ORTHOCELL LIMITED — AGM Information 2018

Oct 18, 2018

ORTHOCELL LIMITED A B N 5 7 1 1 8 8 9 7 1 3 5

NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY MEMORANDUM

The Annual General Meeting of the Company will be held at Building 191 Murdoch University, South Street, Murdoch, Western Australia on 19 November 2018 at 3.00 PM (WST).

The Notice of Annual General Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.

Should you wish to discuss any matter please do not hesitate to contact the Company by telephone on (08) 9360 2888

Shareholders are urged to attend or vote by lodging the Proxy Form attached to this Notice.

ORTHOCELL LIMITED A B N 5 7 1 1 8 8 9 7 1 3 5

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Shareholders of Orthocell Limited ( "Company" ) will be held at Building 191 Murdoch University, South Street, Murdoch, Western Australia on 19 November 2018 at 3.00 PM (WST) ( "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 form part of this Notice.

Terms and abbreviations used in this Notice and the Explanatory Memorandum are defined in Schedule 1.

AGENDA

Ordinary business

1. Financial Statements and Reports

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2018 ( “Annual Report” ) together with the declaration of the Directors, the Directors’ Report, and the Auditor’s Report.

2. Resolution 1 – Non Binding Resolution to adopt Remuneration Report

To consider, and if thought fit, to pass with or without amendment, the following resolution as a non-binding resolution:

"That the Remuneration Report be adopted on the terms and conditions set out in the Explanatory Memorandum."

Note: The vote on this Resolution is advisory only and does not bind the Directors or the Company. Shareholders are encouraged to read the Explanatory Memorandum for further details on the consequences of voting on this Resolution.

Voting Exclusion

The Company will disregard any votes cast in favour of this Resolution by or on behalf of a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or their Closely Related Parties. However, the Company need not disregard a vote if:

• (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed Resolution or the proxy is the Chair of the Meeting and the appointment of the Chair as proxy does not specify the way the proxy is to vote on the resolution and expressly authorises the Chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel; and

• (b) it is not cast on behalf of a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or their Closely Related Parties.

Further, a Restricted Voter who is appointed as a proxy will not vote on this Resolution unless:

• (a) the appointment specifies the way the proxy is to vote on this Resolution; or

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(b)

• the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of this Resolution.

Shareholders may also choose to direct the Chair to vote against this Resolution or to abstain from voting. If you purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.

3. Resolution 2 – Re-Election of Mr Qi Xiao Zhou as a Director

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

"That Mr Qi Xiao Zhou, who retires in accordance with rule 6.1(f)(i) of the Constitution and, being eligible for re-election, be re-elected a Director.”

4. Resolution 3 – Ratification of issue of Options to consultants under ASX Listing Rule 7.1

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

“That, for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders ratify:

• (a) the issue of 1,100,000 Options issued on 9 May 2018 to various consultants; and

• (b) the issue of 500,000 Options issued on 3 October 2018 to a consultant,

in each case on the terms and conditions set out in the Explanatory Memorandum.”

Voting exclusion statement:

The Company will disregard any votes cast in favour of Resolution 3 by or on behalf of any person who is expected to participate in the issue the subject of Resolution 3 and any person who is an Associate of those persons. However, the Company need not disregard a vote if the vote is cast by:

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

(ii) 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.

5. Resolution 4 – Approval of 10% Placement Facility

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

"That pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of Equity Securities of up to 10% of the issued capital of the Company (at the time of issue), calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Memorandum."

Voting exclusion statement:

The Company will disregard any votes cast in favour of this Resolution by or on behalf of a person who is expected to participate in the proposed issue and a person who will obtain a material benefit, except a benefit solely in the capacity of a holder of ordinary securities, if this Resolution is passed, and any Associates of those persons. However, the Company need not disregard a vote if:

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• (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 Chairman as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

6. Resolution 5 – Approval of proportional takeover provisions in Constitution

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

“That, for the purposes of section 648G of the Corporations Act and all other purposes, Shareholders approve the inclusion of the proportional takeover provisions contained in rule 14 of the Constitution for a period of three years commencing from the date of this Meeting.”

OTHER BUSINESS

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To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act.

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Details of the definitions and abbreviations used in this Notice are set out in Schedule 1 to the Explanatory Memorandum.

Dated 12 October 2018

By Order of the Board

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Simon Robertson Company Secretary

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How to vote

Shareholders can vote by either:

• attending the Meeting and voting in person or by attorney or, in the case of corporate Shareholders, by appointing a corporate representative to attend and vote; or

• appointing a proxy to attend and vote on their behalf using the Proxy Form accompanying this Notice and by submitting their proxy appointment and voting instructions in person, by post or by facsimile.

