USCOM LIMITED — AGM Information 2014

Oct 23, 2014

Uscom Limited ABN 35 091 028 090 Suite 1, Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

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Notice of 2014 Annual General Meeting

Notice is hereby given that the tenth Annual General Meeting of members of Uscom Limited (the Company) will be held at 11:00am AEDT on Wednesday, 26 November 2014 at Suite 1, Level 7, 10 Loftus Street, Sydney, NSW.

Business

Financial Statements and Reports

To receive and consider the Financial Report of the Company together with the reports of the Directors and the Auditor for the financial year ended 30 June 2014.

Resolution 1: Re-election of Director – Ms Sheena Jack

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

That Ms Sheena Jack retires by rotation in accordance with Rule 6.4 of the Company’s Constitution and, being eligible for re-election, be re-elected as a Non-Executive Director of the Company.

Resolution 2: Adoption of Remuneration Report for the Year Ended 30 June 2014

To consider and, if thought fit, pass the following advisory resolution of the Company:

That the Remuneration Report for the year ended 30 June 2014 (as set out in the Company’s Directors’ Report) be adopted.

The vote on this resolution is advisory only and does not bind the Directors or the Company.

Voting Exclusion Statement

A vote on Resolution 2 must not be cast (in any capacity) by, or on behalf of:

• (a) a member of the Key Management Personnel ( KMP ) (as that term is defined in the Corporations Act 2001 (Cth) ( the Act ), which includes each of the Directors of the Company) whose remuneration is disclosed in the 2014 Remuneration Report; or

• (b) a closely related party (as that term is defined in the Act) (such as close family members and any controlled companies) ( Closely Related Party ) of such a KMP.

However, such a person may cast a vote on Resolution 2 if it is cast as proxy for a person who is entitled to vote and:

• (a) the proxy appointment is in writing and specifies how the proxy is to vote (for, against, abstain); or

• (b) the vote is cast by the person chairing the Meeting and;

• the appointment does not specify how the proxy is to vote; and

• the appointment expressly authorises the chair of the meeting to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the KMP.

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Uscom Limited ABN 35 091 028 090 Suite 1, Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

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The Chairman of the Meeting will vote any undirected proxies in favour of Resolution 2.

If you appoint a proxy, you are encouraged to direct your proxy how to vote on Resolution 2 by marking either “For”, “Against”, or “Abstain” for that item.

Resolution 3: Ratification of Private Placement of Shares – May 2014

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

That, for the purposes of ASX Listing Rule 7.4, and for all other purposes, the issue of 5,783,337 shares at an issue price of $0.24 per share on 20 May 2014 to the persons identified, and on the terms described, in the Explanatory Statement which forms part of this Notice of Meeting, be approved.

Voting Exclusion Statement

In accordance with ASX Listing Rule 14.11, the Company will disregard any votes cast on Resolution 3 by any person who participated in the issue and any associates of those persons.

However, the Company will not disregard a vote cast on Resolution 3 if:

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

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

Resolution 4: Approval of Uscom Equity Incentive Plan

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

That for the purposes of the Corporations Act 2001 (Cth) and the ASX Listing Rules, the Uscom Limited Equity Incentive Plan, the terms and conditions of which are summarised in the Explanatory Statement which forms part of this Notice of Meeting, be approved.

Voting Exclusion Statement

In accordance with ASX Listing Rule 14.11, the Company will disregard any votes cast on Resolution 4 by any Director of the Company and their associates.

However, the Company need not disregard a vote cast on Resolution 4 if:

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

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote and the appointment expressly authorises the chair of the meeting to exercise the proxy even if the resolution is connected directly or indirectly with remuneration of a member of the KMP.

The Chairman of the Meeting will vote any undirected proxies in favour of Resolution 4.

If you appoint a proxy, you are encouraged to direct your proxy how to vote on Resolution 4 by marking either “For”, “Against”, or “Abstain” for that item.

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Uscom Limited ABN 35 091 028 090 Suite 1, Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

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Resolution 5: Grant of Indeterminate Rights to Executive Chairman Rob Phillips

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

That for the purposes of ASX Listing Rule 10.14, and for all other purposes, the grant to the Executive Chairman, Mr Rob Phillips, of up to 5,409,902 Indeterminate Rights for nil financial consideration which, subject to the achievement of performance and vesting conditions, may convert to ordinary shares in the capital of Uscom Limited on a one-for-one basis under the Uscom Limited Equity Incentive Plan, on the terms described in the Explanatory Statement which forms part of this Notice of Meeting, be approved.

Voting Exclusion Statement

In accordance with ASX Listing Rule 14.11, the Company will disregard any votes cast on Resolution 5 by Mr Rob Phillips and his associates.

However, the Company need not disregard a vote cast on Resolution 5 if:

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

• (b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote and the appointment expressly authorises the chair of the meeting to exercise the proxy even if the resolution is connected directly or indirectly with remuneration of a member of the KMP.

The Chairman of the Meeting will vote any undirected proxies in favour of Resolution 5.

If you appoint a proxy, you are encouraged to direct your proxy how to vote on Resolution 5 by marking either “For”, “Against”, or “Abstain” for that item.

Resolution 6: Additional Share Issue Capacity under Listing Rule 7.1A

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

That, pursuant to and in accordance with ASX Listing Rule 7.1A and for 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 the formula prescribed in ASX Listing Rule 7.1A.2 and on the terms and conditions described in the Explanatory Statement, which forms part of this Notice of Meeting.

