 2008.

• (l) The value of the performance rights issued to Executive Directors needs to be expensed in the financial statements of the Company on a pro rata basis over the vesting period. The amount referred to in the table in clause 7.2(j) is the estimated maximum amount that could be expensed in the financial statements of the Company over the vesting period of the performance rights. The actual amount expensed may, however, be less than this, taking into account the likely outcome of the performance hurdles.

• (m) There will be no cash cost component to the Company as a result of the grant of the performance rights if new Shares are issued upon exercise.

• (n) Each of the Executive Directors receives the following remuneration:

Executive Director Remuneration

Executive Director	Remune
Mr Mark Ward	$650,000
Mr Peter De Leo	$500,000
Mr Rodney Leonard	$550,000
Mr Robert Osmetti	$500,000
Mr Bruno Ruggiero	$500,000.

• (o) The Company has carefully considered the different types of employee share ownership plans available to remunerate Executive Directors and believes the terms of the Performance Rights are appropriate in rewarding the Executive Directors and creating Shareholder value.

The terms of the Performance Rights ensure that the Executive Directors are only rewarded if they are able to increase the earnings per Share of the Company over a number of years rather than being rewarded by increases in the Share price caused by market fluctuations. This assists in retaining employment of the Executive Directors and aligns the incentive of the Executive Directors more closely with Shareholders.

• (p) Historical Share price information for the last three months is as follows:

	Price	Date
Highest	$4.80	01.09.2008
Lowest	$3.00	10.10.2008
Last	$3.20	10.10.2008

• (q) Other than the information above and otherwise in the Explanatory Memorandum, the Company believes that there is no other information that would be reasonably required by Shareholders to pass Resolutions 6 to 10.

• As the Performance Rights are being issued under the Performance Rights Plan, Shareholder approval under Listing Rule 7.1 is not required.

8. Resolution 11 – Approve the Execution of Directors Deeds of Indemnity, Access and Insurance for Mr Mark Ward and Mr Peter De Leo

8.1 Background

The purpose of the resolution is to enable the Company to provide Mr Mark Ward and Mr Peter De Leo with a reasonable level of protection in relation to claims made against them acting as a director of the Company, effective from the date of their appointment.

• Given their duties and responsibilities as directors of a public company and their potential liabilities, Mr Mark Ward and Mr Peter De Leo consider it appropriate that they be suitably protected from certain claims made against them. The proposed protection will not extend to the extent it is prohibited by the Corporations Act.

• As a person may be called to account for his or her actions several years after ceasing to be a director of a company, it is considered reasonable that suitable protection should extend for a period of time after Mr Mark Ward and Mr Peter De Leo have ceased to be directors of the Company.

Lycopodium Limited Notice of Meeting 2008 • 7

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

It is generally recognised that a director or former director of a company may face considerable difficulty in properly answering or defending any claim made against him or her, particularly, as is often the case, where the claim is brought after the director ceases to hold office. Difficulties may arise by reason of the following:

• (a) No indemnity after directorship ends

• While a company’s constitution provides directors with an indemnity in respect of claims made while they remain directors arguably, that indemnity ceases when the directorship ends. Without the benefit of an indemnity, the cost of defending such a claim in respect of the actions of a director or former director, even if the claim is ultimately proven to be without merit, can be considerable and beyond the financial resources of the individual director.

• (b) Maintenance of insurance policies

Directors’ and Officers’ insurance policies generally only provide cover for claims made during the currency of the insurance policy, i.e. while insurance premiums continue to be paid on the policy. Generally, unless insurance premiums continue to be paid after the time a person ceases to be a director, claims made after cessation of the directorship will not be covered by the insurance policy. The cost to a former director of personally maintaining insurance cover after ceasing to be a director can be prohibitive, particularly given the number of years for which insurance must be maintained and given the former director will no longer be receiving any income from the Company.

• (c) Access to board papers

• Directors have a statutory right to inspect the books of the Company:

• (i) whilst they hold office, and

• (ii) for a period of 7 years after the director ceases to hold office, at all reasonable times for the purpose of a legal proceeding to which the director is a party, that the director proposes in good faith to bring or that the director has reason to believe will be brought against him or her.

