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

Notice of Annual General Meeting and Explanatory Memorandum to Shareholders

The Annual General Meeting of the Company will be held at Building 191 Murdoch University, South Street, Murdoch, Western Australia on 27 October 2021 at 9.00 AM (AWST).

A Proxy Form is enclosed

Please read this Notice and Explanatory Memorandum carefully.

If you are unable to attend the Annual General Meeting please complete and return the enclosed Proxy Form in accordance with the specified directions.

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

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of Shareholders of Orthocell Limited ABN 57 118 897 135 will be held at Building 191 Murdoch University, South Street, Murdoch, Western Australia on 27 October 2021 at 9.00 AM (AWST) for the purpose of transacting the following business referred to in this Notice of Annual General Meeting.

The Company and the Board are acutely aware of the current circumstances resulting from COVID-19 and the impact it is having, and is likely to continue to have, on physical meetings. The Board has made the decision that it will hold a physical Meeting with the appropriate social gathering and physical distancing measures in place to comply with the State and Federal Government’s current restrictions for physical gatherings.

Circumstances relating to COVID-19 are changing rapidly. The Company will update Shareholders if changing circumstances will impact the planning or arrangements for the Meeting by way of announcement on ASX and the details will also be made available on our website at www.orthocell.com.au.

AGENDA

Ordinary business

1. Financial Reports

To receive and consider the financial report of the Company for the year ended 30 June 2021, together with the Directors’ Report and the Auditor's Report as set out in the Annual Report.

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

To consider and, if thought fit, pass the following resolution as a non-binding resolution :

"That the Remuneration Report for the year ended 30 June 2021 as set out in the 2021 Annual Report be adopted."

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 statement: The Company will disregard any votes cast on the 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 the Resolution unless: (a) the appointment specifies the way the proxy is to vote on the Resolution; or (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 the Resolution. Shareholders may also choose to direct the Chair to vote against the Resolution or to abstain from voting.

If any of the persons named above purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and those persons may be liable for breaching the voting restrictions that apply to them 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 – Approval of Additional 10% Placement Capacity

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

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

5. Resolution 4 – Renewal 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 purpose of section 648G of the Corporations Act and all other purposes, Shareholders approve the existing proportional takeover provisions, previously approved at the general meeting held on 19 November 2018 and set out in rule 14 of the Company’s Constitution and are being renewed for a further three years commencing from the close of the Meeting.”

OTHER BUSINESS

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

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

By order of the Board

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Simon Robertson Company Secretary

Dated: 21 September 2021

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, electronic address 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 their attendance recorded. To be effective a certified copy of the Power of Attorney, or the original Power of Attorney, must be received by the Company in the same manner, and by the same time as outlined for proxy forms below.

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 (but only to the extent allowed by the appointment) 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 Resolution 1 in accordance with a direction on how the proxy is to vote or, if the proxy is the Chair of the Meeting and the appointment 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.
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 who do not nominate the identity of their proxy, will be taken to have appointed the Chair of the Meeting as their proxy to vote on their behalf. If a Proxy Form is returned but the nominated proxy does not attend the Meeting, the Chair of the Meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chair of the Meeting, the secretary or any Director that do not contain a direction 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, proxies must be received by 9.00 AM (AWST) on 25 October 2021. Proxies received after this time will be invalid.

Proxies may be lodged using any of the following methods:

Meeting will be the entitlement of that person set out in the Register of Shareholders as at 4:00 pm (AWST) on 25 October 2021.

by returning a completed Proxy Form by post to:

Automic GPO Box 5193 Sydney NSW 2001

by returning a complete Proxy Form and delivering it in person at:

Automic Level 5, 126 Phillip Street Sydney NSW 2000

by faxing a complete Proxy Form to +61 2 8583 3040;

−

by email to: [email protected]

− by recording the proxy appointment and voting instructions via the internet at https://investor.automic.com.au/#/l oginsah. Only registered Shareholders may access this facility and will need their Holder Identification Number ( HIN ) or Securityholder Reference Number ( SRN ).

 The Proxy Form must be signed by the Shareholder or the Shareholder's attorney. Proxies 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 9.00 AM (AWST) on 25 October 2021. If facsimile transmission is used, the Power of Attorney must be certified.

Shareholders who are entitled to vote

In accordance with paragraphs 7.11.37 and 7.11.38 of the Corporations Regulations, the Board has determined that a person's entitlement to vote at the Annual General

ORTHOCELL LIMITED

ABN 57 118 897 135

EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of Annual General Meeting of the Company.