Voting Exclusion Statement

In accordance with ASX Listing Rule 14.11, the Company will disregard any votes cast on Resolution 6 by a person (and any associates of such a person) who may participate in the 10% Placement Facility and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if this resolution is passed. At this point in time, there are no potential allottees to whom shares may be issued under this resolution.

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Uscom Limited ABN 35 091 028 090 Suite 1, Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

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However, the Company need not disregard a vote if:

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

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

By order of the Board

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Catherine Officer Company Secretary Sydney, 24 October 2014

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Explanatory Statement

This Explanatory Statement has been prepared to assist Shareholders of Uscom Limited ( Uscom or the Company ) to understand the business to be put to Shareholders at the Annual General Meeting ( Meeting or AGM ) of the Company to be held at 11:00am Sydney time on Wednesday, 26 November 2014.

All of the resolutions to be voted on, with the exception of Resolutions 2 and 6, are ordinary resolutions. Ordinary resolutions require a simple majority of votes cast by Shareholders present and entitled to vote on the resolution. Resolution 2, which relates to approval of the 2014 Remuneration Report, is an advisory resolution, further details of which are included below. Resolution 6 is a special resolution, requiring 75% of votes cast by Shareholders present and entitled to vote in favour of the resolution.

Financial Statements and Reports

The Annual Report and the associated reports of the Directors and the Auditor for the financial year ended 30 June 2014 will be presented for consideration.

The 2014 Annual Report is available on the Company website http://www.uscom.com.au

Shareholders should note that the Financial Statements and Reports will be received in the form presented. It is not the purpose, and there is no requirement either in the Corporations Act 2001 (Cth) ( the Act ) or in the Constitution of the Company for Shareholders to approve the Financial Report, the Directors' Report or the Auditor's Report at the Meeting, or that the Financial Statements and Reports be accepted, rejected or modified in any way.

Resolution 1: Re-election of Director - Ms Sheena Jack

In accordance with Rule 6.4 of the Company’s Constitution, Ms Jack retires by rotation and, being eligible, offers herself for re-election.

Ms Jack has been a Non-Executive Director of Uscom since November 2011 and was also the Chairman of the Company’s Audit and Risk Committee until that Committee was dissolved on 21 February 2014. Ms Jack was until recently the Chief Financial Officer of HCF when she took up the role of HCF Chief Strategy Officer. Ms Jack has over 25 years’ experience as a finance professional and corporate executive. Ms Jack has had experience across a range of corporate organisations including ASX listed companies, government and not for profit in both mature and start-up businesses. Ms Jack has significant experience in mergers and acquisitions, business integration, strategy development and implementation, capital markets and organisational transformation. Ms Jack is a Chartered Accountant and a graduate member of the Australian Institute of Company Directors.

Directors’ Recommendation

The Directors, with Sheena Jack abstaining, recommend that Shareholders vote in favour of Resolution 1.

Resolution 2: Remuneration Report

A resolution for adoption of the Remuneration Report is required to be considered and voted on in accordance with the Corporations Act. The Remuneration Report details the Company’s policy on the remuneration of non-executive directors, executive directors and senior executives and is set out on pages 12-16 of the 2014 Annual Report.

Resolution 2 provides Shareholders with the opportunity to vote on the Company’s Remuneration Report. Under Section 250R(2) of the Act, the Company is required to put the adoption of its Remuneration Report to the vote at the Annual General Meeting and, under section 250SA of the Corporations Act, the Chairman must allow the Shareholders a reasonable opportunity to ask questions about, or make comments on, the Remuneration Report.

The Remuneration Report:

• (a) explains the Board's policies in respect of the nature and level of remuneration paid to directors and senior management of the Company;

• (b) discusses the link between the Board's policies and the Company's performance;

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• (c) explains why the performance conditions were chosen and how performance is measured against them;

• (d) sets out the remuneration details for each director and each member of the Company's senior management team; and

• (e) makes clear that the basis for remunerating non-executive directors is distinct from the basis for remunerating executives and executive directors.

The vote on the adoption of the Remuneration Report resolution is advisory only and does not bind the Directors or the Company.

Directors’ Recommendation

As a matter of best practice corporate governance, the Directors abstain from making a recommendation in relation to Resolution 2.

Resolution 3: Ratification of Private Placement of Shares – May 2014

Under Listing Rule 7.1A, a company may seek shareholder approval to issue equity securities equivalent to an additional 10% of the number of ordinary securities on issue by way of placement over a 12 month period. The Company obtained approval under Listing Rule 7.1A at its 2013 Annual General Meeting. ASX Listing Rule 7.4.2 provides that shareholders may approve an issue of securities after the fact so that the securities issued are regarded as having been made with approval for the purposes of Listing Rule 7.1 or ASX or Listing Rule 7.1A, as the case may be.

Accordingly, Resolution 3 seeks ratification for the 5,783,337 shares which were issued on 20 May 2014 without Shareholder approval. The issue of these shares was within the 10% limit available to the Company. The Company is seeking approval for the purposes of ASX Listing Rule 7.4 so that the Company will have the flexibility to issue further securities under ASX Listing Rule 7.1 and ASX Listing Rule 7.1A if the need arises in the next 12 months.