Despite this statutory right, Mr Mark Ward and Mr Peter De Leo may require access to company documents which are relevant to the directors holding office as a director of the Company and not strictly required for the purpose of anticipated, threatened or commenced legal proceedings. Furthermore, although a proceeding may be instituted within six years after a cause of action arises, that six year period is calculated from the date the damage is found to have occurred – this may be long after the conduct in question, from which the later damage arose, actually occurred.

Given these difficulties a person may be unwilling to become or to remain as a director of a public company without suitable protection being provided by the Company. The benefit to the Company in providing such protection is that it will continue to be able to attract persons of suitable expertise and experience to act as Directors.

8.2 Summary of the Directors’ Indemnity, Insurance and Access Deed

The Company will, subject to Shareholder approval, enter into a Deed, which will require:

• (a) The Company to indemnify Mr Mark Ward and Mr Peter De Leo during the period of their directorships and after the cessation of their directorships, in respect of certain claims made against them in their capacity as a director of the Company to the extent allowable under the Corporations Act.

• (b) The Company to use its reasonable endeavours (subject to cost and availability) to maintain an insurance policy and pay the premiums of insurance as assessed at market rates applicable from time to time, to the extent available under the Corporations Act, for each of Mr Mark Ward and Mr Peter De Leo in respect of certain claims made against them in their capacity as directors of the Company and to continue to pay those premiums for a period of up to 7 years following the termination of their directorships.

• (c) That if the Company cannot procure an insurance policy for Mr Mark Ward and Mr Peter De Leo at a reasonable cost it shall advise them and they may refer the matter to an expert (whose decision shall be final and binding on the parties) for determination that the Company has not used its reasonable endeavours and the expert may direct the Company to obtain an insurance policy on the best available terms.

• (d) The Company to provide each of Mr Mark Ward and Mr Peter De Leo with access, upon ceasing for any reason to be a director of the Company and for a period of up to 7 years following that cessation, to any Company records which are either prepared or provided to Mr Mark Ward and Mr Peter De Leo during the period during which they were directors of the Company.

The Deed will also require Mr Mark Ward and Mr Peter De Leo to maintain confidentiality and to protect the Company’s intellectual property.

8 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

8.3 Summary of indemnity and insurance provisions in the Corporations Act

In considering the resolution, members should be aware of the following limitations in the Corporations Act concerning the provision of indemnities and insurance to the Company’s officers. The deed for which member approval is sought under the resolution, complies with these limitations.

• (a) Section 199A of the Corporations Act

The Corporations Act now sets out specific prohibitions to the Company’s ability to grant indemnities for liabilities and legal costs.

• The Company is prohibited from indemnifying its officers against a liability if it is a liability:

• (i) to the Company or any of its related bodies corporate,

• (ii) to a third party that arose out of conduct involving a lack of good faith, or

• (iii) for a pecuniary penalty order or a compensation order under the Corporations Act (such orders being made for breaches such as breaches of director’s duties, the related party rules and insolvent trading rules).

The Company is also prohibited from indemnifying its officers against legal costs incurred:

• (iv) in defending actions where an officer is found liable for a matter for which he or she cannot be indemnified by the Company as set out immediately above.

• (v) in defending criminal proceedings where the officer is found guilty.

• (vi) in defending proceedings brought by ASIC or a liquidator for a court order if the grounds for making the order are found by the court to be established, or

• (vii) in connection with proceedings for relief to the director under the Corporations Act where the court denies the relief.

• (b) Section 199B of the Corporations Act

If the Company, or a related body corporate of the Company, pays the premium on an insurance policy in favour of a Director, then section 199B of the Corporations Act requires the Company to ensure that the relevant contract of insurance does not cover liabilities incurred by the officer arising out of conduct involving either:

• (i) a wilful breach of duty in relation to the Company, or

• (ii) contravention of the provisions relating to an officer making improper use of information or improper use of his or her position for his or her advantage or gain, or to the detriment of the Company.