Voting in person (or by attorney)

Shareholders, or their attorneys, who plan to attend the Meeting are asked to arrive at the venue 15 minutes prior to the time designated for the Meeting, if possible, so that their holding may be checked against the Company's share register and attendance recorded. Attorneys are required to produce an original or certified copy of the power of attorney under which they have been authorised to attend and vote at the meeting to the Company at least 48 hours before the meeting and should bring with them that power of attorney with them to the meeting.

Voting by a corporation

A Shareholder that is a corporation may appoint an individual to act as its representative and vote in person at the Meeting. The appointment must comply with the requirements of section 250D of the Corporations Act. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which it is signed.

Voting by proxy

• A Shareholder entitled to attend and vote is entitled to appoint not more than two proxies. Each proxy will have the right to vote on a poll and also to speak at the Meeting.

• The appointment of the proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, the votes will be divided equally among the proxies (i.e. where there are two proxies, each proxy may exercise half of the votes).

• A proxy need not be a Shareholder.

• The proxy can be either an individual or a body corporate.

• If a proxy is not directed how to vote on an item of business, the proxy may generally vote, or abstain from voting, as they think fit. However, where a Restricted Voter is appointed as a proxy, the proxy may only vote on Resolutions in accordance with a direction on how the proxy is to vote, or if the proxy is the Chairman and the appointment expressly authorises the Chairman to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

• Should any resolution, other than those specified in this Notice, be proposed at the Meeting, a proxy may vote on that resolution as they think fit.

• If a proxy is instructed to abstain from voting on an item of business, they are directed not to vote on the Shareholder's behalf on the poll and the Shares that are the subject of the proxy appointment will not be counted in calculating the required majority.

• Shareholders who return their Proxy Forms with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairman as their proxy to vote on their behalf. If a Proxy Form is returned but the nominated proxy does not attend the Meeting, the Chairman will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairman, the secretary or any Director that do not contain a direction as to how to vote will be used where possible to support each of the Resolutions proposed in this Notice, provided they are entitled to cast votes as a proxy under the voting exclusion rules which apply to some of the proposed Resolutions. These rules are explained in this Notice.

• To be effective, Proxy Forms must be lodged by 3.00 PM (WST) on 17 November 2018. Proxy Forms lodged after this time will be invalid.

• Proxy Forms may be lodged using any of the following methods:

• by post using the pre-addressed envelope provided with this Notice to: Automic, GPO Box 5193, Sydney NSW 2000

• by faxing a completed proxy form to +61 2 8583 3040

• by hand to: Automic, Level 5, 126 Phillip Street, Sydney NSW 2000

The Proxy Form must be signed by the Shareholder or the Shareholder's attorney. Proxy Forms given by corporations must be executed in accordance with the Corporations Act. Where the appointment of a proxy is signed by the appointer's attorney, a certified copy of the power of attorney, or the power itself, must be received by the Company at the above address, or by facsimile, and by 3.00 PM (WST) on 17 November 2018. If facsimile transmission is used, the power of attorney must be certified.

Shareholders who are entitled to vote

In accordance with regulations 7.11.37 and 7.11.38 of the Corporations Regulations 2001, the Board has determined that a person's entitlement to vote at the Annual General Meeting will be the entitlement of that person set out in the Register of Shareholders as at 4.00PM (WST) on 17 November 2018.

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ORTHOCELL LIMITED A B N 5 7 1 1 8 8 9 7 1 3 5

EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Annual General Meeting of the Shareholders of Orthocell Limited to be held at Building 191 Murdoch University, South Street, Murdoch Western Australia on 19 November 2018 at 3.00 PM (WST).

This Explanatory Memorandum should be read in conjunction with and forms part of the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions set out in the Notice.

A Proxy Form is located at the end of the Explanatory Memorandum.

Defined terms are set out in Schedule 1 to the Explanatory Memorandum.

1. Financial Statements and Reports

The first item of the Notice deals with the presentation of the of the Annual Report together with the declaration of the Directors, the Directors’ report, the Remuneration Report and the Auditor’s Report of the Company for the financial year ended 30 June 2018.

No resolution is required to be moved in respect of this item.

Shareholders will be offered the opportunity to discuss the Annual Report for the financial year ended 30 June 2018 at the Meeting, copies of which can be found on the Orthocell Limited website www.orthocell.com.au or by contacting the Company's registered office on (08) 9360 2888.

Shareholders will be offered the opportunity to ask questions or make comments on the management of the Company.

The Chairman will also provide Shareholders a reasonable opportunity to ask the auditor or the auditor’s representative questions relevant to:

• (a) the conduct of the audit;

• (b) the preparation and content of the Auditor’s Report;

• (c) the accounting policies adopted by the Company in relation to the preparation of accounts; and

• (d) the independence of the auditor in relation to the conduct of the audit.

The Chairman will also allow a reasonable opportunity for the auditor or their representative to answer any written questions submitted to the auditor under section 250PA of the Corporations Act.