For the purposes of ASX Listing Rule 7.5, the following information is provided:

• The shares set out below were issued to the following investors at $0.24 per share on 20 May 2014:

Investor	No of shares issued
UBS Nominees Pty Ltd	1,458,334
Sandhurst Trustees	1,041,667
Hylerod Pty Ltd	200,000
Blueflag Investments Pty Limited	208,334
UBS Wealth Management Australia Nominees Pty Ltd Management>	625,000
Dr Craig John Coghlan	416,667
Jetan Pty Ltd	500,000
Corf Corporation Pty Limited, ACN 100 266 046	416,667
Rooster Booster Pty Limited	166,667
Fredrik Uden	208,334
Invia Custodian Pty Limited	125,000
Peter Maddison	416,667
Total	5,783,337

• The shares are ordinary fully paid shares in the capital of the Company.

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• The issue price of $0.24 per share represented 86% of the average weighted bid price of shares traded during the fifteen trading days prior to issue of shares.

• The funds raised (a total of $1,388,000.88) contributed towards additional working capital associated with the ongoing commercialisation of its products USCOM 1A and BP+.

• A Voting Exclusion Statement is set out under Resolution 3 in the Notice.

Directors’ Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 3.

Resolution 4: Uscom Equity Incentive Plan

The Directors of the Company seek Shareholder approval to issue Plan Interests under the Uscom Equity Incentive Plan ( the Plan ) in accordance with ASX Listing Rule 7.2, Exception 9(b) so that any shares issued under the Plan will be excluded from the maximum number of new shares that may be issued by the Company in any 12 month period under ASX Listing Rule 7.1, for a period of three years from the date of approval. The Board considers it desirable to maintain this flexibility so that it may access capital under ASX Listing Rule 7.1 through subsequent issues as required.

The Company is also seeking Shareholder approval of the Plan in order that it may obtain the benefit of the exemption in section 260C(4) of the Act for financial assistance provided under an employee share scheme approved by shareholders.

Purpose for issue of Plan Interests under the Plan

The Board’s purpose for issuing Plan Interests under the Plan is to:

• provide Eligible Persons with an incentive plan which recognises ongoing contribution to the achievement by the Company of long term strategic goals thereby encouraging the mutual interdependence of Participants and the Company;

• align the interests of Participants with Shareholders, through the sharing of a personal interest in the future growth and development of the Company, as represented in the price of the Company’s ordinary fully paid shares;

• encourage Eligible Persons to contribute to the performance of the Company and its total return to Shareholders; and

• provide a means of attracting and retaining skilled and experienced employees.

Accordingly, the Board has established the Plan. Under the Plan, the Company will be able to grant appropriately structured short-term and long-term incentive awards to Eligible Employees (including Executive Directors). The Plan will provide the Board with the flexibility to grant equity incentives to Eligible Employees in the form of Plan Shares, Rights or Options (collectively Plan Interests ), will only vest on the satisfaction of appropriate hurdles.

The Board wishes to encourage personnel to participate in these plans so that they can share in the growth of the Company.

A copy of the terms and conditions of the Plan is available at the Company’s website, www.uscom.com.au, or by calling the Company Secretary on 02 98280 7445.

A summary of the terms of the Plan is set out below.

Key terms of the Plan

The Board is empowered under the Plan terms and conditions to determine the key terms of any Plan Interest allocated under the Plan.

Eligibility

The Plan is open to eligible participants, namely employees, contractors, consultants or executive directors of the Company (or a subsidiary of the Company) or any other person whom the Board determines to be eligible to participate in the Plan from time to time ( Eligible Employees ).

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Participation

Each Eligible Employee who acquires a legal or beneficial interest in a Plan Interest (including the legal personal representative of the person) becomes a ‘ Participant ’ in the Plan.

Invitation

An offer by the Board to acquire a Plan Interest and become a Participant in the Plan will be in such form and subject to such conditions as the Board determines. The invitation will specify the terms of attaching to each offer, including the following (as applicable):

• the number of Plan Interests to which the invitation relates;

• the date the Plan Interests will be allotted/issued;

• any amount payable by Eligible Employees to acquire the Plan Interests;

• any exercise price payable by Participants;

• the date on which unvested Plan Interests will lapse or expire ( Expiry Date );

• any conditions that must be satisfied in relation to a Participant’s and/or the Company’s performance during a specified period ( Performance Conditions );

• any requirements additional to the Performance Conditions that must be met to release Plan Interests from the Plan (and deliver Shares to Participants) ( Vesting Conditions );

• any conditions that must be satisfied before a Plan Share can be disposed of by a Participant ( Disposal Restrictions ); and

• any conditions that will result in the forfeiture of a Plan Interest ( Forfeiture Conditions ).

Rights of Participants

Plan Interests are subject to the terms and conditions of the Plan until a share issued pursuant to the Plan is:

• registered in the name of the Participant;

• not subject to any Performance Conditions or Forfeiture Conditions ( Vesting Conditions ); and

• not subject to a holding lock or any Disposal Restrictions.

Where Options or Rights have been granted, upon vesting and exercise (as applicable), a Participant will receive either a beneficial entitlement to Plan Shares (i.e. subject to Disposal Restrictions) or a legal and beneficial entitlement to Shares (which are no longer held under the Plan). The Participant will have a legal and equitable interest in the Shares. Plan Shares will rank equally for dividends declared on or after the date of issue but will carry no right to receive any dividend before the date of issue.