8.4 Member approval

To enable the Company to enter into Deeds with Mr Mark Ward and Mr Peter De Leo, the resolution seeks member approval in accordance with the following provisions of the Corporations Act:

• (a) Section 200B of the Corporations Act

• Section 200B of the Corporations Act relevantly provides that the Company cannot give a benefit to a Director in connection with the retirement of that Director from his or her office, without member approval of the Company.

• Mr Mark Ward and Mr Peter De Leo consider that as:

• (i) the proposed payment of insurance premiums

• (ii) the benefit of the indemnity in relation to liabilities incurred during the period a Director holds office, and

• (iii) access to Company records, continues for a period of up to 7 years after they cease to hold office, this may be viewed as the provision of a benefit given ‘in connection with’ their retirement from the Board for the purposes of section 200B of the Corporations Act.

The insurance premiums under each Deed will be calculated at the market rates applicable from time to time.

A copy of all company documents will be kept at the Company’s registered office and made available for inspection and copying by Mr Mark Ward and Mr Peter De Leo for a period of 7 years after they cease to hold office, for whatever reason.

• (b) Section 208 of the Corporations Act

• Chapter 2E of the Corporations Act prohibits a public company, or an entity that the public company controls, from giving a financial benefit to a related party of the public company unless either:

• (i) the giving of the financial benefit falls within one of the nominated exceptions to the provision (e.g. section 212), or

• (ii) prior shareholder approval of the public company is obtained to the giving of the financial benefit.

For the purposes of Chapter 2E, Mr Mark Ward and Mr Peter De Leo are considered to be a related party of the Company.

The provision of insurance and indemnity to Mr Mark Ward and Mr Peter De Leo may involve the provision of a financial benefit to related parties of the Company within the prohibition provided by Chapter 2E of the Corporations Act.

Lycopodium Limited Notice of Meeting 2008 • 9

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

Mr Mark Ward and Mr Peter De Leo consider that, although the payment of insurance premiums and the provision of indemnities by the Company are ‘reasonable in the circumstances’ of the Company and therefore are exceptions from the prohibition in Chapter 2E of the Corporations Act, consideration of the reasonable nature of the provision of any indemnity or insurance is an appropriate matter for Shareholders of the Company.

In accordance with section 219 of the Corporations Act, the following information is provided to Shareholders to allow them to assess the proposed resolution:

• (i) The Company proposes to take out an insurance policy which will provide insurance cover for Mr Mark Ward and Mr Peter De Leo against all permitted liabilities incurred by them acting as a director of the Company.

• (ii) The insurance premiums payable each will be calculated at market rates applicable from time to time, if insurance is available, with an indicative range of $5,000 - $10,000 per Director per annum.

• (iii) Mr Mark Ward and Mr Peter De Leo are related parties of the Company to whom the proposed resolutions would permit the giving of benefits.

9. Resolution 12 – Section 195 Approval

Section 195 of the Corporations Act essentially provides that a director of a public company may not vote or be present during meetings of directors when matters in which that director holds a ‘material personal interest’ are being considered.

Some of the Directors may have a material personal interest in the outcome of Resolutions 6 to 10. In the absence of this Resolution 12, the Directors may not be able to form a quorum at directors meetings necessary to carry out the terms of Resolutions 6 to 10.

The Directors have accordingly exercised their right under section 195(4) of the Corporations Act to put the issue to Shareholders to resolve upon.

10. Action to be taken by Shareholders

Shareholders should read this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a ‘proxy’) to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, to sign and return the Proxy Form to the Company in accordance with the instructions provided. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

• (iv) the nature of the benefit to be given to Mr Mark Ward and Mr Peter De Leo is the benefit under the Deed, the terms of which are summarised in Section 8.2.

• (v) neither Mr Mark Ward and Mr Peter De Leo is entitled to or wishes to make a recommendation to Shareholders about the proposed resolution as they hold an interest in the benefit proposed to be given by the Company to each of them, as each is a proposed party to the Deed. All other Directors unanimously support the passing of the resolution.

• (vi) neither Mr Mark Ward, Mr Peter De Leo nor the Company is aware of any other information that would be reasonably required by Shareholders to make a decision in relation to the benefits contemplated by the proposed resolution.

