ORTHOCELL LIMITED — Capital/Financing Update 2017

Dec 14, 2017

15 December 2017

Dear Shareholder,

Invitation to Participate in Share Purchase Plan

On 13 December 2017, Orthocell Limited ACN 118 897 135 ( OCC or the Company ) announced that it is undertaking an institutional placement of 4,411,765 fully paid ordinary shares at a price of $0.34 per share to sophisticated and professional investors, raising $1,500,000 ( Placement ).

In order to provide all eligible shareholders in OCC with the ability to participate in this capital raising, OCC is pleased to provide details of its Share Purchase Plan ( Plan ). Under the Plan, OCC is giving eligible shareholders the opportunity to purchase up to $15,000 worth of fully paid ordinary shares in OCC ( Shares ) at the same price as the Placement, irrespective of the size of their shareholding, without incurring brokerage or transaction costs.

The offer under the Plan ( Offer ) will raise additional funding on the terms and conditions ( Terms and Conditions ) contained in this letter ( Announcement ) (with no minimum or maximum amount to be raised, except as limited by the ASX Listing Rules). The combined proceeds and cash reserves from the Placement and Offer will be used to accelerate CelGro® commercialisation and progress US regulatory approvals and key studies, advance the development of Ortho-ATI® and other R&D pipeline products.

Shareholders Eligible to Participate in the Plan

The right to participate under the Plan is optional and is available exclusively to shareholders who are registered as holders of Shares at 5.00pm (AEDT) on the Record Date of 12 December 2017 and whose registered address is in Australia or New Zealand ( Eligible Shareholders ).

Share Purchase Plan

The Plan entitles Eligible Shareholders, irrespective of the size of their shareholding, to purchase up to $15,000 worth of Shares priced at a discount of 12.0% to the volume weighted average market price ( VWAP ) for the Shares over the last 5 days on which sales in the shares were recorded before the day on which the issue was announced ( Price ). This Price is the same price as Shares were offered to sophisticated and professional investors under the Placement.

The VWAP of Shares traded on the ASX during the 5 trading days immediately prior to the announcement date of the Offer was $0.386.

OCC will accept applications subject to shareholder demand. However, the maximum number of Shares to be issued is limited by the Australian Securities Exchange ( ASX ) Listing Rules to a maximum of 30,443,831 Shares, being 30% of OCC’s share capital. The Directors may, in their absolute discretion, scale-back all applications on an equitable basis.

An outline of the Plan is set out in this letter and the enclosed Terms and Conditions. An application form for the Plan ( Application Form ) and reply paid envelope are included in this package.

Current Activities

Details of OCC’s current activities are set out in the announcements made by OCC to the ASX and are available from the ASX, or OCC’s website at www.orthocell.com.au.

The funds raised under the Plan (and the Placement) will be used to accelerate CelGro® commercialisation and progress US regulatory approvals and key studies, advance the development of Ortho-ATI® and other R&D pipeline products.

Subscription and Application Procedure

If you would like to participate in the Offer, you can either:

• complete the enclosed Application Form and send it together with your payment by cheque made payable to “Orthocell Limited” and drawn in Australian currency for the correct amount, to OCC’s share registry, Automic Registry Services:

By Mail By Hand Delivery Orthocell Limited Automic C/- Automic Level 3 PO Box 2226 50 Holt Street Strawberry Hills, NSW 2012 Surry Hills, NSW 2010 (Between Sydney office hours 9.00am – 5.00pm (AEDT))

to be received by the share registry no later than 5:00 pm (AEDT) on the Closing Date of 29 December 2017. No late applications will be accepted.

Please note that you can also access your Application Form electronically by registering on the Automic website https://investor.automic.com.au/#/home. Once you have registered, click on the “Documents & Statements” option, then click “download” to access your form; or

• make a BPAY [®1] payment from your cheque or savings account by using the Biller Code and Reference Number shown on your Application Form which is required to identify your holding. If you have multiple holdings you will have multiple BPAY Reference Numbers. To ensure you receive your Shares under the Offer in respect of that holding you must use the specific Biller Code and Reference Number shown on each personalised Application Form when paying for any Shares that you may wish to apply for in respect of that holding. If you inadvertently use the same Reference Number for more than one of your applications, you will be deemed to have applied only for that application to which that Reference Number applies and any excess amount will be refunded. If you make your payment using BPAY[®] you do not need to return your Application Form . New Zealand holders will not be able to make a payment using BPAY [®] . Payments made by BPAY [®] received after 5:00 pm (AEDT) on 29 December 2017 will not be accepted. Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment, and should therefore take this into consideration when making payment. You may also have your own limit on the amount that can be paid via BPAY. It is your responsibility to check that the amount you wish to pay via BPAY does not exceed your limit.