Where Rights are granted, depending on the specific terms of the invitation, the Board may determine in its absolute discretion that a vested Right will be satisfied by the Company making a cash payment to the Participant in lieu of allocating Shares ( Indeterminate Rights ).

A holder of Plan Interests is not entitled to participate in a new issue of Shares or other securities made by the Company to Shareholders merely because he or she holds Options or Rights.

The Company will apply for quotation on the official list of the ASX of those Shares acquired under the Plan or upon the exercise of an Option issued or Right that vests under the Plan, as soon as practicable after the acquisition of those Shares by a Participant. The Company will not seek official quotation by ASX of any Options or Rights.

Should the Company undergo a reorganisation or reconstruction of capital or any other such change, the terms of the Plan Interests will be correspondingly changed as the Board considers appropriate in the given circumstances to ensure that the value of the Participant’s Plan Interests is not diminished as a result of the capital reconstruction or reorganisation.

In the event of a change of control ( Control Event ), the Board may give notice to Participants and discretion to deal with the Securities by:

• converting Participants’ Rights to Shares whether or not all conditions have been met;

• permitting the exercise of some or all Options whether or not Vesting Conditions have been met; and/or

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 removing any Disposal Restrictions.

Assignment

Plan Interests issued under the Plan are not transferable or assignable without the prior written approval of the Board.

Administration

The Plan will be administered by the Board which has an absolute discretion to determine appropriate procedures for its administration and resolve questions of fact or interpretation and formulate special terms and conditions (subject to any applicable Listing Rules) in addition to those set out in the Plan.

Termination and amendment

The Plan may be terminated or suspended at any time by the Board but any such suspension or termination will not affect nor prejudice rights of any Participant holding Plan Interests at that time. The Plan may be amended at any time by the Board.

Executive Award

The Board intends to make an offer under the Plan of a total of 450,000 Performance Rights to a senior executive of the Company. Subject to achievement of the performance conditions, the Performance Rights will convert to ordinary shares in the capital of Uscom Limited on a one for one basis. The terms and conditions will be identical to those applying to the Indeterminate Rights to be offered to the Executive Chairman under Resolution 5, other than Performance Rights are to be offered to the senior executive and Indeterminate Rights are to be offered to Mr Phillips, and there is no discretion for the Board to determine to make a cash payment in respect of the Performance Rights in lieu of issuing shares.. In this regard, refer to the description in the Explanatory Statement in relation to Resolution 5.

The number of Plan Interests that may be offered under the Executive Award and Executive Chairman’s Award collectively, will constitute approximately 7% of the current issued share capital of the Company.

The Company will only be able to rely on ASX Listing Rule 7.2, Exception 9(b) (an exception to the restrictions regarding the issue of capital without shareholder approval under ASX Listing Rule 7.1) if there has been no change to the number or terms of the securities to be issued, the mechanism for pricing or payment or any other material terms of the Plan. Any securities issued following material changes to the Plan will not have the benefit of ASX Listing Rule 7.2, Exception 9(b) until such time as the revised plan is approved by Shareholders.

Directors' Recommendation

The Directors (other than Rob Phillips who has abstained from making a recommendation) recommend that Shareholders vote in favour of Resolution 4.

Resolution 5: Grant of Indeterminate Rights under the Uscom Equity Incentive Plan to Executive Chairman Rob Phillips

Resolution 5 seeks Shareholder approval to issue 5,409,902 Indeterminate Rights to the Executive Chairman, Mr Rob Phillips under the Uscom Equity Incentive Plan, on the terms and conditions set out below. The primary purpose of the proposed issue of Indeterminate Rights is to both reward performance and provide an incentive to Mr Phillips as Executive Chairman and Chief Executive Officer of the Company.

Uscom Limited Remuneration Philosophy

The Uscom Limited Board believes that appropriately designed equity based plans are an important component of the Company’s remuneration arrangements. Such plans are a key tool to allow the Company to attract and retain talented directors and employees, and ensure the interests of Directors and employees are aligned with those of Shareholders in creating long-term Shareholder value.

In order to provide a long-term incentive which continues to align employees with the Company’s strategies, a flexible equity-based plan – the Uscom Equity Incentive Plan ( the Plan ) - has been established to allow the Board to grant different types of performance-based awards depending upon

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the prevailing circumstances[1] . The Plan has been designed with maximum flexibility to deliver different securities from time-to-time (depending on the participant base) with performance conditions commensurate with the Company’s key business drivers at the time of award. Approval of the Plan is the subject of Resolution 4 contained in this Notice and further details regarding the Plan are set out in this Explanatory Statement.

Further information about the Company's remuneration governance and executive remuneration policy and framework is set out the Company's Remuneration Report which forms part of Uscom’s 2014 Annual Report.

Issue of Indeterminate Rights to Rob Phillips

The number of Indeterminate Rights, and details of testing dates, Performance Conditions and Vesting Dates are set out in the table below.

		Number of
Tranche	Testing Date	Indeterminate	Performance Condition*	Vesting Date
		Rights available
		to vest
Tranche 1	30 September 2015	1,136,364	Company revenue for FY2015 greater than or equal to $1,330,833.	1 July 2018
Tranche 2	30 September 2016	2,136,364	Company revenue for FY2016 greater than or equal to $1,596,999.	1 July 2019
Tranche 3	30 September 2017	2,136,364	Company revenue for FY2017 greater than or equal to $1,863,166.	1 July 2020

*The Performance Condition is equivalent to a 25% increase (non-compounding) each year on the Company’s revenue for the 2014 financial year.