• (vii) the reasons and basis for the benefit are set out in Section 8.1.

• (viii) Mr Mark Ward and Mr Peter De Leo will be paid in accordance with section 7.2 of the Explanatory Memorandum.

10 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

Schedule 1 – Definitions

In this Explanatory Memorandum and Notice:

Annual Report means the 2008 Annual Financial Report of the Company and its controlled entities (if any) a copy of which was lodged with the ASX.

Article means an article of the Constitution.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited ABN 98 008 624 691 and where the

context permits the Australian Securities Exchange operated by ASX Limited.

Auditor’s Report means the auditor’s report on the Financial Report.

Schedule 2 – Summary of Performance Rights Plan

1. Only eligible participants may participant in the Plan. Under the Plan, an eligible participant is a full time executive Director or a senior manager (as defined in ASIC Class Order 04/899).

2. The Company determines which eligible participants will participate and the terms of such participation, in accordance with the Plan.

3. No consideration is payable for the grant of Performance Rights. The Performance Rights will not be listed.

4. The Performance Rights will not vest and are not capable of exercise until performance hurdles are satisfied.

5. The Performance Rights are not transferrable, except on death of an eligible participant.

Board means the Board of Directors.

Company means Lycopodium Limited ABN 83 098 556 159.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company and Directors means the directors of the Company.

Directors’ Report means the annual directors report prepared under Chapter 2M of the Corporations Act for the Company and its controlled entities (if any).

Executive Directors means the executive directors receiving Performance Rights in sections 6 and 7 of the Explanatory Memorandum.

Explanatory Memorandum means the explanatory memorandum to the Notice.

Financial Report means the annual financial report prepared under Chapter 2M of the Corporations Act of the Company and its controlled entities (if any).

Listing Rules means the Listing Rules of ASX.

Meeting has the meaning given in the introductory paragraph of the Notice.

Notice means this notice of meeting.

Performance Right means a performance right to acquire a Share on the terms and conditions in the Plan with the expiry period and the performance hurdles in Schedule 3.

Plan has the meaning given in section 6 of the Explanatory Memorandum and has the terms and conditions in Schedule 2. Proxy Form means the proxy form attached to the Notice.

Remuneration Report means the remuneration report of the Company contained in the Annual Report.

1. No security interest may be granted over the Performance Rights.

2. A Performance Right does not confer any right to participate in new issues of Shares by the Company (including a bonus issue, rights issue or otherwise).

3. One vested Performance Right is exercisable into one Share.

4. The Board may, in its absolute discretion, elect to pay the eligible participant cash in lieu of Shares.

5. Unless otherwise provided, no amount shall be payable upon exercise of a vested Performance Right.

6. Where an eligible participant dies, is seriously injured, becomes disabled or suffers an illness which renders the eligible participant incapable of continuing employment with the Company, all unvested Performance Rights become vested and all vested Performance Rights may be exercised within a specified period.

7. Where an eligible participant’s employment with the Company ceases for reasons other than as specified in paragraph 11, the Board will determine, in its absolute discretion, the extent to which any Performance Rights vest.

8. If an eligible participant ceases full time employment with the Company but remains in part time employment with the Company then any unvested Performance Rights up to the end of the last financial year prior to commencing part time employment do not expire and are capable of vesting. All other Performance Rights expire.

9. The Board may cancel any Performance Rights or refuse to exercise any Performance Rights where the eligible participant has acted with gross misconduct, fraudulently or dishonestly or is in material breach of his/her employment obligations.

Resolution means a resolution contained in this Notice.

Schedule means a Schedule to this Notice.

1. All Performance Rights will vest where there is a change in control of the Company.

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

Shareholder means the holder of a Share.

WST means Western Standard Time, being the time in Perth, Western Australia.

Lycopodium Limited Notice of Meeting 2008 • 11

LYCOPODIUM LIMITED ABN 83 098 556 159 EXPLANATORY MEMORANDUM

1. The Performance Rights will lapse on the earlier of:

2. (a) Where an eligible participant’s employment ceases because of death, serious injury, disability or illness, three months from the date on which the eligible participant’s employment ceased.

