PHOSLOCK ENVIRONMENTAL TECHNOLOGIES LIMITED — Proxy Solicitation & Information Statement 2008

Mar 13, 2008

Notice of General Meeting and Explanatory Memorandum

Phoslock Water Solutions Limited ACN 099 555 290

Date: Friday 11[th] April, 2008 Time: 9:00 am (EST)

Place: 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086

In this document you will find: A letter from the Chairman summarising the Meeting's items of business A Notice of the General Meeting An Explanatory Memorandum containing an explanation of and information about the proposed resolutions, shareholder approval and voting exclusion statements Definitions Section A Proxy Form and Instructions for completion	Page No 2 3 5-9 10 11 - 12

Phoslock Water Solutions Limited ACN 099 555 290

Dear Shareholder,

I am pleased to invite you to a General Meeting ( Meeting ) of Phoslock Water Solutions Limited ( PWS ) to be held on Friday 11[th] April, 2008. The Meeting will be held at 9.00am (EST) at the PWS Head Office at 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086.

I enclose your Notice of Meeting, Explanatory Memorandum and Proxy Form.

The Notice of Meeting (including the Explanatory Memorandum) sets out the items of business for the Meeting. Please take time to carefully read the whole document. To help you understand what the document contains, here is a summary of the resolutions on which Shareholders are asked to vote.

Resolution 1 – Issue of 10 PWS Converting Notes to Mr Robert Schuitema

On 11 February 2008 the Company placed, or agreed to place, 100 PWS Converting Notes each with a face value of $10,000 to either sophisticated or professional investors for the purposes of section 708(8) or 708(11) respectively of the Corporations Act 2001 (Cth). Mr Robert Schuitema wishes to participate in this placement to demonstrate tangible support in the Company and its future business prospects. If approved by Shareholders, Mr Robert Schuitema (or his nominee(s)) will be issued 10 PWS Converting Notes with a total face value of $100,000 in consideration for the payment of $100,000 to the Company.

Resolution 2 – Issue of Options to Dr David Garman

The Company proposes to issue 1,000,000 options to Dr David Garman as part of the Company’s short term and long term incentive program. The options will form part of Dr David Garman’s remuneration and are being granted as recognition by the Company for the significant work he has undertaken (and continues to undertake) to promote PWS and the Phoslock product.

Voting on items of business at the Meeting

If you would like to vote on items of business outlined in the Notice of Meeting, you may attend the Meeting or appoint a proxy to vote for you at the Meeting. If appointing a proxy, the enclosed Proxy Form should be completed and returned (see Proxy Form for details) as soon as possible and in any event no later than 9.00am (EST) on 9 April 2008.

If you have any queries in relation to the Meeting, please contact Mr Colin Upcroft (CFO & Company Secretary) on (02) 9453 0455.

Yours sincerely,

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Dr David Garman Chairman

Sydney, Australia

12 March 2008

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Notice of General Meeting

NOTICE IS HEREBY GIVEN that the General Meeting of Shareholders of Phoslock Water Solutions Limited (ACN 099 555 290) ( 'PWS' or 'Company' ) will be held on 11 April 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086, at 9.00 am (EST).

The Explanatory Memorandum accompanying this Notice of Meeting forms part of this Notice of Meeting.

Business

Resolution 1. Issue of Converting Notes to Mr Robert Schuitema (Managing Director) (or his nominee(s))

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

“That for the purposes of ASX Listing Rule 10.11 and all other purposes, the Shareholders approve the issue of 10 PWS Converting Notes to Mr Robert Schuitema (or his nominee(s)) on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 2. Grant of Options to Dr David Garman (Company Chairman)

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the Shareholders of the Company approve the issue to Dr David Garman of options to take up 1,000,000 ordinary shares in the capital of the Company on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

By Order of the Board

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Mr Colin Upcroft Company Secretary

Sydney, Australia

12 March 2008

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Voting and Proxies

1. Determination of Membership and Voting Entitlement

In accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the shares of the Company that are quoted on ASX as at 7.00pm (EST) on 9 April 2008, will be taken for the purpose of the Meeting to be held by the persons who held them at that time. Transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Accordingly, those persons will be recognised as members of the Company and the holder of shares and will be entitled to attend and vote at the Meeting.