2. Resolution 1 – Non Binding Resolution to adopt 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 Directors' Report for the year ended 30 June 2018 contains the Remuneration Report which sets out the Board’s policy for determining the nature and amount (or value) of remuneration for the Key Management Personnel of the Company and reports the remuneration arrangements in place for Key Management Personnel, including the executive Directors, specified executives and non-executive Directors. The Remuneration Report is set out in the Company’s Annual Financial Statements which is available on the Company’s website at www.orthocell.com.au.

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The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

However, if at least 25% of the votes cast are against adoption of the Remuneration Report at two consecutive annual general meetings, the Company will be required to put a resolution to the second Annual General Meeting ( Spill Resolution ), to approve calling a general meeting ( Spill Meeting ). If more than 50% of Shareholders vote in favour of the Spill Resolution, the Company must then convene a Spill Meeting within 90 days of the second Annual General Meeting. All of the Directors who were in office when the applicable Directors’ Report was approved, other than the Managing Director, will need to stand for re-election at the Spill Meeting if they wish to continue as Directors.

The Remuneration Report for the financial year ended 30 June 2017 did not receive a vote of more than 25% against its adoption at the Company’s last general meeting held on 15 November 2017. Accordingly, if at least 25% of the votes cast on Resolution 1 are against adoption of the Remuneration Report it will not result in the Company putting a Spill Resolution to Shareholders.

The Remuneration Report explains the Board policies in relation to the nature and level of remuneration paid to Directors, sets out remuneration details for each Director and any service agreements and sets out the details of any equity based compensation.

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

Note that a voting exclusion applies to Resolution 1 in the terms set out in the Notice. In particular, the Directors and other Restricted Voters may not vote on this Resolution and may not cast a vote as proxy, unless the appointment gives a direction on how to vote or the proxy is given to the Chair and expressly authorises the Chair to exercise your proxy, even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. The Chair intends to use any such proxies to vote in favour of the Resolution. Shareholders are urged to carefully read the Proxy Form and provide a direction to the proxy on how to vote on this Resolution.

3. Resolution 2 – Re-election of Mr Qi Xiao Zhou as a Director

Pursuant to the Constitution, Mr Qi Xiao Zhou will retire at this Meeting and, being eligible, seeks re-election.

Mr Qi Xiao Zhou was appointed a director of the Company on 2 November 2012.

Mr Qi Xiao Zhou has 16 years’ experience within China as a senior business manager and executive. Mr Zhou is the founding CEO of Shenzhen Lightning Digital Technology Co Ltd, a company focused on the manufacture and distribution of electronic semiconductor since 2001. Mr Zhou has experience within the public markets in Hong Kong, China and Taiwan and brings to the Board a wealth of business management and development experience. In particular Mr Zhou has broad connections and experience in the licensing of technologies into the Asian region.

The Board believes that Mr Qi Xiao Zhou has performed the duties and responsibilities of a Director diligently and professionally, in the best interests of all Shareholders.

The Board considers Mr Qi Xiao Zhou not to be an independent Director as he is a substantial shareholder of the Company.

The Board (in the absence of Mr Qi Xiao Zhou) supports the re-election of Mr Qi Xiao Zhou.

The Chairman intends to exercise all undirected proxies in favour of Resolution 2.

4. Resolution 3 – Ratification of issue of Options to various consultants under ASX Listing Rule 7.1

On 9 May 2018 and the Company issued a total 1,100,000 Options exercisable at $0.34 on or before 8 May 2021 to consultants engaged by the Company.

On 3 October 2018 the Company issued a total 500,000 Options exercisable at $0.34 on or before 8 May 2021 to a consultant engaged by the Company.

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Listing Rule 7.1 broadly provides that a company may issue, without shareholder approval, Equity Securities up to 15% of its issued capital in any 12 month period.

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior Shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of the ratification is to restore the Company's maximum discretionary power to issue further Equity Securities up to 15% of the issued capital of the Company without requiring Shareholder approval.

Resolution 4 seeks ratification under Listing Rule 7.4 of the issue of:

• 1,100,000 Options that were made on 9 May 2018; and

• 500,000 Options that were made on 3 October 2018,

in order to restore the ability of the Company to issue further Equity Securities within the 15% limit during the next 12 months.

The following information in relation to the Options is provided to Shareholders for the purposes of Listing Rule 7.5:

• (a) 1,600,000 Options were issued;

• (b) the Options were issued at an issue price of Nil;

• (c) the Options are exercisable at $0.34 on or before 8 May 2021;

• (d) the Options were issued to various consultants providing services to the Compony, all of whom were unrelated parties of the Company;

• (e) the Options were issued to the consultants as part of their engagement arrangements;

• (f) the terms and conditions of the Options are set out in Schedule 2; and

• (g) no funds will be raised from the issue of the Options.