3. (b) If an eligible participant’s employment with the Company ceases for any reason other than the above:

4. (i) in the case of a vested Performance Right, three months from the date on which the eligible participant’s employment ceased, and

5. (ii) In the case of an unvested Performance Right, 21 days after the date of cessation of employment.

6. (c) In the case of unvested Performance Rights which have performance periods expiring after the eligible participant ceases full time employment but remains employed, the date that full time employment ceases.

7. (d) The date on which the Company forms the opinion that an eligible participant has acted with gross misconduct, fraudulently or dishonestly or is in material breach of his/her employment obligations to the Company;

Schedule 3 - Performance Hurdles

Performance Rights vest:

1. On 1 July 2011 if earnings per Share for 30 June 2009 exceeds earnings per Share for 30 June 2008 by 10%

2. On 1 July 2012 if earnings per Share for 30 June 2010 exceeds earnings per Share for 30 June 2009 by 10%

3. On 1 July 2013 if earnings per Share for 30 June 2011 exceeds earnings per Share for 30 June 2010 by 10%

4. On 1 July 2014 if earnings per Share for 30 June 2012 exceeds earnings per Share for 30 June 2011 by 10%, and

5. On 1 July 2015 if earnings per Share for 30 June 2013 exceeds earnings per Share for 30 June 2012 by 10%.

Where earnings per Share does not exceed 10%, the Performance Rights will vest proportionally for each period from 0% where earning per Share is 5% to 100% where earning per Share is 10%.

• (e) if there is a change in control of the Company then within the period specified by the Company, and

• (f) 8 years from the date the Performance Rights are granted.

• Subject to the Listing Rules, if the Company undertakes any alteration of its capital the Board may make adjustments to the Performance Rights in accordance with the Listing Rules.

• Shares acquired upon exercise of a vested Performance Right will rank equally in all respects with the Company’s then issued Shares.

• The Company will apply for quotation of the Shares on ASX within 10 business days after the Shares are allotted.

• A holding lock will be applied following an issue of Shares on exercise of vested Performance Rights. The removal of the holding lock will require the approval of the Company.

• Where the eligible participant commits any act of gross misconduct, is fraudulent, dishonest or in material breach of his/her employment obligations (as determined in the absolute opinion of the Board) the Shares issued on exercise of the Performance Rights will be forfeited.

12 • Lycopodium Limited Notice of Meeting 2008

LYCOPODIUM LIMITED ABN 83 098 556 159 PROXY FORM

The Company Secretary Lycopodium Limited

For information on returning this proxy form please see instructions over the page.

I/We[1] ............................................................................................................................................................................................................................................................................................... of ......................................................................................................................................................................................................................................................................................................... being a Shareholder/Shareholders of the Company and entitled ................................................................................................................................................................ votes in the Company, hereby appoint[2] ......................................................................................................................................................................................................................

or failing such appointment the chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the annual general meeting of the Company to be held at Duxton Hotel, 1 St Georges Terrace, Perth, Western Australia on Thursday, 27 November 2008 at 10.00 am and at any adjournment thereof in the manner indicated below or, in the absence of indication, as he thinks fit. If 2 proxies are appointed, the proportion or number of votes of this proxy is authorised to exercise is * [ ]% of the Shareholder’s votes*/ [ ] of the Shareholder’s votes. (An additional Proxy Form will be supplied by the Company, on request).

1Insert name and address of Shareholder 2 Insert name and address of proxy *Omit if not applicable

INSTRUCTIONS AS TO VOTING ON RESOLUTIONS IMPORTANT:

The chairman of the Meeting intends to vote undirected proxies in favour of the Resolution.