Applicants should not forward cash and direct bank transfers are not permitted.

1 ® Registered to BPAY Pty Ltd, ABN 69 079 137 518

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Eligible Shareholders may participate by selecting only one of the following offers to purchase Shares under the Plan:

he Plan:
	Total amount payable	Number of Shares which may be purchased
Offer A	$15,000	44,117
Offer B	$10,000	29,411
Offer C	$5,000	14,705
Offer D	$2,500	7,352
Offer E	$1,000	2,941

The number of Shares to which you are entitled will be calculated by dividing the subscription amount you have elected by the purchase price of A$0.34 per Share, rounded down.

Once an application has been made it cannot be revoked. All valid applications shall be deemed accepted if received before the Closing Date of 29 December 2017. If the exact amount of money is not tendered with your application, OCC reserves the right to either:

• (a) return your Application Form and/or payment and not allot any Shares to you; or

• (b) issue to you the number of Shares that would have been issued had you applied for the highest designated amount that is less than the amount of your payment and refund the excess application money to you by cheque as soon as possible, without interest.

The maximum investment any shareholder may apply for will remain $15,000 even if a shareholder receives more than one Offer (whether in respect of a joint holding or because the shareholder has more than one holding under a separate account). It is the responsibility of the applicant to ensure that the aggregate of the application price paid for the Shares the subject of the application and any other shares and interests in the class applied for by you under the Plan or any similar arrangement in the 12 months prior to the date of submission does not exceed $15,000.

Indicative Timetable

Record Date for Share Purchase Plan	5pm, AEDT, 12 December 2017
Announce Share Purchase Plan and Placement	13 December 2017
Offer Letter and Section 708A “Cleansing Notice” lodged with ASX	15 December 2017
Dispatch Share Purchase Plan booklet to shareholders	15 December 2017
Share Purchase Plan Opens	18 December 2017
Issue of Placement shares	20 December 2017
Closing date for Share Purchase Plan	29 December 2017
Lodge Appendix 3B, Issue of new shares under the Share Purchase Plan	5 January 2018
Quotation on ASX of new shares under the Share Purchase Plan	10 January 2018

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These dates are indicative only. OCC may vary the dates and times of the Offer without notice. Accordingly, shareholders are encouraged to submit their Entitlement and Acceptance Forms as early as possible.

Should you wish to discuss any information contained in this letter further, do not hesitate to contact OCC’s Company Secretary, Mr Simon Robertson on (08) 9360 2888 or email celltherapy@orthocell.com.au.

Yours faithfully

==> picture [125 x 69] intentionally omitted <==

Stewart Washer Executive Chairman Orthocell Limited

For more information, please contact:

General enquiries

Investor and Media enquiries

Paul Anderson Orthocell Limited, Managing Director

P: +61 8 9360 2888 E: paulanderson@orthocell.com.au

Ben Walsh WE Buchan

P: + 61 411 520 012 E: bwalsh@buchanwe.com.au

About Orthocell Limited

Orthocell is a regenerative medicine company focused on regenerating mobility for patients by developing products for the repair of a variety of tendon, cartilage and soft tissue injuries. Orthocell’s portfolio of products include TGA-licensed cell therapies Autologous Tenocyte Implantation (Ortho-ATI®) and Autologous Chondrocyte Implantation (Ortho-ACI®), which aim to regenerate damaged tendon and cartilage tissue. The Company’s other major product is CelGro®, a collagen medical device which facilitates tissue repair and healing in a variety of orthopaedic, reconstructive and surgical applications and is being readied for first regulatory approvals.

