MEMPHASYS LIMITED. — Governance Information 2007

May 9, 2007

NuSep Ltd A.B.N. 33 120 047 556

RULES OF THE NUSEP DIRECTORS, EMPLOYEE AND CONSULTANTS OPTION PLAN

DEFINITIONS $\mathbf 1$

In these Rules of the NuSep Directors, Employees and Consultants Option Plan, unless the contrary intention appears:

"Acceptance Form" means a form for the acceptance of offers made to Grantees to participate in the Plan in a form approved for the purpose by the Committee from time to time;

"ASIC" means Australian Securities and Investments Commission

"Associated Company" means any company that is a related body corporate of the Company within the meaning of Section 50 of the Corporations Act 2001 (Cth) and is declared to be an Associated Company for the purpose of the Plan by the Committee;

"ASX" means Australian Stock Exchange Limited:

"Business Day" means a day that is not a Saturday, a Sunday or a public holiday or bank holiday in the place or places concerned;

"Class Order" means the Class Order CO 03/184 entitled "Employee Share Schemes" issued on 30 April 2003 by ASIC and every amendment and re-issue of it:

"Committee" means the Directors or any other committee appointed pursuant to clause 3 to administer the Plan:

"Company" means NuSep Limited;

"Consultant" has the meaning given to that term in paragraph 49.40 of Policy Statement No 49:

"Constitution " means the constitution of the Company;

"Directors" means the Directors of the Company from time to time;

"Employee" has the meaning given to the that term in clause 8 of the interpretation clause in the Class Order:

"Exercise Price" means, in respect of an Option, the price determined in accordance with clause 7, in relation to that Option;

"Grantee" means a Participant who received an offer from the Committee to participate in the Plan pursuant to clause 8;

"Holder" means the registered holder of an Option:

"Listed" means, in relation to the Company, the Company being and remaining admitted to the official list of ASX:

"Listing Rules" means, the Listing Rules of ASX:

"Market Price" means, in respect of an Option, the price calculated in accordance with clause 7.1 in relation to that Option:

"Offering Date" means each date upon which an offer is made to a Grantee to participate in the Plan:

"Option" means an Option to acquire a fully paid Share issued pursuant to the Plan:

"Option Certificate" means the certificate issued by the Company to a holder in respect of an Option;

"Option Period" means, in respect of an Option, the period commencing on the date on which the Option was granted and expiring on the fifth anniversary of the date on which the Option was granted:

"Participant" means any Director, Employee or Consultant of the Company or an Associated Company, provided that participation of such Director, Employee or Consultant in the Plan has been approved by the Committee:

"Plan" means the NuSep Directors, Employee and Consultants Option Plan established in accordance with these Rules as amended from time to time;

"Policy Statement No 49" means the "Policy Statement No 49 : Employee share schemes" published by ASIC as IR 03-14 on 1 May 2003 and every amendment and re-issue of it.

"Rules" means these rules governing the NuSep Directors, Employees and Consultants Option Plan:

"Shares" means fully paid ordinary shares in the capital of the Company.

"Takeover Bid" means an offer to acquire the shares in NuSep made under Part 6 of the Corporations Act 2001 (Cth) as amended or any re-enactment thereof;

$\overline{2}$ . OBIECT OF THE PLAN

The object of the Plan is to assist in the reward, retention and motivation of Directors, Employees and Consultants of the Company and its Associated Companies.

$\overline{3}$ . COMMITTEF'S AUTHORITY

The Plan shall be administered by the Directors or by a Committee of Directors (appointed in accordance with the Constitution) with such powers and duties as are conferred upon it.

$\Delta$ TOTAL NUMBER OF OPTIONS

• $4.1$ The maximum number of Options which may be issued pursuant to the Plan may not at any time exceed 5% of the number of ordinary fully paid shares in the capital of the Company on issue at that time.
• $4.2$ Options will be allocated to Participants by the Committee and will be granted progressively.

5. OFFERING DATE

The Offering Dates will be those dates as may be determined by the Committee.