General Terms & Conditions of Indeterminate Rights

• The Indeterminate Rights will be forfeited if Mr Phillips ceases to be employed by Uscom for any reason prior to the testing date.

• The Indeterminate Rights will be forfeited in the period between the testing date and the vesting date in the following circumstances:

• Mr Phillips resigns (other than due to permanent illness or material disability) as a Director and employee; or

• Mr Phillips’ employment is terminated due to misconduct.

• If Mr Phillips’ employment is terminated for convenience by the Company, for example, redundancy, or Mr Phillips resigns due to permanent illness or material disability that renders him unable to work, or Mr Phillips dies, then the Indeterminate Rights in respect of which the Performance Conditions have been met will vest at the date of termination or death.

• If there is a Control Event after a testing date then the vesting date will be brought forward to the date of the Control Event.

• If a Control Event occurs before a testing date, the Board may bring forward the testing date to a date on or after the date of the Control Event and make a pro rata adjustment to the financial performance condition. The vesting date will be the same as the relevant testing date.

• If the Performance Condition for a tranche is not met, the Indeterminate Rights available to vest in that tranche carry forward and are included with and become part of the Indeterminate Rights available to vest with the next tranche. If the Performance Condition is not met at the testing date for Tranche 3, the Indeterminate Rights will lapse.

The Board has decided to grant Indeterminate Rights to Mr Phillips for the following reasons:

1 The Plan is subject to Shareholder approval for the purposes of Listing Rule 7.2 Exception 9, refer Resolution 4.

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• the grant of Rights is in accordance with acceptable market practice;

• the grant of Indeterminate Rights will have a minimal dilutionary effect on the issued share capital of the Company;

• the grant of Indeterminate Rights will reward Mr Phillips for performance; and

• vested Indeterminate Rights can create recognisable value to executives, which when granted under transparent and robust performance conditions, ensure real Shareholder value creation.

The Board considers the number of Indeterminate Rights proposed to be issued to Mr Phillips to be fair and reasonable and within comparable market parameters, having regard to both the Company’s size and stage of development, and the role and responsibilities expected of Mr Phillips as Executive Chairman of the Company.

The Indeterminate Rights may vest into fully paid ordinary shares in the Company if the Performance Conditions (described below) are met. Alternatively, if the Performance Conditions are met, the Board may determine in its absolute and unfettered discretion that a vested Indeterminate Right will be satisfied by the Company making a cash payment to Mr Phillips in lieu of allocating Shares. In such an instance, the cash payment will be equivalent to the number of vested Indeterminate Rights multiplied by the then value of the Company’s Share price as traded on the ASX.

Vesting Conditions

As stated above, one of the reasons that the Company has introduced the Plan is not only to attract and reward key executives, but to retain talented staff. Therefore, the Board has determined that a tenure based vesting condition is the most appropriate hurdle for current purposes.

Information for the purposes of Listing Rule 10.15

In accordance with ASX Listing Rule 10.15, the following information is provided regarding Resolution 5:

• Mr Rob Phillips is the Executive Chairman of the Company.

• Mr Phillips will be granted up to 5,409,902 Indeterminate Rights for nil financial consideration which, subject to the achievement of performance conditions, may convert to ordinary shares in the capital of Uscom Limited on a one-for-one basis. Up to 5,409,902 ordinary shares may be allotted to Mr Phillips upon the conversion of vested Indeterminate Rights, for nil financial consideration. Any shares allotted to Mr Phillips may be acquired on market or issued by Uscom Limited.

Alternatively, should Indeterminate Rights vest, the Board may determine in its absolute discretion that a vested Indeterminate Right will be satisfied by the Company making a cash payment to Mr Phillips in lieu of allocating Shares.

• As this is the first allocation of securities under the Uscom Limited Equity Incentive Plan, for the purposes of ASX Listing Rule 10.15.4, no person referred to in Listing Rule 10.14 has received any securities under the Plan.

• The Indeterminate Rights will be granted under the terms and conditions of the Uscom Equity Incentive Plan, the subject of Resolution 4 at this AGM.

• The Terms and Conditions of the Uscom Equity Incentive Plan provide that any Director is eligible to participate in particular awards. The only Director who is currently eligible for participation is the Executive Chairman, Mr Phillips.

• There is no loan attaching to the offer of Indeterminate Rights under the Plan.

• Details of any securities issued under the Uscom Equity Incentive Plan will be published in Uscom Limited’s future annual Remuneration Reports, including that approval for this issue of securities was obtained under Listing Rule 10.14.

• The Company will issue the Indeterminate Rights no later than one month after this Annual General Meeting.

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A voting exclusion statement is set out under Resolution 5 in the Notice.

Reasonable Remuneration

Section 208(1) of the Corporations Act 2001 (Cth) ( the Act ) provides that a public company must not, without the approval of the Company’s members, give a financial benefit to a related party unless an exception to the prohibitions which are set out in sections 210 to 216 of the Act applies to that issue. As a Director of the Company, Mr Phillips is a related party of the Company for the purposes of section 228(2) of the Act. The issue of the Indeterminate Rights and the the issue of shares or payment of cash on vesting of the Indeterminate Rights will constitute the giving of a financial benefit to a related party for the purposes of section 229(3)(e) of the Act.