The Chairman intends to exercise all undirected proxies in favour of Resolution 3.

5. Resolution 4 – Approval of 10% Placement Facility

5.1 General

Listing Rule 7.1A enables eligible entities to issue Equity Securities up to 10% of its issued share capital over a 12 month period after the annual general meeting at which a resolution for the purposes of Listing Rule 7.1A is passed by special resolution ( 10% Placement Facility ). The 10% Placement Facility is in addition to the Company's 15% placement capacity under Listing Rule 7.1.

An eligible entity for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation of $300 million or less. The Company has a market capitalisation of approximately $32.5 million as at 1 October 2018 and is an eligible entity.

While the Company has no current intention to use the 10% Placement Facility, the Company is now seeking Shareholder approval by way of a special resolution to have the ability to issue Equity Securities under the 10% Placement Facility in the 12 months following the Meeting.

The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to Section 7.2(c) below).

The Company intends to continue to develop its existing business activities. The Company may use the 10% Placement Facility to further develop and commercialise its products and for general working capital.

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The Directors believe that Resolution 4 is in the best interests of the Company and unanimously recommend that Shareholders vote in favour of this Resolution.

The Chairman intends to exercise all undirected proxies in favour of Resolution 4.

5.2 Description of Listing Rule 7.1A

• (a) Shareholder approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to Shareholder approval by way of a special resolution at an annual general meeting.

• (b) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company.

The Company, as at the date of the Notice, has on issue quoted Shares, unquoted Options and unquoted Warrants.

• (c) Formula for calculating 10% Placement Facility

Based on the number of shares on issue at the date of this Notice, the Company will have 110,177,779 Shares on issue and therefore, subject to Resolution 3 being passed and Shareholder approval being obtained under Resolution 4, 11,017,777 of Equity Securities will be permitted to be issued in accordance with Listing Rule 7.1A.

Listing Rule 7.1A.2 provides that eligible entities which have obtained Shareholder approval at an annual general meeting may issue or agree to issue, during the 12 month period after the date of the annual general meeting, a number of Equity Securities calculated in accordance with the following formula:

(A x D) – E

A is the number of Shares on issue 12 months before the date of issue or agreement:

• (A) plus the number of fully paid Shares issued in the 12 months under an exception in Listing Rule 7.2;

• (B) plus the number of partly paid Shares that became fully paid in the 12 months;

• (C) plus the number of fully paid Shares issued in the 12 months with approval of holders of Shares under Listing Rule 7.1 and 7.4. This does not include an issue of fully paid Shares under the entity's 15% placement capacity without Shareholder approval;

• (D) less the number of fully paid Shares cancelled in the 12 months.

Note that A is has the same meaning in Listing Rule 7.1 when calculating an entity's 15% placement capacity.

D is 10%.

• E is the number of Equity Securities issued or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of the issue or agreement to issue that are not issued with the approval of Shareholders under Listing Rule 7.1 or 7.4.

Listing Rule 7.1 and Listing Rule 7.1A

(d)

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The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity's 15% placement capacity under Listing Rule 7.1.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at the date of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to Section 7.2(c) above).

• (e) Minimum issue price

The issue price of Equity Securities issued under Listing Rule 7.1A must be not less than 75% of the VWAP of Equity Securities in the same class calculated over the 15 Trading Days on which trades in that class were recorded immediately before:

• (i) the date on which the price at which the Equity Securities are to be issued is agreed; or

• (ii) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (i) above, the date on which the Equity Securities are issued.

• (f) 10% Placement Period

Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires on the earlier to occur of:

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

• (ii) the date of the approval by Shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking),

( 10% Placement Period ).

5.3 Listing Rule 7.1A

The effect of passing Resolution 4 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the 10% Placement Period without using the Company’s 15% placement capacity under Listing Rule 7.1.

Resolution 4 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative) in order to be passed.

5.4

Specific information required by Listing Rule 7.3A

Pursuant to and in accordance with Listing Rule 7.3A, information is provided in relation to the approval of the 10% Placement Facility as follows:

• (a) The Equity Securities will be issued at an issue price of not less than 75% of the VWAP for the Company's Equity Securities over the 15 Trading Days on which trades in that class were recorded immediately before:

• (i) the date on which the price at which the Equity Securities are to be issued is agreed; or

• (ii) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (i) above, the date on which the Equity Securities are issued.

• (b) If Resolution 4 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, the existing Shareholders' economic and voting

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interests in the Company will be diluted as shown in the below table. There is also a risk that:

• (i) the market price for the Company's Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and

• (ii) the Equity Securities may be issued at a price that is at a discount to the market price for the Company's Equity Securities on the issue date or the Equity Securities are issued as part of the consideration for the acquisition of a new asset,

which may have an effect on the amount of funds raised by the issue of the Equity Securities under the 10% Placement Facility.