2. Votes of Members

On a show of hands, each member present in person or by proxy or, in the case of a body corporate, by a representative at the Meeting shall have one vote.

On a poll, every member present in person or by attorney or by proxy or, in the case of a body corporate, by a representative shall have one vote for each share held by him or her.

3. Proxies

Please note that:

• a member who is entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote on behalf of the member; and

• where the member is entitled to cast two (2) or more votes, the member may appoint two (2) proxies and may specify the proportion or the number of votes each proxy is appointed to exercise.

If the member appoints two (2) proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half of the votes.

A proxy need not be a member of the Company.

Any instrument of proxy deposited or received at the registered office of the Company in which the name of the appointee is not filled in shall be deemed to be given in favour of the Chairman of the Meeting to which it relates.

Proxies given by corporate shareholders must be executed in accordance with their constitutions, or signed by a duly authorised officer or attorney.

A proxy may decide whether to vote on any motion, except where the proxy is required by law or the Constitution to vote, or abstain from voting, in their capacity as proxy. If a proxy is directed how to vote on an item of business, the proxy may vote on that item only in accordance with the direction. If a proxy is not directed how to vote on an item of business, the proxy may vote as he or she thinks fit.

If a Shareholder appoints the Chairperson of the Meeting as the Shareholder's proxy and does not specify how the Chairperson is to vote on an item of business, the Chairperson will vote, as proxy for that Shareholder, in favour of that item.

To be effective the instrument appointing a proxy (and power of attorney or other authority, if any, under which it is signed or a certified copy of the power or other authority) must be deposited not less than forty eight (48) hours prior to the Meeting, that is, by 9.00 am (EST) on 9 April 2008 by mail to PO Box 105, Frenchs Forest, Sydney, NSW 1640 or by delivery at the Company's Registered Office, being 3/81 Frenchs Forest Road, Frenchs Forest, Sydney, NSW 2086 or be received by facsimile on (02) 9453 2693.

A form of proxy accompanies this Notice of General Meeting.

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Explanatory Memorandum

This Explanatory Memorandum has been prepared for the information of Shareholders in the Company in connection with the business to be considered at the Meeting to be held on 11 April 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086 at 9.00am (EST).

The Explanatory Memorandum forms part of the accompanying Notice of Meeting.

Details of the business to be considered at this Meeting are set out below.

Resolution 1 – Issue of 10 PWS Converting Notes to the PWS Managing Director

Resolution 1 seeks Shareholder approval for the issue of 10 PWS Converting Notes to Mr Robert Schuitema, the Managing Director of the Company (or his nominee(s)).

ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires that the Company must obtain Shareholder approval before the Company can issue equity securities to a Director of the Company or an associate of a Director of the Company.

On 11 February 2008, the Company placed 100 PWS Converting Notes, each with a face value of $10,000, to either sophisticated or professional investors for the purposes of section 708(8) or 708(11) respectively of the Corporations Act 2001 (Cth). Mr Robert Schuitema wishes to participate in this placement and, subject to Shareholder approval, will be issued with 10 PWS Converting Notes by the Company in consideration for the payment of $100,000 to the Company. Mr Robert Schuitema is the Managing Director of the Company.

Accordingly, approval for the issue of 10 PWS Converting Notes to Mr Robert Schuitema (or his nominee(s)) is required under ASX Listing Rule 10.11.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a Notice of Meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 1:

1. The PWS Converting Notes will be issued to Mr Robert Schuitema who is the Managing Director of the Company (or his nominee(s)).

2. The maximum amount of securities to be granted by the Company under Resolution 1 is the issue of 10 PWS Converting Notes with a total face value of $100,000 which is convertible into a maximum of 555,555 fully paid ordinary shares in the Company applying the minimum issue price of $0.18 per share to the face value of the securities.

3. The PWS Converting Notes will be issued to Mr Robert Schuitema (or his nominee(s)) within 1 month of the date of this Meeting.