$6₁$ DETERMINATION OF ELIGIBILITY

The Committee may from time to time determine that a Participant is entitled to participate in the Plan and will determine the number of Options which may be granted to that Participant. In making determinations, the Committee must have regard to the following factors:-

• $(a)$ the length of service of the person with the Company;
• $(b)$ the record of employment of the person with the Company;
• $(c)$ the potential contribution of the person to the growth of the Company;
• $(d)$ The provisions of the Class Order and Policy Statement No 49; and
• $(e)$ any other matters which tend to indicate the merit of the person.

$\overline{7}$ . DETERMINATION OF PRICE

• $7.1$ The Market Price per Share must be determined by the Committee but in no event may the Market Price per Share be less than 50 cents.
• $7.2$ Subject to Clause 12.2, the Exercise Price per Option to be paid by way of subscription upon exercise of an Option must be an amount equal to the Market Price per Share.

METHOD OF OFFER 8.

• 8.1 The Committee from time to time may offer Options to those Participants as it sees fit. subiect to the terms and conditions of the Plan for the time being, and for that purpose must, following its decision to make an offer of Options to Participants, determine the following:-
• $(a)$ the name and address of each Grantee under the Plan:
• $(b)$ the number of Shares for which the Grantee shall be entitled to subscribe:
• $(c)$ the Exercise Price per Option determined in accordance with clause 7:

and must make offers in writing to the Grantees as may be appropriate in accordance with the Plan.

• 8.2 $(a)$ Subject to clause 8.2(b), an offer of Options must state the number of Shares for which the Grantee will be entitled to subscribe, the Exercise Price per Option and the closing date for accepting the offer. The closing date must be not less than 15 days and not more than 45 days from the Offering Date.
• $(b)$ The Options may not be exercised in excess of the following percentages:
  • $(i)$ prior to the first anniversary of the granting of the Options -33% of the Options subscribed for,
  • $(ii)$ after the first anniversary and prior to the second anniversary after the granting of the Options - 66% of the Options subscribed for, and
  • $(iii)$ after the second anniversary and prior to the third anniversary after the granting of the Options - 100% of the Options subscribed for.

• $(c)$ The Options may be exercised in accordance with clause 8.2(b) at the following times:
• $(i)$ Within thirty (30) days after the date on which the Company announces its annual result to the ASX or within thirty (30) days after the date that the Company announces its half-yearly result to the ASX:
• $(ii)$ Whenever the Company offers shares by way of a prospectus:
• $(iii)$ Upon an entity announcing its intention to make a Takeover Bid for the Shares in the Company:
• $(iv)$ At any other time at which the Committee in its absolute discretion allows the Options to be exercised.
• 8.3 An offer to a Grantee is personal to the Grantee and is not assignable.
• 8.4 For so long as the Company is listed, the Committee may only offer Options to an Employee or any person who, for the purposes of Part 1.2 Division 2 of the Corporations Act 2001 (Cth), would be regarded as a person associated with an Employee, or in a manner permitted by the Listing Rules.
• 8.5 There must be no consideration payable by the Grantee for the grant and issue of Options pursuant to the Plan.

9. ACCEPTANCE OF THE OFFER

• $9.1$ Any Grantee who wishes to accept an offer made pursuant to clause 8 must deliver an Acceptance Form duly completed as required therein to the Committee on or before the closing date stated in the offer.
• $9.2$ Upon receipt of a duly completed Acceptance Form from a Grantee, the Committee must issue to the Grantee a statement in such form as the Committee may from time to time approve, showing the number of Shares for which the Grantee is entitled to subscribe pursuant to the Option.

$10₁$ EXERCISE OF OPTION

$10.1$ If a Grantee has accepted an offer made to the Grantee pursuant to clause 8, he or she may exercise the Option to subscribe for the Shares the subject of the Option or any part thereof at any time during the Option Period relating the Option, provided that any exercise is for a minimum of a marketable parcel (within the meaning of the Listing Rules) of Shares or such other number or multiple of a number as the Committee may determine.