For more information on Orthocell, please visit www.orthocell.com.au or follow us on Twitter @Orthocellltd and Linkedin www.linkedin.com/company/orthocell-ltd

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Orthocell Limited (OCC) ACN 118 897 135 Shareholder Share Purchase Plan - Terms and Conditions

Purpose

The purpose of the Shareholder Share Purchase Plan ( the Plan ), which will be conducted in conjunction with the Placement, is to offer shareholders of Orthocell Limited ( OCC or the Company ) the opportunity to acquire additional fully paid ordinary shares in OCC ( Shares ) up to a maximum of $15,000 (when combined with any shares issued under any share purchase plan in the 12 months preceding the date of the Plan). The issue price under the Plan will be at a discount of 12.0% to the average market price for OCC Shares over the last 5 days on which sales in the shares were recorded on the financial market operated by ASX Limited ( ASX ) before the day on which the issue was announced. Shares will also be issued without the need to pay brokerage costs and without the need for OCC to issue a Prospectus. The Plan is governed upon such terms and conditions as the board of directors of OCC, in its absolute discretion, sees fit.

Shareholders Eligible to Participate

Holders of OCC’s Shares that are registered with an Australian or New Zealand address at the relevant record date are eligible shareholders ( Eligible Shareholders ) and may participate in the Plan, unless such registered shareholder holds shares on behalf of another person who resides outside Australia or New Zealand. Due to foreign securities laws, it is not practical for shareholders resident in other countries to be offered the opportunity to participate in the Plan.

Participation in the Plan is optional and is subject to these Terms and Conditions. Offers made under the Plan are non-renounceable (i.e. Eligible Shareholders may not transfer their rights to any Shares offered under the Plan). Eligible Shareholders who wish to take up Shares issued under the Plan agree to be bound by OCC’s constitution in respect of Shares issued under the Plan.

An offer may, at the discretion of the directors of OCC ( Directors ), be made under the Plan once a year. The maximum amount which any shareholder may subscribe for in any consecutive 12 month period is $15,000. The Directors may also determine in their discretion the minimum amount for participation, the multiple of Company Shares to be offered under the Plan and the period the offer is available to Eligible Shareholders.

Foreign offer restrictions

This document may not be released or distributed in any country other than Australia and New Zealand. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in any other country. In particular, any securities described in this document have not been, and will not be, registered under the US Securities Act of 1933 (as amended) and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

New Zealand Shareholders

The Shares offered under the Plan are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand and to whom the Offer is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2016 (New Zealand) .

This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain. The taxation treatment of Australian financial products is not the same as for New Zealand financial products. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.

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Acceptance of Risk Factors

On the last trading day immediately prior to the announcement date of the Offer (12 December 2017), the closing price of the Shares traded on ASX was $0.38. The market price of Shares in OCC may rise and fall between the date of the Offer and the date that any Shares are issued to you as a result of your application under this Offer.

By making an application under this Offer and applying for Shares under the Plan, each Eligible Shareholder will be acknowledging that although the purchase Price is at a discount, Shares are a speculative investment and the price of Shares on ASX may change between the date of OCC announcing its intention to make an Offer and the date of issue of Shares under that Offer and that the value of the Shares received under the Plan may rise or fall accordingly.

The Board recommends that you obtain your own financial advice in relation to the Offer and consider price movements of Shares in OCC prior to making an application under this Offer.

Underwriting

The Offer is not underwritten.

Price of Shares

The price of Shares to be issued under the Plan will be at a discount of 12.0% of the average market price for the shares over the last 5 days on which sales in the shares were recorded before the day on which the issue was announced.

Issue of Shares

Shares to be issued under the Plan will be issued as soon as reasonably practicable after the Closing Date specified by the Directors in the relevant Offer.

Shares issued under the Plan will rank equally in all respects with all other fully paid ordinary shares in the Company from the date of issue.

Shareholding statements or CHESS notification will be issued in respect of all Shares issued under the Plan. The Company will, promptly after the issue of the Shares under the Plan, make application for those Shares to be listed for quotation on the official list of ASX.

Raising Amount and Scale back

OCC will accept applications subject to shareholder demand. However, the maximum number of Shares that can be issued is 30,443,831 and OCC reserves absolute discretion regarding the final amount raised under the Plan, subject to the ASX Listing Rules.

The Directors may, in their absolute discretion, scale-back all applications on an equitable basis. Scale-back for Shares held by Custodians will be applied at the level of the underlying Beneficiary.

If the Company rejects or scales-back an application or purported application, the Company will promptly return to the shareholder the relevant application monies, without interest.

Applications and Notices

At the discretion of the Directors, the Company will send Eligible Shareholders a letter of offer and acceptance procedures, inviting them to subscribe for Shares under the Plan, and accompanied by these Terms and Conditions of the Plan and an Application Form. Applications will not be accepted after the Closing Date of the Offer. Over subscriptions to an offer may be refunded without interest.