4. The terms of the PWS Converting Notes are set out in the following section of this Explanatory Memorandum.

5. The funds raised by the issue of the PWS Converting Notes will be used for working capital.

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It should be noted that prior to the issue of any securities to Mr Robert Schuitema (or his nominee(s)) in respect of interest accruing on the Convertible securities shareholder approval will be necessary under Listing Rule 10.11. The maximum number of fully paid ordinary shares to be issued as consideration for interest payments is 120,000 applying the minimum issue price of $0.15 per share to the maximum interest amount payable on the convertible securities of $18,000.

PWS Converting Note Terms

The PWS Converting Notes are governed by the Converting Note Deed.

The material terms of the PWS Converting Notes are as follows:

• the PWS Converting Notes each have a face value of $10,000;

• the PWS Converting Notes will be convertible on or before 18 August 2009 ( Maturity Date ) into PWS Shares;

• the Company will pay interest on the PWS Converting Notes from the date of issue at a rate of 12% per annum payable six monthly in arrears;

• the interest payable in respect of the PWS Converting Notes will be satisfied in the form of an issue of PWS Shares with the number of PWS Shares to be issued calculated as follows:

• $0.25 cents per fully paid PWS Share; or

• VWAP for PWS Shares for 10 Business Days preceding the interest payment date, subject to a minimum of $0.15 per PWS Share;

• the PWS Converting Notes must be converted into PWS Shares:

• by the Maturity Date, in which case the conversion of the PWS Converting Notes into PWS Shares will be calculated at an issue price of $0.18 cents per PWS Share; or

• on a date nominated by the Company prior to the Maturity Date, if the VWAP for PWS Shares is greater than $0.50 cents per PWS Share for a period of at least 10 consecutive Business Days, in which case the conversion of the PWS Converting Notes into PWS Shares will be calculated at an issue price of $0.25 cents per PWS Share;

• the PWS Converting Notes are unlisted and do not entitle noteholders (including Mr Robert Schuitema) to participate in new issues of securities; and

• if the Company reorganises its share capital in any way (including consolidation, subdivision, reduction or return) while the PWS Converting Notes are on issue, in respect of those PWS Converting Notes, the issue price and/or the number of the PWS Shares issued on a conversion of the PWS Converting Notes will be adjusted by the Company in a manner consistent with the ASX Listing Rules.

The PWS Converting Note Deed contains other standard clauses typical for a transaction of this nature. The full terms and conditions of the PWS Converting Notes are set out in the Converting Notes Deed, which is available for inspection at the Company’s registered office.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

ASX Listing Rule 7.2, exception 14, however, provides an exception to this rule where shareholders have given their approval under ASX Listing Rule 10.11. If approval of the

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Shareholders is given under ASX Listing Rule 10.11 then it is not separately required under ASX Listing Rule 7.1. Shareholders should note that the issue of the PWS Converting Notes to Mr Robert Schuitema (or his nominee(s)) will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1 if the resolution is passed.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on resolution 1 by Mr Robert Schuitema or his associates.

However, the Company need not disregard a vote if:

• it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors (other than Mr Robert Schuitema) recommend Shareholders vote in favour of this resolution.

Resolution 2 – Grant of Options to PWS Chairman

Resolution 2 seeks shareholder approval for the issue of 1,000,000 options to Dr David Garman, the Company’s Chairman.

ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires that the Company must obtain Shareholder approval before the Company can issue equity securities to a Director of the Company or an associate of a Director of the Company.

Accordingly, approval for the issue of 1,000,000 options to Dr David Garman is required under ASX Listing Rule 10.11.

The options are to be issued to Dr David Garman as part of the Company’s short term and long term incentive programme and form part of Dr David Garman’s remuneration. Dr David Garman is being recognised by the Company for the significant work he has undertaken (and continues to undertake) to promote PWS and its products.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 2:

1. The options are to be issued to Dr David Garman who is the Company’s Chairman.

2. The maximum amount of securities to be granted by the Company under Resolution 2 is the issue of 1,000,000 options to Dr David Garman.

3. It is anticipated that the options will be issued on 11 April 2008 but in any event, the options will be issued no later than 1 month after the date of this meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rule) and it is anticipated that the options will be issued on one date.

4. The terms of the options are set out in the following section of this Explanatory Memorandum.

5. The options were issued to Dr David Garman for nil consideration.

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1. No funds will be raised by the grant of the options.