The Board considers that the issue of the Indeterminate Rights constitutes reasonable remuneration within the meaning of section 211(1) of the Act as:

• the incentive represented by the issue of the Indeterminate Rights is a cost-effective and efficient incentive when compared to other forms of incentive;

• The Indeterminate Rights comprise Mr Phillips’ short- and long-term incentive;

• Tranche 1 is to provide a short-term incentive to the equivalent of $250,000 based on the Company’s share price as at 30 June 2014;

• Tranches 2 and 3 comprise the ongoing short-term incentive together with an additional 1,000,000 Indeterminate Rights for financial performance over the 2 to 3 year period, vesting 5 to 6 years from the date of grant (subject to meeting performance hurdles).

• The Indeterminate Rights will be forfeited if Mr Phillips ceases as an Executive Director and employee, thereby eliminating any future financial benefit.

• Mr Phillips’ current base salary (excluding superannuation and share-based payments) is $170,000. Further information regarding Mr Phillips’ remuneration is set out in the Remuneration Report in the 2014 Annual Report, at page 14.

• The Performance Conditions provide an incentive to Mr Phillips in his role as Chairman and Chief Executive Officer to improve the performance of the Company. Taking this into consideration, the Directors (other than Mr Phillips) consider there is no opportunity cost or benefit foregone to the Company in granting the Indeterminate Rights under Resolution 5.

Accordingly, Shareholder approval is not required under section 208(1) of the Act.

If Shareholders do not approve the proposed issue of Indeterminate Rights to Mr Phillips under Resolution 5, the issue will not proceed. This may affect Uscom’s ability to incentivise Mr Phillips and align his interests with those of Shareholders. The Board will need to consider alternative remuneration arrangements which may include cash payment.

Directors’ Recommendation

The Directors (with Mr Phillips abstaining) recommend that Shareholders vote in favour of Resolution 5.

Resolution 6: Additional Share Issue Capacity under Listing Rule 7.1A

ASX Listing Rule 7.1A enables small to mid-cap listed companies to seek shareholder approval by special resolution to issue equity securities equivalent to an additional 10% of the number of ordinary securities on issue by way of placements over a 12 month period (10% Placement Facility) . This is in addition to the existing 15% placement capacity permitted by ASX Listing Rule 7.1.

A company is eligible to seek shareholder approval for this additional placement capacity if it satisfies both of the following criteria at the date of the AGM:

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

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The Company currently satisfies both the above criteria, and it is anticipated that it will also satisfy both these criteria at the date of the Meeting.

Accordingly, Resolution 6 is seeking Shareholder approval by special resolution for the issue of such number of equity securities as calculated under the formula in ASX Listing Rule 7.1A.2, at an issue price as permitted by ASX Listing Rule 7.1A.3, to such persons as the Board may determine, on the terms as described in this Explanatory Statement, which forms part of the Notice of Meeting.

At the date of this Notice, the Company has on issue 81,459,490 Shares. If Resolution 3 is approved the Company will have the capacity to issue:

• (i) 12,218,923 equity securities under ASX Listing Rule 7.1; and

• (ii) subject to Shareholder approval being sought under Resolution 6, 8,145,949 equity securities under ASX Listing Rule 7.1A.

The actual number of equity securities that the Company will have capacity to issue under ASX Listing Rule 7.1A will be calculated at the date of issue of the equity securities in accordance with the formula prescribed in ASX Listing Rule 7.1A.2.

The effect of Resolution 6 will be to allow the Directors to issue the equity securities under Listing Rule 7.1A during the 10% Placement Period without using the Company’s 15% placement capacity under Listing Rule 7.1.

Information required by ASX Listing Rule 7.3A

For the purposes of ASX Listing Rule 7.3A, the following information is provided:

• The minimum price at which the equity securities will be issued will be no less than 75% of the volume weighted average market price for ordinary shares calculated over the 15 trading days on which trades are recorded immediately before:

• a) the date on which the price at which the securities are to be issued is agreed; or

• b) if the securities are not issued within five trading days of the date in paragraph (a), the date on which the shares are issued.

• If Resolution 6 is approved by Shareholders and the Company issues securities under the 10% Placement Facility, the existing Shareholders face the risk of economic and voting dilution as a result of the issue of shares which are the subject of this resolution, to the extent that such shares are issued; including:

• a) the market price of ordinary shares may be significantly lower on the issue date than on the date on which this approval is being sought; and

• b) the shares may be issued at a price that is at a discount to the market price for those shares on the issue date, or the shares may be issued as part consideration for the acquisition of a new asset,

which may have an effect on the amount of funds raised by the issue of the shares.

• The following table gives examples of the potential dilution of existing ordinary shareholders on the basis of the current market price of shares and the current number of ordinary securities for variable “A” calculated in accordance with the formula in Listing Rule 7.1A.2 as at the date of the Notice.

The table also shows:

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

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

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		Dilution	Dilution
No. of Shares on Issue 2
	Issue price (per Share)	$0.11 50% decrease in Issue Price	$0.22 Issue Price	$0.44 100% increase in Issue Price
81,709,490 (Current)	Shares issued	8,170,949	8,170,949	8,170,949
	Funds raised	$898,804.39	$1,797,608.78	$3,595,217.56
122,564,235 (50% increase)	Shares issued	12,256,423	12,256,423	12,256,423
	Funds raised	$1,348,206.53	$2,696,413.06	$5,392,826.12
163,418,980 (100% increase)	Shares issued	16,341,898	16,341,898	16,341,898
	Funds raised	$1,797,608.78	$3,595,217.56	$7,190,435.12

The table has been prepared on the following assumptions:

• (i) Resolution 3 is approved.