Certain abbreviations and other defined terms are used throughout this Explanatory Memorandum. Defined terms are generally identifiable by the use of an upper case first letter. Details of the definitions and abbreviations are set out in the Glossary to the Explanatory Memorandum.

1 Financial Statements and Reports

The first item of the Notice deals with the presentation of the consolidated annual financial report of the Company for the financial year ended 30 June 2021, together with the Directors' declaration and report in relation to that financial year and the Auditor's Report on the financial report. Shareholders should consider these documents and raise any matters of interest with the Directors when this item is being considered.

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

Shareholders will be given a reasonable opportunity at the Annual General Meeting to ask questions and make comments on the accounts and on the management of the Company.

The Chair will also give 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 independent audit report;
(c) the accounting policies adopted by the Company in relation to the preparation of the financial statements; and
(d) the independence of the Auditor in relation to the conduct of the audit.

The Chair 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

Section 250R(2) of the Corporations Act requires the Company to put to its Shareholders a resolution that the Remuneration Report as disclosed in the Company's 2021 Annual Report be adopted. The Remuneration Report is set out in the Company’s 2021 Annual Report and is also available on the Company’s website (www.orthocell.com.au).

The vote on this Resolution 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 2020 did not receive a vote of more than 25% against its adoption at the Company’s last general meeting held on 14 October 2020. Accordingly, if at least 25% of the votes cast on this Resolution 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 Chair will give Shareholders a reasonable opportunity to ask questions about, or make comments on, the Remuneration Report.

Voting

Note that a voting exclusion applies to this Resolution in the terms set out in the Notice.

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

Listing Rule 14.4 provides that a director of an entity must not hold office (without reelection) past the third annual general meeting following the director’s appointment or three years, whichever is the longer.

Rule 6.1 of the Constitution requires that one third of the Directors (rounded down to the nearest whole number) of the Directors, excluding the Managing Director and any Director who must retire following his or her appointment as an addition to the existing directors or to fill a casual vacancy since the last annual general meeting, must retire at each annual general meeting, provided always that no Director (except a Managing Director) shall hold office for a period in excess of three years, or until the third annual general meeting following his or her appointment, whichever is the longer, without submitting himself or herself for re-election.

The Directors to retire at an annual general meeting are those who have been longest in office since their last election, but, as between persons who became Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by drawing lots.

The Company currently has five Directors, other than the Managing Director.

Accordingly, at least one Director must retire. A Director who retires by rotation under rule 6.1(f)(i) of the Constitution is eligible for 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 considers Mr Qi Xiao Zhou not to be an independent Director as he is a substantial shareholder of the Company.

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. Based on Mr Qi Xiao Zhou’s relevant experience and performance the members of the Board (in the absence of Mr Qi Xiao Zhou) support the re-election of Mr Qi Xiao Zhou as a Director of the Company.

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

4 Resolution 3 – Approval of Additional 10% Placement Capacity

4.1 Background

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

Listing Rule 7.1A enables an eligible entity 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 ( Additional 10% Placement Capacity ). The Additional 10% Placement Capacity is in addition to the Company's 15% placement capacity under Listing Rule 7.1.

An entity will be eligible to seek approval under Listing Rule 7.1A if:

(a) the entity has a market capitalisation of $300 million or less; and
(b) the entity that is not included in the S&P/ASX 300 Index.

The Company is an eligible entity for the purposes of Listing Rule 7.1A.

Resolution 3 seeks Shareholders’ approval by way of special resolution to issue additional Equity Securities under the Additional 10% Placement Capacity provided for in Listing Rule 7.1A without Shareholder approval. It is anticipated that funds raised by the

issue of Equity Securities under the Additional 10% Placement Capacity would be applied towards the Company’s existing and new product development studies and intellectual property maintenance costs, and general working capital.