Option Terms

A total amount of 1,000,000 options are being issued in 2 tranches. The main terms of the options are as follows:

options are as follows:
	Tranche 1	Tranche 2
Issue Price	Nil	Nil
Exercise Price	$0.40	$0.50
Number	500,000	500,000
Issue Date	11 April 2008	11 April 2008
Vesting Date	1 September 2009	1 September 2010
Expiry Date	31 December 2010	31 December 2011
Vesting conditions	Achievement by the Company of an EBIT of $1,000,000 for the period 1 July 2008 to 30 June 2009	Achievement by the Company of an EBIT of $5,000,000 for the period 1 July 2009 to 30 June 2010

The other material terms of the options are as follows:

• each option entitles Dr David Garman to subscribe for one PWS Share in the Company at the exercise price;

• all PWS Shares allotted upon exercise of the options rank equally in all respects with PWS Shares previously issued;

• there are no participating rights or entitlements inherent in the options and Dr David Garman will not participate in new issues of securities offered to Shareholders during the currency of the options;

• once the options have vested they can be exercised at any time until the expiry date. An option cannot be exercised until it has vested;

• unvested options which have not lapsed will automatically vest in the following circumstances:

• if there is an announcement of a takeover bid (to ASX) or the lodgement of a bidders statement (with the Australian Securities and Investments Commission) in accordance with the takeover provisions set out in Chapter 6 of the Corporations Act; or

• if Dr David Garman ceases to be a Director as a result of death (other than by way of suicide), illness (including mental illness), serious disability or permanent incapacity through ill heath or injury (other than ill health which arises as a result of the abuse of alcohol or drugs) ( Automatic Vesting Grounds );

• unvested options will automatically lapse if Dr David Garman ceases to be a Director on any grounds other than the Automatic Vesting Grounds set out in the above bullet point;

• options which do not satisfy the applicable vesting conditions will automatically lapse unless they have automatically vested prior to that time; and

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• if the Company reorganises its share capital in any way (including consolidation, subdivision, reduction or return) while the options are on issue, in respect of those options, the issue price and/or the number of PWS Shares issued on exercise of the options will be adjusted by the Company in a manner consistent with the ASX Listing Rules.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

ASX Listing Rule 7.2, exception 14, however, provides an exception to this rule where shareholders have given their approval under ASX Listing Rule 10.11. If approval of the Shareholders is given under ASX Listing Rule 10.11 then it is not separately required under ASX Listing Rule 7.1. Shareholders should note that the issue of securities to Dr David Garman will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1 if the resolution is passed.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 2 by Dr David Garman or his associates.

However, the Company need not disregard a vote if:

• it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors (other than Dr David Garman) recommend Shareholders vote in favour of this resolution.

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DEFINITIONS

Unless the context requires otherwise, the following words shall have the following meanings in this Notice of Meeting and Explanatory Memorandum:

• (1) ASX means ASX Limited.

• (2) ASX Listing Rule means a listing rule of ASX as amended or waived.

• (3) Business Day means a day that is not a Saturday, Sunday or any other day which is a public holiday or a bank holiday in the place where an act is to be performed or a payment is to be made.

• (4) Converting Note Deed means the deed entered into between PWS and various noteholders for the issue of PWS Converting Notes, dated 18 February 2008.

• (5) Directors means the directors of PWS.

• (6) EBIT means earnings before interest and taxes as disclosed in the accounts of the Company.

• (7) Meeting means the General Meeting of Shareholders convened by this Notice of Meeting.

• (8) Notice of Meeting means this document which comprises the Notice of Meeting to be held on 11 April 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, French Forest, NSW 2086 at 9.00am (EST).

• (9) PWS or Company means Phoslock Water Solutions Limited ACN 099 555 290.

• (10) PWS Converting Note means a converting note issued by PWS in accordance with the Converting Note Deed.

• (11) PWS Shares means fully paid ordinary shares in the capital of PWS listed on ASX under the cods PHK.

• (12) Shareholder means a shareholder in PWS.

• (13) VWAP means volume weighted average price for PWS Shares sold on ASX as calculated by PWS from data supplied by ASX.