• (ii) The Company issues the maximum number of shares available under the 10% Placement Facility in Listing Rule 7.1A.

• (iii) No options are exercised in ordinary shares before the date of issue of ordinary shares under Listing Rule 7.1A.

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

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

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

• (vii) The issue price is $0.22, being the closing price of the Shares on ASX on 16 October 2014.

• If any of the shares being approved by this resolution are issued, they will be issued during the Placement Period, that is, within 12 months of the date the AGM, i.e. by 26 November 2015, and the approval being sought by this resolution will cease to be valid if Shareholders approve a transaction under ASX Listing Rules 11.1.2 or 11.2 prior to 26 November 2015.

• The shares will be issued for the purpose of raising working capital for the Company, which will be applied to meet the Company’s strategy of establishing new sales, distribution and licensing opportunities for the benefit of all Shareholders. A proportion of the shares may be issued for non-cash consideration and in such circumstances the Company will provide a valuation of the non-cash consideration as required by ASX Listing Rule 7.1A.3.

• The Company will comply with the disclosure obligations under ASX Listing Rules 7.1A.4 and 3.10.5A upon issue of any equity securities.

• The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of any equity securities that may be issued (subject to Shareholder approval of Resolution 6) have not been determined as at the date of this Notice, but may include existing Shareholders as well as new Shareholders who are not related parties or associates of the Company. Any potential allottees will be determined on a case-by-case basis having regard to factors including, but not limited to, the following:

• the methods of raising funds that are available to the Company and balancing interest from potential allottees with the interests of existing Shareholders;

2 Variable “A” in Listing Rule 7.1A.2

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• the effect of the issue of the Shares on the control of the Company. Allocation will be subject to takeover thresholds;

• the financial situation and solvency of the Company and its projected need for working capital at any given time; and

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

Previous Approval under ASX Listing Rule 7.1A

• The Company previously obtained Shareholder approval under Listing Rule 7.1A at its 2013 Annual General Meeting held on 13 November 2013.

• In the twelve months preceding the date of the proposed 2014 Annual General Meeting, the Company has issued a total of 5,783,337 ordinary shares, which represents 7.1% of the total number of Shares on issue at the commencement of the 12 month period (being 26 November 2013).

• No Shares were issued under Listing Rule 7.1.

• 5,783,337 Shares were issued under Listing Rule 7.1A on 20 May 2014. Shareholder approval is being sought for the issue of these Shares under Resolution 3 and details of the Share issue, including the disclosure required under Listing Rule 7.3A.6 is included under this resolution.

• No other securities were issued by the Company in the twelve months preceding the date of the proposed 2014 Annual General Meeting.

• For the purposes of ASX Listing Rule 7.3A.6, the following information is provided in respect of the 5,783,337 Shares.

• The shares set out below were issued to the following investors at $0.24 per share:

Details of All Issues of Equity Securities during the Twelve Months Preceding 26 November 2014	Details of All Issues of Equity Securities during the Twelve Months Preceding 26 November 2014
Date of Issue	20 May 2014 Private Placement
Number of equity securities issued	5,783,337
Class of equity securities	Fully paid ordinary Shares. The shares issued rank equally with the existing class of fully paid ordinary shares traded under the code UCM
Names of persons to whom equity securities were issued	The shares were issued to institutional and sophisticated investors under a private Placement, for which Hawkesbury Partners acted as Lead Manager:  UBS Nominees Pty Ltd  Sandhurst Trustees Fund>  Hylerod Pty Ltd  Blueflag Investments Pty Limited  UBS Wealth Management Australia Nominees Pty Ltd  Dr Craig John Coghlan  Jetan Pty Ltd  Corf Corporation Pty Limited, ACN 100 266 046 Family Settlement>  Rooster Booster Pty Limited  Fredrik Uden  Invia Custodian Pty Limited  Peter Maddison
Issue price and discount to market price (if any)	$0.24 per share The issue price represented 86% of the average weighted bid price of shares traded during the fifteen trading days prior to issue of shares.
Total cash consideration	$1,388,000.88

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Use of cash consideration	The funds raised (total of $1,388,000.88) contributed towards additional working capital associated with the ongoing commercialisation of its products USCOM 1A and BP+.
Total non-cash consideration	Not applicable

• The funds raised (total of $1,388,000.88) contributed towards additional working capital associated with the ongoing commercialisation of its products USCOM 1A and BP+. As at 16 October 2014, the Company had total cash and cash equivalents of $1,016,630.55.

Voting Exclusion Statement

• A Voting Exclusion Statement is set out under the resolution in the Notice of Meeting. At the date of the Notice, the Company has not approached any particular existing Shareholder or security holder or an identifiable class of existing security holder to participate in an issue of shares. Therefore, no existing Shareholder's votes will be excluded under the voting exclusion in the Notice.

Resolution 6 is a special resolution. For a special resolution to be passed, at least 75% of the votes cast by shareholders entitled to vote on resolution 6 must be in favour of the resolution.

Directors’ Recommendation

The Directors unanimously recommend that Shareholders vote in favour of this resolution.