• 10.2 The Grantee may exercise an Option by notice to the Committee.
• $10.3$ Upon receipt of notice under clause 10.2, the Committee must, within 10 Business Days after receipt of the notice from the Grantee, determine and notify the Grantee of the amount of the subscription money for the relevant Shares, being, subject to the Rules, the number of Options exercised multiplied by the Exercise Price per Share.
• $10.4$ The Grantee, upon receipt of the notice referred to in clause 10.3 must, within 5 Business Days, remit to the Committee the full amount of the relevant subscription money. All payments must be made by cheque, bank draft or postal order made out in favour of the Company.
• 10.5 Upon receipt of the full amount of the subscription money, the Committee must, within 10 Business Days of the last day on which the Grantee was entitled under clause 10.4 to remit the full amount of the relevant subscription money, allot to the Grantee the Shares for which the Grantee is entitled to subscribe, subject to the provisions of the Constitution.

$11.$ INVALID ACCEPTANCE

• Failure by a Grantee to comply with the requirements of these terms and $11.1$ conditions of the Plan (as amended from time to time) or any directions printed on an Acceptance Form will, unless the Committee otherwise determines, invalidate the Grantee's acceptance of an offer in accordance with the Plan.
• 11.2 Any Grantee who fails to return an Acceptance Form on or before the closing date as set out in the offer made pursuant to clause 8 will be deemed to have rejected an offer in accordance with the Plan and any acceptance received after the closing date will not be valid.

$12.$ RIGHTS OF GRANTEF UPON EXERCISE OF OPTION

• $12.1$ Shares allotted upon the exercise of an Option will rank pari passu in all respects with the then existing ordinary issued Shares in the capital of the Company and will be subject to the provisions of the Constitution.
• 12.2 (a) Subject to 12.2(e) the Exercise Price in respect of an Option will not be adjusted following upon any changes to the capital structure of the Company that occur by way of cash issues.
• $(b)$ A Holder will not be entitled to participate in new issues of securities of the Company.

• $(c)$ It is a condition of the Option that:
• $(i)$ in the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the company, the number of Options or the exercise price of the Options or both shall be reconstructed (as appropriate) in a manner which will not result in any benefits being conferred on Holders which are not conferred on shareholders: and
• $(ii)$ (subject to the provisions with respect to rounding of entitlements as sanctioned by the meeting of shareholders approving the reconstruction of capital) in all other respects the terms for the exercise of Options shall remain unchanged.
• $(d)$ In any reconstructions, Options must be treated in the following manner:
• $(i)$ in the event of a consolidation of the share capital of the Company, the number of Options must be consolidated in the same ratio as the ordinary share capital and the Exercise Price must be amended in inverse proportion to that ratio:
• $(ii)$ in the event of a sub-division of the share capital of the Company, the number of Options must be sub-divided in the same ratio as the ordinary share capital and the Exercise Price shall be amended in inverse proportion to that ratio;
• $(iii)$ in the event of a reduction of par value of each Share by a cancellation of share capital that is either lost or not represented by available assets, the number of Options and the Exercise Price of each Option must remain unaltered;
• $(iv)$ in the event of a pro rata cancellation of Shares, the number of Options must be reduced in the same ratio as the ordinary share capital and the Exercise Price of each Option shall be amended in inverse proportion to that ratio;
• $(v)$ in the event of any other reconstruction of the issued capital of the Company, the number of Options or the Exercise Price of the Options or both must be reconstructed (as appropriate) in a manner which will not result in any benefits being conferred on option holders which are not conferred on shareholders', and
• $(v_i)$ (subject to the provisions with respect to rounding of entitlements as sanctioned by the meeting of shareholders

approving the reconstruction of capital) in all other respects the terms for the exercise of Options must remain unchanged.

• $(e)$ If, prior to the exercise of an Option, the Company makes a pro rata bonus issue or a pro rata cash issue to the holders of Shares and the Option is not exercised prior to the books closing date in respect of that bonus issue or cash issue, the Company will be entitled to adjust the number of Shares over which the Option exists or the Exercise price of the Option in order to take into account changes to the capital structure of the company but such adjustments are to occur only in accordance with the Listing Rules. In particular, in the case of a pro rata bonus issue, upon exercise of the Option, the number of shares received will include the number of bonus shares that would have been issued if the Option had been exercised prior to the books closing date for bonus issues.
• $(f)$ The Company must give notice to Holders and to the ASX within the period prescribed in Listing Rule 3.11.2 of any adiustment to the number of Shares which the Holder is entitled to subscribe for on exercise of an Option and/or any adjustment to the Exercise Price in accordance with the Listing Rules.
• $(g)$ If the Company is Listed, the Committee must only exercise its powers pursuant to this clause 12 if allowed by in accordance with the Listing Rules.
• 12.3 The Plan will afford a Grantee no additional rights to compensation or damages in consequence of the termination of his employment or appointment for any reason whatsoever.