The table below shows the potential dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable "A" calculated in accordance with the formula in Listing Rule 7.1A(2) as at the date of this Notice.

The table also shows:

• (i) two examples where variable “A” has increased, by 50% and 100%. Variable “A” is based on the number of ordinary securities the Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) or future specific placements under Listing Rule 7.1 that are approved at a future Shareholders’ meeting; and

• (ii) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against the current market price.

Variable “A” in Listing Rule 7.1A.2			Dilution
		$0.147 50% decrease in Issue Price	$0.295 Issue Price	$0.59 100% increase in Issue Price
Current Variable “A” 110,177,779 Shares	Shares issued	11,017,778	11,017,778	11,017,778
	Funds raised	$1,619,613	$3,250,244	$6,500,489
	Dilution effect	10%	10%	10%
50% increase in current Variable “A” 165,266,669 Shares	Shares issued	16,526,667	16,526,667	16,526,667
	Funds raised	$2,429,420	$4,875,367	$9,750,733
	Dilution effect	10%	10%	10%
100% increase in current Variable “A” 220,355,558 Shares	Shares issued	22,035,556	22,035,556	22,035,556
	Funds raised	$3,239,227	$6,500,489	$13,000,978

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	Dilution effect	10%	10%	10%

The table has been prepared on the following assumptions:

• (i) That Resolution 3 is passed by Shareholders. There are currently 110,177,779 existing Shares on issue as at the date of this Notice. On the basis that Resolution 3 is passed variable A is 110,177,779.

• (ii) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility.

• (iii) No convertible securities (including any convertible securities issued under the 10% Placement Facility) are exercised into Shares before the date of the issue of the Equity Securities.

• (iv) The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.

• (v) The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Facility, based on that Shareholder’s holding at the date of the Meeting.

• (vi) The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placement capacity under Listing Rule 7.1.

• (vii) The issue of Equity Securities under the 10% Placement Facility consists only of Shares.

• (viii) The issue price is $0.295 being the closing price of the Shares on ASX on 1 October 2018.

• (c) The Company will only issue the Equity Securities during the 10% Placement Period. As noted above, the approval under Resolution 4 for the issue of the Equity Securities pursuant to the 10% Placement Facility will cease to be valid in the event that Shareholders approve a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or Listing Rule 11.2 (disposal of main undertaking).

• (d) The Company may seek to issue the Equity Securities for the following purposes:

• (i) non-cash consideration for the acquisition of the new assets and investments. In such circumstances the Company will comply with the minimum issue price limitations and provide a valuation of the non-cash consideration as required by Listing Rule 7.1A.3 and will release the valuation to the market; or

• (ii) cash consideration. In such circumstances, the Company may use the 10% Placement Facility to further develop and commercialise its products and for general working capital.

The Company will comply with the disclosure obligations under Listing Rules 7.1A.4 and 3.10.5A upon issue of any Equity Securities.

• (e) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of Equity Securities will be determined on a case-by-case basis having regard to factors including but not limited to the following:

• (i) the methods of raising funds that are available to the Company, including but not limited to, rights issue or other issue in which existing security holders can participate;

• (ii) the dilutionary effect of the issue of the Equity Securities on existing Shareholders at the time of the proposed issue of Equity Securities;

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(iii) the effect of the issue of the Equity Securities on the control of the Company;

• (iv) the financial situation and solvency of the Company; and

• (v) advice from corporate, financial and broking advisers (if applicable).

The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existing substantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

Further, if the Company is successful in acquiring new resources assets or investments, it is likely that the allottees under the 10% Placement Facility will be the vendors of the new resources assets or investments.

The Company last obtained approval from its Shareholders pursuant to Listing Rule 7.1A at its 2017 annual general meeting held on 15 November 2017 ( Previous Approval ). Since the Previous Approval, the Company has not issued any Equity Securities pursuant to the Previous Approval. During the 12 month period preceding the date of the Meeting, being on and from 15 November 2017, the Company has issued a total of 21,388,342 Equity Securities (which represents approximately 18.29% of the total diluted number of Equity Securities on issue in the Company on 15 November 2017, which was 116,931,674. Further details of the issues of Equity Securities by the Company during the 12 month period preceding the date of the Meeting are set out in Schedule 3.

(f) A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not determined its allocation policy for the issue of Equity Securities under the 10% Placement Capacity (other than noting the persons to whom Equity Securities will be issued will be determined on a case by case basis, having regard to the factors outlined in paragraph (e) above), nor has it approached any particular existing Shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities. No existing Shareholder's votes will therefore be excluded under the voting exclusion in the Notice.

6. Resolution 5 - Approval of proportional takeover provisions in Constitution

The Constitution contains proportional takeover provisions which are set out in rule 14 of the Constitution.