The proxy is to vote for or against the Resolution referred to in the Notice as follows:

			For	Against	Abstain
Resolution	1	Directors’ Remuneration			
Resolution	2	Re-election of Mr Laurie Marshall as a Director			
Resolution	3	Re-election of Mr Michael Caratti as a Director			
Resolution	4	Election of Mr Rodney Leonard as a Director			
Resolution	5	Adoption of Performance Rights Plan			
Resolution	6	Approve grant of Performance Rights to Mr Mark Ward			
Resolution	7	Approve grant of Performance Rights to Mr Peter De Leo			
Resolution	8	Approve grant of Performance Rights to Mr Rodney Leonard			
Resolution	9	Approve grant of Performance Rights to Mr Robert Osmetti			
Resolution	10	Approve grant of Performance Rights to Mr Bruno Ruggiero			
Resolution	11	Approve the Execution of Directors Deeds of Indemnity, Access and Insurance			
Resolution	12	Section 195 Approval			

Lycopodium Limited Notice of Meeting 2008 • 13

LYCOPODIUM LIMITED ABN 83 098 556 159 PROXY FORM

Authorised signature/s

Authorised signature/s
This section must be signed in accordance	with the instructions overleaf to enable your voting	instructions to be implemented.
Individual or Shareholder 1	Shareholder 2	Shareholder 3
........................................................................................	...........................................................................................	......................................................................................
........................................................................................	...........................................................................................	......................................................................................
........................................................................................	...........................................................................................	......................................................................................
Sole Director and	Director	Director/Company Secretary
Sole Company Secretary
.......................................................................................	...........................................................................................	......................................................................................
Contact Name	Contact Daytime Telephone	Date
.......................................................................................	...........................................................................................	......................................................................................

Proxy Notes:

A Shareholder entitled to attend and vote at the Meeting may appoint a natural person as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting. If the Shareholder is entitled to cast 2 or more votes at the Meeting the Shareholder may appoint not more than 2 proxies. Where the Shareholder appoints more than one proxy the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If such proportion or number of votes is not specified each proxy may exercise half of the Shareholder’s votes. A proxy may, but need not be, a Shareholder of the Company.

If a Shareholder appoints a body corporate as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting, the representative of the body corporate to attend the Meeting must produce the Certificate of Appointment of Representative prior to admission. A form of the certificate may be obtained from the Company’s share registry.

You must sign this form as follows in the spaces provided:

Joint Holding: where the holding is in more than one name all of the holders must sign. Power of Attorney: if signed under a Power of Attorney, you must have already lodged it with the registry, or alternatively, attach a certified photocopy of the Power of Attorney to this Proxy Form when you return it. Companies: a Director can sign jointly with another Director or a Company Secretary. A sole Director who is also a sole Company Secretary can also sign. Please indicate the office held by signing in the appropriate space.

If a representative of the corporation is to attend the Meeting the appropriate ‘Certificate of Appointment of Representative’ should be produced prior to admission. A form of the certificate may be obtained from the Company’s Share Registry.

Return of Proxy Forms

Proxy Forms (and the power of attorney or other authority, if any, under which the Proxy Form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the Proxy Form (and the power of attorney or other authority) must be deposited at or received by facsimile transmission at the Company’s office as set out below not less than 48 hours prior to the time of commencement of the annual general meeting.

Facsimile: +618 6210 5201 Post/Delivery: 1 Adelaide Terrace EAST PERTH WA 6004 Email: info@lycopodium.com.au

14 • Lycopodium Limited Notice of Meeting 2008

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Lycopodium Limited Notice of Meeting 2008 • 15

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Lycopodium Limited Notice of Meeting 2008 • 16

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Corporate Directory

Directors

Michael John Caratti Mark Bambury Ward Robert Joseph Osmetti Rodney Lloyd Leonard Bruno Ruggiero Peter De Leo Lawrence William Marshall

Share Registry

Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace Perth Western Australia 6000

T: +61 (0) 3 9415 4267 W: www.computershare.com.au

Company Secretary

Keith John Bakker

Registered and Principal Office

Level 5, 1 Adelaide Terrace East Perth Western Australia 6004

Auditor

PricewaterhouseCoopers 250 St Georges Terrace Perth

Western Australia 6000

T: +61 (0) 8 9238 3000 W: www.pwc.com/au

T: +61 (0) 8 6210 5222 W: www.lycopodium.com.au

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www.lycopodium.com.au