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

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

4.2 The number of Equity Securities which may be issued pursuant to the Additional 10% Placement Capacity

Based on the number of Shares on issue at the date of this Notice, the Company will have 191,083,118 Shares on issue and therefore, subject to Shareholder approval being obtained under this Resolution, 19,108,311 Equity Securities will be permitted to be issued in accordance with Listing Rule 7.1A. Shareholders should note that the calculation of the number of Equity Securities permitted to be issued under the Additional 10% Placement Capacity is a moving calculation and will be based the formula set out in Listing Rule 7.1A.2 at the time of issue of the Equity Securities. That formula is:

(A x D) – E

A is the number of Shares on issue 12 months immediately before the date of issue or agreement ( Relevant Period ):
plus the number of fully paid Shares issued in the Relevant Period under an exception in Listing Rule 7.2 other than exception 9, 16 or 17;
plus the number of fully paid Shares issued in the Relevant Period on the conversion of convertible securities within Listing Rule 7.2 exception 9 where:
the convertible securities were issued or agreed to be issued before the commencement of the Relevant Period; or
the issue of, or agreement to issue, the convertible securities was approved or taken under the Listing Rules to have been approved, under Listing Rules 7.1 or 7.4;
plus the number of Shares issued in the Relevant Period under an agreement to issue securities within Listing Rule 7.2 exception 16 where:
the agreement was entered into before the commencement of the Relevant Period; or
the agreement or issue was approved, or taken under these rules to have been approved, under Listing Rules 7.1 or 7.4;
plus the number of partly paid Shares that became fully paid in the Relevant Period;
plus the number of fully paid Shares issued in the Relevant Period with approval of holders of Shares under Listing Rules 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;

less the number of fully paid Shares cancelled in the Relevant Period.

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 Relevant Period where the issue or agreement to issue has not been subsequently approved by Shareholders under Listing Rule 7.4.

Resolution 3 is a special resolution, requiring 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.

4.3 Specific information required by Listing Rule 7.3A

The following information in relation to the Shares proposed to be issued is provided to Shareholders for the purposes of Listing Rule 7.3A:

(a) Approval of the Additional 10% Placement Capacity will be valid during the period ( Additional Placement Period ) from the date of the Annual General Meeting and will expire on the earlier of:
(i) the date that is 12 months after the date of the Annual General Meeting;
(ii) the time and date of the Company’s next Annual General Meeting; and
(iii) the time and 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).
(b) Equity Securities issued under the Additional 10% Placement Capacity must be in the same class as an existing quoted class of Equity Securities of the Company. As at the date of this Notice the Company has Shares and unlisted Options on issue.
(c) The Equity Securities will be issued for cash consideration at an issue price per Equity Security of not less than 75% of the volume weighted average price for the Company's Equity Securities over the 15 Trading Days on which trades in the class were recorded immediately before:
(i) the date on which the price at which the Equity Securities are to be issued is agreed by the Company and the recipient of the Equity Securities; or
(ii) if the Equity Securities are not issued within ten Trading Days of the date in paragraph (i) above, the date on which the Equity Securities are issued.
(d) The Company may seek to issue the Equity Securities as cash consideration in which case the Company intends to use the funds raised towards:
(i) its existing and new product development studies and intellectual property maintenance costs;
(ii) general working capital; or
(iii) for the acquisition of new assets and investments.

(e) If Resolution 3 is approved by Shareholders and the Company issues Equity Securities under the Additional 10% Placement Capacity, the existing Shareholders' economic and voting interests in the Company will be diluted. 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 Annual General Meeting at which the Additional 10% Placement Capacity was approved; 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.

The table below demonstrates the potential dilution of existing Shareholders in three differing scenarios.

Variable ‘A’ (refer above for calculation)		Dilution
		$0.245 Issue Price at half the current market price	$0.49 Issue Price at current market price	$0.98 Issue Price at double the current market price
Current Variable ‘A’ 191,493,243 Shares	Shares issued	19,149,324	19,149,324	19,149,324
	Funds raised	$4,691,584	$9,383,169	$18,766,338
	Dilution	10%	10%	10%
50% increase in current Variable ‘A’ 287,239,865 Shares	Shares issued	28,723,986	28,723,986	28,723,986
	Funds raised	$7,037,377	$14,074,753	$28,149,507
	Dilution	10%	10%	10%
100% increase in current variable ‘A’ 382,986,486 Shares	Shares issued	38,298,649	38,298,649	38,298,649
	Funds raised	$9,383,169	$18,766,338	$37,532,676
	Dilution	10%	10%	10%

Note : This table assumes:

1 No Options are exercised before the date of the issue of the Equity Securities.
2 The issue of Equity Securities under the Additional 10% Placement Capacity consists only of Shares. If the issue of Equity Securities includes quoted Options, for the purposes of the above table, it is assumed that those quoted Options are exercised into Shares for the purposes of calculating the voting dilution effect on existing Shareholders.
3 The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the Additional 10% Placement Capacity, based on that Shareholder’s holding at the date of the Meeting.
4 The Company has issued 2,800,000 Equity Securities in the 12 months prior to the Meeting that were not issued under an exception in Listing Rule 7.2 or with approval under Listing Rule 7.1.