Resolution 5 seeks Shareholder approval for the proportional takeover provisions to be included in the Constitution with effect from the close of the Meeting, and is a special resolution, requiring approval of 75% of the votes cast by Shareholders entitled to vote on the resolution in order to be passed.

If Resolution 5 is passed, then rule 14 of the Constitution will have effect as and from the close of the Meeting for a period of three years. After a period of three years, rule 14 of the Constitution would cease to apply unless renewed by a further special resolution of Shareholders.

Section 648G(5) of the Corporations Act requires certain information to be included in a notice of meeting where a company seeks the approval of its members to adopt proportional takeover provisions. This information is set out below.

6.1 Proportional takeover bid

A proportional takeover bid is a takeover offer sent to all shareholders of a company, offering to purchase only a specified proportion of each shareholder’s shares. If a shareholder accepts, the shareholder disposes of that specified portion of shares and retains the balance.

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6.2 Effects of the proposed proportional takeover provisions

The effects of the proposed proportional takeover provisions in the Company’s new Constitution are that:

• (a) if a bidder makes a proportional takeover bid for any class of shares in the Company, the Directors must ensure that a general meeting of members of that class is convened where a resolution to approve the bid is voted upon. The vote is decided on a simple majority. The bidder and its associates are excluded from voting on that approving resolution;

• (b) the resolution will be required to be passed in a general meeting before the time stated in section 648D of the Corporations Act, being the 14th day before the last day of the bid period (“approving resolution deadline”); and

• (c) if the approving resolution is:

• (i) not voted on at the end of the day before the approving resolution deadline, the bid will be taken to have been approved;

• (ii) put to members and rejected before the approving resolution deadline, the bid cannot proceed and the offer will be taken to have been withdrawn. Any transfers giving effect to takeover contracts for the bid will not be registered and all offers under the takeover bid are taken to be withdrawn and all takeover contracts must be rescinded; or

• (iii) passed (or taken to have been approved), the transfers must be registered (subject to other provisions of the Corporations Act and the Company's Constitution).

The proportional takeover provisions do not apply to full takeover bids.

6.3 Reasons for proportional takeover provisions

A proportional takeover bid may result in control of the Company changing without Shareholders having the opportunity to dispose of all of their Shares. By making a proportional bid, a bidder can obtain practical control of the Company by acquiring less than a majority interest. Shareholders are exposed to the risk of not being able to exit their investment in the Company by selling their entire shareholding and consequently being left as a minority shareholder in the Company. The bidder may be able to acquire control of the Company without payment of an adequate control premium.

The proportional takeover provisions allow Shareholders to decide if a proportional takeover bid is acceptable in principle, and may assist in ensuring that any proportional takeover bid is appropriately priced. To assess the merits of the proportional takeover provisions, Shareholders should make a judgement as to what events are likely to occur in relation to the Company during the three year life of the proposed provisions.

6.4 Advantages and disadvantages

The Corporations Act requires this Explanatory Memorandum to discuss the advantages and disadvantages for Directors and Shareholders of the proportional takeover provisions which are proposed to be included in the Constitution.

The potential advantages for Shareholders of the proportional takeover provisions include the following:

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• (a) Shareholders have the right to decide, by majority vote, whether an offer under a proportional takeover bid should proceed. The proposal would enable Shareholders to act in a cohesive manner and thereby avoid the coercion of Shareholders that arises where they believe the offer to be inadequate, but nevertheless accept through fear that other Shareholders will accept;

• (b) the provisions may assist Shareholders and protect them from being locked in as a minority;

• (c) the existence of the approval machinery in the Company's new Constitution may make it more probable that any takeover bid will be a full bid for the whole shareholding of each Shareholder, so that Shareholders may have the opportunity of disposing of all their shares rather than of a proportion only;

• (d) the provisions may increase the bargaining power of Shareholders and may assist in ensuring that any proportional takeover bid is adequately priced; and

• (e) each individual Shareholder may better assess the likely outcome of the proportional takeover bid by knowing the view of the majority of Shareholders and assist in deciding whether to accept or reject an offer under a proportional takeover bid.

The potential disadvantages for Shareholders include the following:

• (a) proportional takeover bids for Shares in the Company may be discouraged;

• (b) Shareholders may lose an opportunity to sell some of their Shares at a premium;

• (c) it is possible that the existence of the provisions might have an adverse effect on the market value of the Company’s Shares by making a proportional takeover bid less likely and thereby reducing any takeover speculation element in the Share price;

• (d) individual Shareholders may consider that the proportional takeover provisions would restrict their ability to deal with their Shares as they see fit; and

• (e) the likelihood of a proportional takeover bid succeeding may be reduced.

6.5 Knowledge of any acquisition proposal

At the date of this Notice of Meeting, no Director of the Company is aware of any proposal by any person to acquire, or to increase the extent of a substantial interest in the Company.