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Notices and statements made by the Company to participants may be given in any manner prescribed by its Constitution.

Custodians, trustees and nominees

If you are an Eligible Shareholder and hold Shares as a custodian (as defined in ASIC Class Order CO 09/425) (refer below) ( Custodian ) or in any more specific ASIC relief granted to OCC in relation to the Plan), you may apply for up to the maximum of new Shares for each beneficiary for whom you act as custodian provided you annexe to your Application Form a certificate to OCC ( Custodian Certificate ) with the following information:

• that you held Shares on behalf of one or more other persons who are resident in Australia or New Zealand (each a Participating Beneficiary ) at 12 December 2017 who have subsequently instructed you to apply for Shares under the Plan on their behalf;

• the number of Participating Beneficiaries and their names and addresses;

• the number of Shares that you hold on behalf of each Participating Beneficiary;

• the dollar amount of Shares that each Participating Beneficiary has instructed you, either directly or indirectly through another custodian, to apply for on their behalf;

• that the application price for Shares applied under the Offer for each Participating Beneficiary for whom you act plus the application price for any other Shares issued to you as custodian for that Participating Beneficiary under any arrangement similar to the Plan in the prior 12 months does not exceed $15,000;

• that a copy of the written offer document was given to each beneficiary; and

• where you hold shares on behalf of a beneficiary indirectly, through one or more interposed custodians, the name and address of each interposed custodian.

• For the purposes of ASIC Class Order CO 09/425 you are a ‘custodian’ if you are a registered holder that:

• holds an Australian financial services licence that allows you to perform custodian or depositary services or operate IDPS accounts;

• is exempt under:

• (i) paragraph 7.6.01(1)(k) of the Corporations Regulations 2001 (the Regulations ); or

• (ia) paragraph 7.6.01(1)(na) of the Regulations; or

• (ii) ASIC Class Order CO 14/1000 or ASIC Class Order CO 14/1001; or

• (iia) ASIC Class Orders CO 03/1099, CO 03/1100, CO 03/1101, CO 03/1102, CO 04/829 or CO 04/1313; or

• (iib) an individual instrument of relief granted by ASIC to the person in terms similar to one of the class orders referred to in subparagraph (xx); or

• (iii) paragraph 911A(2)(h) of the Act;

from the requirement to hold an Australian financial services licence for the provision of a custodial or depositary service; or

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• is a trustee of a self managed superannuation fund;

• is a trustee of superannuation master trusts;

• is a responsible entity of IDPS like schemes; or

• is noted on OCC’s register of members as holding the shares on account of another person.

If you hold Shares as a trustee or nominee for another person or persons but are not a Custodian as defined above, you cannot participate for beneficiaries in the manner described above. In this case, the rules for multiple single holdings (above) apply.

Custodians should request a Custodian Certificate when making an application on behalf of Participating Beneficiaries. To request a Custodian Certificate and if you would like further information on how to apply, you should contact Automic Registry Services at any time from 8.30am to 5.00pm (AEDT time) Monday to Friday during the Offer period.

OCC reserves the right to reject any application for Shares to the extent it considers that the application (whether alone or in conjunction with other applications) does not comply with these requirements. OCC reserves the right to reject applications in accordance with these Terms and Conditions.

Modification and Termination of the Plan

OCC may modify or terminate the Plan at any time. OCC will notify ASX of any modification to, or termination of, the Plan. The omission to give notice of any modification to, or termination of, the Plan or the failure of ASX to receive such notice will not invalidate the modification or termination.

Without limiting the above, OCC may issue to any person fewer Company Shares than the person applied for under the Plan if the issue of Shares applied for would contravene any applicable law or the Listing Rules of ASX.

Dispute Resolution

OCC may, in any manner it thinks fit, settle any difficulties, anomalies or disputes which may arise in connection with or by reason of the operation of the Plan, whether generally or in relation to any participant, application or Shares. The decision of OCC in this respect will be conclusive and binding on all shareholders and other persons to whom that determination relates.

OCC reserves the right to waive strict compliance with any provision of these terms and conditions. The powers of OCC under these conditions may be exercised by the directors of OCC or any delegate of the directors of OCC.

Questions and Contact Details

If you have any questions regarding the Plan or how to deal with this Offer, please contact your stockbroker or professional adviser or Mr Simon Robertson on (08) 9360 2888.

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