VECTUS BIOSYSTEMS LIMITED — Capital/Financing Update 2017

Jun 4, 2017

ABN 54 117 526 137

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5 June 2017

Company Announcements Office Australian Securities Exchange

Issue of Options

Vectus Biosystems Limited (ASX:VBS) (Vectus or the Company) advises that it has today issued a total of 9,726 zero-exercise-priced options to six of its employees as part of the Company’s annual staff performance and remuneration review. The options have been issued under the Company’s Employee Incentive Plan. These five-year options will vest as to one third annually over three years based on the staff members’ satisfactory work performance, as assessed in the annual review.

The Appendix 3B for these issues of options is attached.

Vectus Biosystems Limited

Robert J Waring

Company Secretary

Notice under Section 708A(5)(e)

As at 5 June 2017, Vectus gives notice under section 708A(5)(e) of the Corporations Act 2001 (Cth) (Corporations Act) that:

1. the Company issued the abovementioned securities without disclosure to investors under Part 6D.2 of the Corporations Act.

2. the Company has complied with the provisions, as they apply to the Company, of Chapter 2M of the Corporations Act and with Section 674 of the Corporations Act; and

3. there is no information:

4. a. that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; or

5. b. that investors and their professional advisors would reasonably require for the purpose of making an informed assessment of the assets and liabilities, financial performance, profits and losses, and prospects of Vectus, or the rights and liabilities attaching to Vectus’ ordinary shares.

VECTUS BIOSYSTEMS LIMITED ABN 54 117 526 137

3-11 Primrose Avenue, Rosebery, NSW 2018 Telephone: +61 2 9662 4144 Facsimile: +61 2 9697 0933 Website: www.vectusbiosystems.com.au

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Vectus Biosystems Limited (ASX:VBS)

ABN

54 117 526 137

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to Options

• be issued

• 2 Number of[+] securities issued or to be issued (if known) or maximum 9,726 number which may be issued

• 3 Principal terms of the[+] securities 6,500 zero-exercise-priced options issued to five (e.g. if options, exercise price and of Vectus’ employees under the Company’s expiry date; if partly paid +securities, the amount Employee Incentive Plan (EIP). These options expire on 29 May 2022 and will vest as to one

• outstanding and due dates for payment; if +convertible third annually over three years from 29 May 2017 based on the staff members’ satisfactory work

• securities, the conversion price and dates for conversion) performance, as assessed in the annual review. 3,226 zero-exercise-priced options issued to one of Vectus’ employees under the Company’s EIP. These options expire on 25 January 2022 and vest as to one third annually over three years from 25 January 2017, with 50% to vest based on the achievement of corporate goals and 50% based on the personal achievement of goals set for the employee. The Board retains a discretion to allow vesting if it so determines, regardless of the circumstances.

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted+securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h_in_ relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of +securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the+issue date and both values. Include the source of the VWAP calculation.	The options, when exercised into fully paid ordinary shares, will rank equally with existing fully paid ordinary shares.
	The options have a zero issue price and a zero exercise price (providing that the vesting conditions are met).
	The options were issued to six of Vectus’ employees under the Company’s EIP.
	No
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and+class of all+securities quoted on ASX (_including_the +securities in section 2 if applicable)	Not applicable	Not applicable
	Not applicable
	5 June 2017
	Number	+Class
	14,853,383	Fully paid ordinary shares

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Number and+class of all+securities not quoted on ASX (_including_the +securities in section 2 if applicable)	Number	+Class
	8,521,387 100,000 300,000 75,000 6,000 39,986 6,500	Fully paid ordinary shares (restricted for 24 months until 23 February 2018). Performance Rights (restricted for 24 months until 23 February 2018, issued under the Vectus Employee Incentive Plan (EIP), which expire, if not converted into shares after meeting performance conditions, on 23 February 2019). Performance Rights, issued under the EIP (vest and automatically convert into fully paid ordinary shares on 5 December 2018, providing the Director remains a Director of the Company and providing the Vectus share price is at least 50% higher than the $1.55 IPO price). Deferred Share Awards, issued under the EIP (expiry date of 17 November 2019 if not converted into fully paid ordinary shares after meeting performance conditions). Options with no consideration payable on exercise, with an expiry date of 25 January 2022. All options, issued under the EIP, to vest over three years starting on 1 July 2017, with one third to vest if the share price exceeds $2.00 (10-day VWAP) and two thirds to vest each year based on merit. Options with no consideration payable on exercise, with an expiry date of 25 January 2022. All options, issued under the EIP, vest after three years from the date of issue, with 50% to vest based on the achievement of corporate goals and 50% based on the personal achievement of goals set for each individual employee. Options with no consideration payable on exercise, with an expiry date of 29 May 2022. These five- year options, issued under the EIP, will vest as to one third annually over three years from the date of issue based on the staff members’ satisfactory work performance, as assessed in the annual review.

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

• 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Any fully paid ordinary shares issued will have full participation in any future dividends.

Part 2 - Pro rata issue

Questions 11 to 33 are not applicable

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of[+] securities ( tick one )

• (a) +Securities described in Part 1

• (b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• 37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

Questions 38 to 42 are not applicable

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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Sign here: ............................................................ Date: 5 June 2017 ( ~~Director/~~ Company Secretary)

Print name: Robert J Waring

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• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

Insert number of fully paid[+] ordinary The Company has not sought shareholder securities on issue 12 months before the approval at an Annual General Meeting + issue date or date of agreement to issue under ASX Listing Rule 7.1A. Add the following: • Number of fully paid[+] ordinary securities issued in that 12 month period under an exception in rule 7.2

• Number of fully paid[+] ordinary securities issued in that 12 month period with shareholder approval

• • Number of partly paid[+] ordinary securities that became fully paid in that 12 month period

• Note: • Include only ordinary securities here – other classes of equity securities cannot be added

• • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• • It may be useful to set out issues of securities on different dates as separate line items

• Subtract the number of fully paid[+] ordinary securities cancelled during that 12 month period “A”

• See chapter 19 for defined terms.

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Step 2: Calculate 15% of “A”

Step 2: Calculate 15% of “A”	Step 2: Calculate 15% of “A”
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15
Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period_not counting_those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4 Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items
“C”
Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2
Subtract“C” Note: number must be same as shown in Step 3
Total[“A” x 0.15] – “C”	[Note: this is the remaining placement capacity under rule 7.1]

“A” x 0.15 Note: number must be same as shown in Step 2 Subtract “C” Note: number must be same as shown in Step 3 Total [“A” x 0.15] – “C” [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Part 2

Rule 7.1A – Additional placement capacity for eligible entities

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

“A” Not Applicable Note: number must be same as shown in Step 1 of Part 1

Step 2: Calculate 10% of “A”

“D” 0.10 Note: this value cannot be changed Multiply “A” by 0.10

Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used

Insert number of[+] equity securities issued or agreed to be issued in that 12 month period under rule 7.1A

Notes:

• This applies to equity securities – not just ordinary securities

• • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed

• • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained

• • It may be useful to set out issues of securities on different dates as separate line items

• “E”

• See chapter 19 for defined terms.

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Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

“A” x 0.10 Note: number must be same as shown in Step 2 Subtract “E” Note: number must be same as shown in Step 3 Total [“A” x 0.10] – “E” Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

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