6.6 Right to set aside Resolution

If Resolution 5 is passed, then within 21 days after the meeting, the holders of at least 10% of the Company’s Shares have the right to apply to the court to have the Resolution set aside. The court may set aside the Resolution if the court is satisfied in all the circumstances that it is appropriate to do so.

6.7 Directors’ recommendation

The Directors do not believe the potential disadvantages outweigh the potential advantages of adopting the proportional takeover provisions and as a result consider that the proportional takeover provisions in the Constitution are in the interest of

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Shareholders and unanimously recommend that Shareholders vote in favour of Resolution 5.

7. Action to be taken by Shareholders

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

8. Proxies

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, 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.

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Schedule 1 - Definitions

In the Notice, words importing the singular include the plural and vice versa.

$ means Australian Dollars.

10% Placement Facility has the meaning given in Section 7.1.

10% Placement Period has the meaning given in Section 7.2.

Accounting Standards has the meaning given to that term in the Corporations Act.

Annual Report means the annual financial report of the Company for the year ended 30 June 2018.

Associate has the meaning given in sections 12 and 16 of the Corporations Act. Section 12 is to be applied as if paragraph 12(1)(a) included a reference to the Listing Rules and on the basis that the Company is the “designated body” for the purposes of that section. A related party of a director or officer of the Company or of a Child Entity of the Company is to be taken to be an associate of the director or officer unless the contrary is established

ASX means the 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.

Board means the board of Directors of the Company.

Chairman or Chair means the person appointed to chair the Meeting of the Company convened by the Notice.

Child Entity has the meaning given to that term in the Listing Rules.

Closely Related Party has the meaning given to that term in the Corporations Act.

Company or Orthocell Limited means Orthocell Limited ACN 118 897 135.

Constitution means the constitution of the Company as at the date of the Meeting.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director 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 for the year ended 30 June 2018.

Employee means a person who is a full-time or permanent part-time employee or officer or director or company secretary of the Company or a related body corporate, or such other person as the Board determines.

Equity Security has the same meaning as in the Listing Rules.

Explanatory Memorandum means the explanatory memorandum which forms part of the Notice.

Key Management Personnel has the meaning given to that term in the Accounting Standards.

Listing Rules means the listing rules of ASX.

Meeting or Annual General Meeting means the annual general meeting convened by this Notice.

Notice means this notice of annual general meeting.

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Option means an option to acquire a Share.

Proxy Form means the proxy form attached to the Notice.

Remuneration Report means the remuneration report of the Company contained in the Directors’ Report.

Resolution means a resolution referred to in the Notice.

Restricted Voter means Key Management Personnel and their Closely Related Parties as at the date of the Meeting.

Schedule means a schedule to the Notice.

Section means a section of the Explanatory Memorandum.

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

Shareholder means a shareholder of the Company.

Spill Meeting has the meaning given in Section 1.

Spill Resolution has the meaning given in Section 1.

Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules.

VWAP means volume weighted average price.

Warrants means Warrants exercisable at $0.58 on or before 19 November 2020.

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

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Schedule 2 - Terms and Conditions of the Options

1. Entitlement

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

1. Exercise Price

The exercise price of each Option is $0.34 (Exercise Price).

1. Vesting and Expiry Date

50 % of the Options vested immediately on issue and 50% vest one year from date of issue.

The options will expire (Expiry Date), if not previously exercised, on the first to occur of:

• I. 8 May 2021;

• II. the expiry of 30 days (or any longer period which the Board determines) after the consultant cease to be engaged or appointed by the Company or any of its subsidiaries for any reason; and

• III. a determination of the Board that you have acted fraudulently, dishonestly or in breach of your obligations to the Company or any of its subsidiaries and that the option is to be forfeited.

• IV. as determined in accordance with item 4 below,

and thereafter no party has any claim against any other party arising under or in respect of the Options.

1. Change in Control

Upon the occurrence of a Change in Control Event the Board may determine (in its discretion):

• (d) that any unvested Options may vest and be exercised at any time from the date of such determination, and in any number until the date determined by the Board acting bona fide so as to permit the holder to participate in any change of control arising from a Change in Control Event provided that the Board will forthwith advise in writing each holder of such determination. Thereafter, the Options shall lapse to the extent they have not been exercised; or

• (e) to use their reasonable endeavours to procure that an offer is made to holders of Options on like terms (having regard to the nature and value of the Options) to the terms proposed under the Change in Control Event in which case the Board shall determine an appropriate period during which the holder may elect to accept the offer and, if the holder has not so elected at the end of that period, the Options shall immediately vest and become exercisable and if not exercised within 10 days, shall lapse.