Proxies

For an appointment of a proxy to be effective, proxy forms must be lodged at the Company’s Share Registry, Boardroom Pty Limited at:

Postal address: Boardroom Pty Limited GPO Box 3993, Sydney NSW 2001 Fax number: (02) 9290 9655

no later than 11:00am (Sydney time) on Monday, 24 November 2014. A proxy form is provided with this Notice.

The Board has determined the date and time when a person must be on the Company register of members to attend and vote at the meeting to be 7.00pm (Sydney Time) on Monday, 24 November 2014.

Sydney, 24 October 2014

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All Correspondence to:

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 By Mail Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Australia

Level 7, 207 Kent Street, Sydney NSW 2000 Australia  By Fax: +61 2 9290 9655  Online: www.boardroomlimited.com.au  By Phone: (within Australia) 1300 737 760 (outside Australia) +61 2 9290 9600

YOUR VOTE IS IMPORTANT

For your vote to be effective it must be received before 11:00am AEDT on Monday, 24[th] of November, 2014.

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 APPOINTMENT OF PROXY

Indicate who you want to appoint as your Proxy. If you wish to appoint the Chair of the Meeting as your proxy, mark the box in Step 1. If you wish to appoint someone other than the Chair of the Meeting as your proxy please write the full name of that individual or body corporate in Step 1. A proxy need not be a securityholder of the Company.

Default to Chairman of the Meeting

Any directed proxies that are not voted on a poll at the meeting will default to the Chairman of the Meeting, who is required to vote those proxies as directed. Any undirected proxies that default to the Chair of the Meeting will be voted as set out in this proxy form, including where the resolution is connected directly or indirectly with the remuneration of KMP.

STEP 3 SIGN THE FORM

The form must be signed as follows:

Individual: This form is to be signed by the securityholder.

Joint Holding : where the holding is in more than one name, all the securityholders should sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form should be signed by that person. Please indicate the office held by signing in the appropriate place.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by contacting the company’s securities registry or you may copy this form.

To appoint a second proxy you must:

(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded. (b) return both forms together in the same envelope.

STEP 2 VOTING DIRECTIONS TO YOUR PROXY

To direct your proxy how to vote, mark one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of securities are to be voted on any item by inserting the percentage or number that you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item for all your securities your vote on that item will be invalid.

Proxy which is a Body Corporate

STEP 4 LODGEMENT

Proxy forms (and any Power of Attorney under which it is signed) must be received no later than 48 hours before the commencement of the meeting, therefore by 11:00am AEDT on Monday, 24[th] of November, 2014. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy forms may be lodged using the enclosed Reply Paid Envelope or:

 By Fax + 61 2 9290 9655  By Mail Boardroom Pty Limited GPO Box 3993, Sydney NSW 2001 Australia Level 7, 207 Kent Street,  In Person Sydney NSW 2000 Australia

Attending the Meeting

If you wish to attend the meeting please bring this form with you to assist registration .

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an “Appointment of Corporate Representative” prior to admission. An Appointment of Corporate Representative form can be obtained from the company’s securities registry.

Uscom Limited ABN 35 091 028 090

Your Address

This is your address as it appears on the company’s share register. If this is incorrect, please mark the box with an “X” and make the correction in the space to the left. Securityholders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.

PROXY FORM

STEP 1 APPOINT A PROXY

I/We being a member/s of Uscom Limited (Company) and entitled to attend and vote hereby appoint:

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the Chair of the Meeting (mark box)

OR if you are NOT appointing the Chair of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered shareholder) you are appointing as your proxy below

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or failing the individual or body corporate named, or if no individual or body corporate is named, the Chair of the Meeting as my/our proxy to act on my/our behalf (including to vote in accordance with the following directions or, if no directions have been given and to the extent permitted by law, as the proxy sees fit) at the Annual General Meeting of the Company to be held at Suite 1, Level 7, 10 Loftus Street, Sydney NSW 2000 on Wednesday, 26[th] of November, 2014 at 11:00am AEDT and at any postponement or adjournment of the Meeting.

Important for Resolutions 2, 4 & 5: If the Chair of the Meeting is your proxy, either by appointment or by default, and you have not indicated your voting intention below, you expressly authorize the Chair of the Meeting to exercise the proxy in respect of Resolution 2, even though the Resolution is connected directly or indirectly with the remuneration of Key Management Personnel ( KMP ).

The Chair of the Meeting will vote all undirected proxies in favour of each Item of business (including Resolutions 2, 4 & 5). If you wish to appoint the Chair of the Meeting as your proxy with a direction to vote against, or to abstain from voting on an item, you must provide a direction by marking the ' Against ' or ' Abstain ' box opposite that resolution.

STEP 2 VOTING DIRECTIONS

• If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your vote will not be counted in calculating the required majority if a poll is called.

For Against Abstain*

Resolution 1 To re-elect Ms Sheena Jack as a Director Resolution 2 To Adopt the Remuneration Report Resolution 3 Ratification of Private Placement of Shares – May 2014 Resolution 4 Approval of Uscom Equity Incentive Plan Resolution 5 Grant of Indeterminate Rights to Executive Chairman Rob Phillips Resolution 6 Additional Share Issue Capacity under Listing Rule 7.1A ( Special Resolution )

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STEP 3 SIGNATURE OF SHAREHOLDERS

This form must be signed to enable your directions to be implemented.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director / Company Secretary Contact Name…………………………………………….... Contact Daytime Telephone………………………................................ Date / / 2014