5 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.
(f) The identity of the persons to whom Shares will be issued is not yet known and will be determined on a case by case basis having regard to market conditions at the time of the proposed issue of Equity Securities and the Company’s allocation policy, which involves consideration of matters including, but not limited to:
(i) the purpose of the issue;
(ii) alternative methods for raising funds available to the Company at that time, including, but not limited to, an entitlement issue or other offer where existing Shareholders may participate;
(iii) the effect of the issue of the Equity Securities on the control of the Company, including the dilutionary effect of the issue of Equity Securities on existing Shareholders at that time;
(iv) the circumstances of the Company, including, but not limited to, the:
- (A) financial position and solvency of the Company; and
- (B) prevailing market conditions; and
(v) advice from corporate, financial and broking advisers (if applicable).

The persons to whom Shares will be issued under the Additional 10% Placement Capacity have not been determined as at the date of this Notice but will not include related parties (or their Associates) of the Company.

(g) The Company previously obtained Shareholder approval under Listing Rule 7.1A at its annual general meeting held on 14 October 2020. During the 12 month period preceding the date of the Meeting, the Company has not issued or agreed to issue any Equity Securities pursuant to Listing Rule 7.1A.2.

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

5 Resolution 4 - Renewal of proportional takeover provisions in Constitution

5.1 Background

The Corporations Act permits a company to include in its constitution provisions (called takeover approval provisions ) requiring that a proportional or partial takeover offer (i.e. an offer for less than 100% of the shares but for the same proportion of each shareholder’s shares) be approved by a majority of shareholders, before it may proceed. In effect, the approval of Resolution 4 will enable the Company to refuse to register shares acquired under a proportional takeover bid unless than bid is approved by a majority of shareholders.

The proportional takeover provisions currently contained in rule 14 of the Company’s Constitution require the renewal of approval for the provisions every three years or the provisions cease to have effect. The proportional takeover provisions were last renewed by Shareholders at the general meeting held on 19 November 2018.

Resolution 4 seeks Shareholder approval for the proportional takeover provisions to be renewed 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 4 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.

5.2 Operation of the proportional takeover bid provisions

If the proportional takeover bid provisions set out in rule 14 of the Company’s Constitution are renewed the registration of a transfer of Shares acquired under a proportional takeover offer will be prohibited unless an approving resolution is passed by Shareholders in the Company in the manner provided in rule 14 of the Company’s Constitution. If the Company’s existing proportional takeover provisions are renewed and a proportional takeover offer is subsequently made for 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 proportional takeover bid is voted upon. The vote is decided on a simple majority. The bidder under the proportional takeover bid and its Associates are excluded from voting on that approving resolution.

That approving resolution will be required to be passed in a general meeting before the time stated in section 648D of the Corporations Act (being passed before the 14th day before the last day of the bid period ( Approving Resolution Deadline )). If the approving resolution is:

(a) not voted on at the end of the day before the Approving Resolution Deadline, the bid will be taken to have been approved;
(b) 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 transfer of shares resulting from the takeover offer will be prohibited. Acceptances will be returned and any contracts formed by acceptance will be rescinded; or
(c) passed (or taken to have been approved), the transfers of shares to the bidder will 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.

5.3 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.

Having considered the advantages and disadvantages to Shareholders and the Directors set out below, the Directors have decided to put this Resolution to Shareholders, to give Shareholders an opportunity to take advantage of the protections which the takeover approval provisions offer, if a proportional takeover offer is made.

5.4 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:

(a) Shareholders have the right to decide, by majority vote, whether an offer under a proportional takeover bid should proceed which may 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 concern that a significant number of other Shareholders will accept;
(b) the takeover approval provisions may assist Shareholders and protect them from being coerced into accepting a partial bid at a high premium where the bidder indicates its intention to mount a subsequent bid for the remaining shares at a much reduced price, putting pressure on Shareholders to accept the initial bid in order to maximise their returns;
(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 such that it will be attractive to at least a majority of Shareholders; and
(e) the body of Shareholders may more effectively advise and guide the Directors’ response to a partial bid and knowing the view of the majority of Shareholders may assist individual Shareholders to assess the likely outcome of the proportional bid and in deciding whether to accept or reject an offer under a proportional takeover bid.