13. LISTING ON AUSTRALIAN STOCK EXCHANGE LIMITED

No Option will be quoted or listed on any stock exchange. When an option is exercised, the Company will apply to ASX (and any other stock exchange on which the Shares of the Company are quoted) for quotation of the Shares issued in consequence of the exercise of an Option.

14. DURATION OF THE PLAN

• The Plan will continue in operation at the discretion of the Committee. $14.1$
• $14.2$ If the Plan is terminated or discontinued, the rights of Grantees in respect of whom offers pursuant to clause 8 have been made and accepted will not be affected.

ALTERATION TO THE PLAN 15.

• $15.1$ Subject to clause 15.2, the Committee may at any time and from time to time by resolution:-
• (a) revoke, add or vary any of the terms and conditions of the Plan or any of the rights or obligations of the Grantees or any of them, provided that the interests of the Participants are not, in the opinion of the Committee. thereby materially prejudiced: and
• (b) formulate various sets of special terms and conditions, in addition to those set out herein, to apply to Participants employed or resident in or who are citizens of countries other than Australia. Each set of special terms and conditions must, as far as is practical, be consistent with the general intent and objectives of the Plan and must be restricted in its application to those participants employed or resident in or who are citizens of the foreign country or countries specified by the Committee in relation thereto, and may be revoked, added to or varied in accordance with paragraph (a) of this clause.
• 15.2 For so long as the Shares in the capital of the Company are listed on the ASX, the Committee's powers under clause 15.1 are subject to any restrictions of procedural requirements relating to the amendment of the terms of an employee incentive scheme or of issue options imposed by the Listing Rules.

16. NOTICES AND CORRESPONDENCE

• $16.1$ Any notice required to be given by a Grantee to the Company or any correspondence to be made between a Grantee and the Company must be in writing and may be given or made to the registered office of the Company or such other address as may notified by the Company in writing.
• 16.2 Any notice required to be given by the Company to a Grantee or any correspondence to be made between the Company and a Grantee may be given or made by the Committee (or such person or persons as it may from time to time direct) on behalf of the Company.

$17₁$ NON-ASSIGNABILITY OF THE OPTION

Each Option is personal to the Grantee and is not transferable, transmissible or assignable, except as provided in clause 18 or with the prior written consent of the Company.

1. TERMINATION OF THE OPTION

9

• In the event of the death of a Grantee or termination of the employment of a $181$ Grantee or termination of the appointment of a Grantee prior to the exercise of any Option held by that Grantee, that Option will forthwith terminate without any claim against the Company, provided always that subject to the written approval of the Committee in its absolute discretion;
• (a) where the Grantee dies before the expiry of the Option Period and at the date of his death he held an unexercised Option or Options, that Option or Options any be exercised by the personal representatives of the Grantee: or
• (b) where the Grantee ceased his or her employment with the Company or ceased his or her appointment by the Company by reason of:
  • retirement at or after attaining normal retirement age; $(i)$
  • (ii) retirement before that age with the consent of the Committee;
  • (iii) ill-health or accident:
  • (iv) redundancy; or
  • $(v)$ any other circumstance with the consent of the Committee;

he or she may exercise his or her unexercised Option or Options (in respect of the number of Options which are exercisable at that time) as provided in clause 10 within 30 days after the date of termination of employment or appointment by the Company. A change of employment will not be considered a termination so long as the Grantee continues to be employed by the Company or an Associated Company. Any Options held by a Grantee whose employment is terminated which are not exercisable at that time will automatically terminate.

In the event of the appointment of a liquidator, receiver and manager or $18.2$ administrator of any of the property of the Company, all Options to the extent that they are then unexercised shall terminate.

19. DISPUTES

Any disputes or differences of any nature arising hereunder shall be referred to the Committee and its decision shall be final and binding in all respects.