For the purposes of this Item 3 "Change in Control Event" means:

• (f) the occurrence of:

• (i) the offeror under a takeover offer in respect of all Shares announcing that it has achieved acceptances in respect of 50.1% or more of the Shares; and

• (ii) that takeover bid has become unconditional (except any condition in relation to the cancellation or exercise of the Options); or

• (g) the announcement by the Company that:

• (i) Shareholders have at a Court convened meeting of shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement under which all Shares are to be either:

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  - (A) cancelled; or

  - (B) transferred to a third party; and

• (ii) the Court, by order, approves the proposed scheme of arrangement; or

• (h) the occurrence of the sale of all or a majority of the Company's main undertaking; or

(i) at the absolute discretion of the Board, the occurrence of a sale of at least 50% of the Company's main undertaking.

1. Exercise Period

The Options are exercisable at any time after the Vesting Date in item 2 above and on or prior to the Expiry Date.

1. Notice of Exercise

The Options may be exercised by notice in writing to the Company (“ Notice of Exercise in Schedule 2” ) and payment of the Exercise Price for each Option being exercised. Any Notice of Exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt.

1. Shares issued on exercise

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

1. Quotation of Shares on exercise

Application will be made by the Company to ASX for quotation of the Shares issued upon the exercise of the Options.

9. Timing of issue of Shares

After an Option is validly exercised, the Company must, as soon as possible following receipt of the Notice of Exercise and receipt of cleared funds equal to the sum payable on the exercise of the Option:

• (d) issue the Share;

• (e) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and

• (f) do all such acts matters and things to obtain the grant of official quotation of the Share on ASX no later than 5 Business Days after issuing the Share.

10. Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options.

1. Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment):

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• (a) the number of Shares which must be issued on the exercise of an Option will be increased by the number of Shares which the option holder would have received if the option holder had exercised the Option before the record date for the bonus issue; and

• (b) no change will be made to the Exercise Price.

12.

Adjustment for rights issue

If the Company makes an issue of Shares pro rata to existing Shareholders there will be no adjustment of the Exercise Price of an Option.

13. Adjustments for reorganisation

If there is any reorganisation of the issued share capital of the Company, the rights of the option holder may be varied to comply with the Listing Rules which apply to a reorganisation of capital at the time of the reorganisation.

14. Quotation of Options

No application for quotation of the Options will be made by the Company.

15. Options not transferable

Options are not transferable unless they are Vested Options and only with the prior written approval of the Board of directors of the Company and subject to compliance with the Corporations Act.

16.

Lodgement Instructions

Cheques shall be in Australian currency made payable to the Company and crossed "Not Negotiable". The application for shares on exercise of the Options with the appropriate remittance should be lodged at the Company's Registry.

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Schedule 3 - Issue of Equity Securities since 15 November 2017

Date	Number of Equity Securities	Class of Equity Securities and summary of terms	Names of recipients or basis on which recipients determined	Issue price of Equity Securities and discount to market price on the trading day prior to the issue	Form of Consideration
Issue 20 December 2017	4,198,238	Shares1	Issued to sophisticated and institutional investors	$0.34 per ordinary share (Share price on day of issue $0.335)	Amount raised = $1,427,400 Amount spent =$ Expended on: Costs of offer $76,000 Research and Development $462,000 Staff Costs $539,000 Corporate, admin and general working capital $350,000
Issue 12 January 2018	4,286,578	Shares1	Issued to Shareholders participating in Share Purchase Plan	$0.34 per ordinary share (Share price on day of issue $0.34)	Amount raised = $1,457,436 Amount spent $444,000 Expended on: Research and Development $144,000 Staff Costs $168,000 Corporate, admin and general working capital $133,000 Funds not yet expended $1,013,436 Forecast to be expended as following: Research and Development $328,000 Corporate, Administration and other working capital expenses $685,436
Issue 9 May 2018	213,526	Shares1	Issued Directors following shareholder approval	$0.34 per ordinary share (Share price on day of issue $0.345)	Amount raised = $72,591 Amount spent =$72,591

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					Expended on: Corporate, Administration and other working capital expenses $72,591
Issue 9 May 2018	11,090,000	Options exercisable at $0.395 on 8 may 2021	Issued under the Orthocell Limited Employee Option Acquisition Plan	Nil	Valuation at time of issue $0.1075 Current value $0.068.2
Issue 9 May 2018	1,100,000	Options exercisable at $0.34 on or before 8 May 2021	Issued to Consultants	Nil	Valuation at time of issue $0.1248 Current value $0.082.2

Notes :

1. Shares are fully paid ordinary shares in the Company ranking equally in all respect with the existing issued Shares in the Company.

2. Value of options determined using the Black-Scholes methodology.

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Non Binding Resolution to adopt Remuneration Report

Re-Election of Mr Qi Xiao Zhou as a Director

Ratification of issue of Options to consultants under ASX Listing Rule 7.1

Approval of 10% Placement Facility

Approval of proportional takeover provisions in Constitution

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