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Shareholder Proxy Form

Phoslock Water Solutions Limited, 3/81 Frenchs Forest Road, Frenchs Forest, Sydney, NSW, 2086.

I/We............................................................................................................................................................................

of ................................................................................................................................................................................ appoint........................................................................................................................................................................ of ................................................................................................................................................................................ or in his/her absence .................................................................................................................................................. of ................................................................................................................................................................................

or, if no person is named above or if this proxy form contains conflicting directions, the Chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the General Meeting of the Company to be held on 11 April, 2008 and at any adjournment of that meeting. The Chairman of the meeting intends voting in favour of the item of business in relation to undirected proxies.

Note: If appointing a second proxy please state the number of shares OR the percentage of voting rights applicable to this Proxy Form.

Number of shares OR %

I/We direct my/our proxy to vote in respect of the resolutions to be considered as indicated with an "X" below, and to vote or abstain in respect of any procedural resolution as my/our proxy thinks fit.

FOR AGAINST ABSTAIN

Item 1: Issue of PWS Converting Notes to Mr Robert Schuitema or his nominee(s) Item 2: Issue of Options to Dr David Garman

If no direction is given above, I/we authorise my/our proxy to vote or abstain as my/our proxy thinks fit in respect of the resolution to be considered by the meeting and any adjournment of the meeting.

If the Chairman of the meeting is appointed as your proxy or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of the resolutions, please place a mark in this box.

[Note: ][By marking this box, you acknowledge that the Chairman of the meeting may ] exercise your proxy even if he has an interest in the outcome of the resolutions and that votes cast by him for those resolutions other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chairman will not cast your votes on the resolutions and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

Individual or Shareholder 1

Individual/Sole Director and Sole Company Secretary

Shareholder 2

Director

Shareholder 3 Director/Company Secretary

Date:

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Instructions for completing this proxy form

Appointment of proxy

Insert the name of your proxy if your proxy is someone other than the Chairman of the meeting. If you leave the appointment section of this Proxy Form blank or your named proxy is unable to attend, the Chairman of the meeting for the time being will be your proxy to vote your shares. Your proxy need not be a shareholder of the Company.

You may appoint one or two proxies to attend and vote at the General Meeting on your behalf. If you appoint two proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not specify a proportion or number, each proxy may exercise one-half of the votes in which case any fraction of votes will be disregarded. Where a shareholder appoints more than one proxy, neither proxy is entitled to vote on a show of hands. If you require an additional proxy form, the Company will supply it on request.

Voting directions to your proxy

You may direct your proxy how to vote on the item of business by placing an “X” in one of the three boxes opposite the item. Your proxy may decide whether to vote on the item, except where proxies are required by law or the constitution of the Company to vote or abstain in their capacity as proxies. If your proxy votes on an item, all of your shares will be voted in accordance with your direction unless you indicate a proportion of voting rights on the item by inserting the number of shares or percentage you wish to vote in the appropriate box. If you do not mark any of the boxes on a given item and your proxy is entitled to vote, your proxy may decide how to vote on that item. If you mark more than one box, your vote may be invalid.

If not directing your proxy

If the Chairman of the meeting is your proxy and you do not direct him how to vote on the item of business please mark the box to confirm that the Chairman should vote on your behalf. If you do not mark the box, the Chairman will not be able to vote on your behalf. The Chairman intends to vote undirected proxies in favour of the item of business .

Signature(s)

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

• Individual Holding : The Shareholder must sign in the box.

• • Joint Holding : If shares are held in joint names, all Shareholders must sign in the boxes.

• Attorney : If you are signing as an Attorney, the Power of Attorney must have already been lodged with the Company or, alternatively, a certified copy of it must accompany this proxy form.

• Companies : Only duly authorised officer/s can sign on behalf of a company. Please sign in the boxes provided which state the office held by the signatory, ie Director and Director, or Company Secretary and Director, or the Sole Director and Sole Company Secretary.

Lodgment of Proxy

The proxy form and the power of attorney or other authority (if any) under which it is signed (or a certified copy) must be received by the Company at least 24 hours before the time for holding the General Meeting. Documents may be sent to the Company by:

• posting or delivering them to the address detailed on page 4 of this Notice; or

• sending them by fax to the Company's registered office on (02) 9453 2693

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