The potential disadvantages to Shareholders of the renewal of proportional takeover provisions in the Company’s Constitution include the following:

(a) by placing obstacles in the way of partial offers, proportional takeover bids for Shares in the Company may be discouraged, thus reducing the opportunity for Shareholders to sell a portion of their holding at a premium;
(b) 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;
(c) individual Shareholders may consider that the proportional takeover provisions would restrict their ability to deal with their Shares as they see fit, given that

individual Shareholders who wish to accept a proportional takeover offer will be unable to sell to the bidder unless a majority of Shareholders favour the proportional takeover scheme;

(d) the likelihood of a proportional takeover bid succeeding may be reduced; and
(e) if a proportional takeover offer is made, the Company will incur the cost of calling a meeting of Shareholders.

5.5 Advantages and disadvantages of the proportional takeover provisions for the Directors

Potential advantages and disadvantages to the Directors of the renewal of proportional takeover provisions in the Company’s Constitution are set out below:

(a) If the Directors consider that a proportional bid should be opposed, they will be assisted in preventing the bidder from securing control of the Company as the bidder will need a majority of votes to be cast in its favour by the independent Shareholders, before the bidder can succeed.
(b) On the other hand, under the takeover approval provisions, if a proportional takeover offer is received, the Directors must call a meeting to seek the Shareholders’ views. They must do so even if the Directors believe that the offer should be accepted.
(c) At present, it is only the Directors who express any formal view on the adequacy or otherwise of a takeover bid, on behalf of the Company. Under the takeover approval provisions the most effective view on a proportional bid will become the view expressed by the vote of the Shareholders themselves, at the meeting.

The takeover approval provisions may make it easier for the Directors to discharge their fiduciary and statutory duties as directors in the event of a proportional takeover bid.

5.6 Knowledge of any acquisition proposal

At the date of this Notice, 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.

5.7 Right to set aside renewal

If Resolution 4 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 renewal set aside. The court may set aside the renewal if the court is satisfied in all the circumstances that it is appropriate to do so.

Unless and until an application made to the court is finally determined by the making of an order setting aside the renewal, the Company is taken for all purposes to have validly renewed the proportional takeover provisions.

5.8 Directors’ recommendation

The Directors do not believe the potential disadvantages outweigh the potential advantages of renewing the proportional takeover provisions and as a result consider that the proportional takeover provisions in the Constitution are in the interest of Shareholders and unanimously recommend that Shareholders vote in favour of Resolution 4.

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

GLOSSARY

$ means Australian dollars.

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

Additional 10% Placement Capacity has the meaning set out on page 7.

Additional Placement Period has the meaning set out on page 9.

Annual Report means the annual report of the Company for the year ended 30 June 2021.

Approving Resolution Deadline has the meaning set out on page 12.

Associate has the meaning given to that term in the Listing Rules.

ASX means ASX Limited ABN 98 008 624 691 and, where the context permits, the Australian Securities Exchange operated by ASX Limited.

Auditor means the Company’s auditor from time to time (if any).

Auditor’s Report means the report of the Auditor contained in the Annual Report for the year ended 30 June 2021.

AWST means western standard time as recognised in Perth, Western Australia.

Board means the Directors.

Chair or Chairman means the individual elected to chair any meeting of the Company from time to time.

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

Company means Orthocell Limited ABN 57 118 897 135.

Constitution means the Company's constitution, as amended from time to time.

Corporations Act means Corporations Act 2001 (Cth).

Directors means the directors of the Company.

Equity Securities has the meaning given to that term in the Listing Rules.

Explanatory Memorandum means the explanatory memorandum accompanying this Notice.

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

Listing Rules means the ASX Listing Rules.

Meeting means the Annual General Meeting convened by the Notice.

Notice means this Notice of Annual General Meeting.

Option means an option to acquire a Share.

Proxy Form means the proxy form accompanying the Notice.

Relevant Period has the meaning set out on page 8.

Remuneration Report means the remuneration report set out in the Annual Report for the year ended 30 June 2021.

Resolution means a resolution contained in the Notice.

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

Shareholder means a member of the Company from time to time.

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

Spill Meeting has the meaning set out on page 6.

Spill Resolution has the meaning set out on page 6.

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

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