VYSARN LIMITED — Proxy Solicitation & Information Statement 2019

Dec 29, 2019

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Vysarn Limited ACN 124 212 175

Notice of General Meeting and Explanatory Memorandum

Date of Meeting

Thursday 30 January 2020

Time of Meeting

11.30am (WST)

Place of Meeting

108 Outram Street, West Perth

A Proxy Form is enclosed

Please read this Notice of General Meeting and Explanatory Memorandum carefully.

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

Vysarn Limited

ACN 124 212 175

Notice of General Meeting

NOTICE IS GIVEN that a General Meeting of Shareholders of Vysarn Limited ACN 124 212 175 ( Company ) will be held at 108 Outram Street, West Perth, Western Australia on Thursday 30 January 2020 at 11.30am (WST) for the purpose of transacting the business referred to in this Notice of General Meeting.

An Explanatory Memorandum containing information in relation to each of the following Resolutions accompanies this Notice. Terms used in the Resolutions contained in this Notice have the meaning given to them in the glossary in the Explanatory Memorandum.

Agenda

Resolution 1 – Approval to issue Performance Rights to Mr James Clement

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

"That, under and for the purposes of sections 200B and 200E of the Corporations Act, Listing Rule 10.11 and for all other purposes, the Directors are authorised to issue up to 5,000,000 Performance Rights to Mr James Clement and/or his nominee(s), on the terms and conditions set out in the Explanatory Memorandum (including Annexure A to the Explanatory Memorandum)."

Voting exclusion statement : The Company will disregard any votes cast in favour of Resolution 1 by or on behalf of Mr James Clement and/or his nominee(s) and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company) or any Associate of those persons. However, this does not apply to a vote cast in favour of Resolution 1 by:

• (a) a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with the directions given to the proxy or attorney to vote on the resolution in that way; or

• (b) the Chairman of the meeting as proxy or attorney for a person who is entitled to vote on the resolution in accordance with a direction given to the Chairman to vote as the Chairman decides; or

• (c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: (i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting on the resolution; and (ii) the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Further, pursuant to section 200E of the Corporations Act, the Company will disregard any votes cast on Resolution 1 (in any capacity) by or on behalf of the retiree or an associate of the retiree. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution and it is not cast on behalf of the retiree or an associate or the retiree.

Further, a Restricted Voter who is appointed as a proxy must not vote on Resolution 1 unless:

• (a) the appointment specifies the way the proxy is to vote on Resolution 1; or

• (b) the proxy is the Chairman of the Meeting and the appointment expressly authorises the Chairman to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chairman intends to vote any undirected proxies in favour of Resolution 1. Shareholders may also choose to direct the Chairman to vote against Resolution 1 or to abstain from voting.

If you purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.

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Resolution 2 – Approval to issue Incentive Options to Mr James Clement

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

"That, under and for the purpose of Listing Rule 10.11 and for all other purposes, the Directors are authorised to issue up to 10,000,000 Incentive Options to Mr James Clement and/or his nominee(s), on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)."

Voting exclusion statement : The Company will disregard any votes cast in favour of Resolution 2 by or on behalf of Mr James Clement and/or his nominee(s) and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company) or any Associate of those persons. However, this does not apply to a vote cast in favour of Resolution 2 by:

• (a) a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with the directions given to the proxy or attorney to vote on the resolution in that way; or

• (b) the Chairman of the meeting as proxy or attorney for a person who is entitled to vote on the resolution in accordance with a direction given to the Chairman to vote as the Chairman decides; or

• (c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: (i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting on the resolution; and (ii) the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Further, a Restricted Voter who is appointed as a proxy must not vote on Resolution 2 unless:

• (a) the appointment specifies the way the proxy is to vote on Resolution 2; or

• (b) the proxy is the Chairman of the Meeting and the appointment expressly authorises the Chairman to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chairman intends to vote any undirected proxies in favour of Resolution 2. Shareholders may also choose to direct the Chairman to vote against Resolution 2 or to abstain from voting.

If you purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.

Other business

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

By order of the Board

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Kyla Garic Company Secretary

Dated: 24 December 2019

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How to vote

Shareholders can vote by either:

• attending the Meeting and voting in person or by attorney or, in the case of corporate Shareholders, by appointing a corporate representative to attend and vote; or

• appointing a proxy to attend and vote on their behalf using the Proxy Form accompanying this Notice and by submitting their Proxy Form online, by mobile, by post or by facsimile.

Voting in person or by attorney

Shareholders, or their attorneys, who plan to attend the Meeting are asked to arrive at the venue 15 minutes prior to the time designated for the Meeting, if possible, so that their holding may be checked against the Company's share register and their attendance recorded. A certified copy of the Power of Attorney, or the original Power of Attorney, must be received by the Company in the same manner, and by the same time as outlined for proxy forms below.

Voting by a corporation

A Shareholder that is a corporation may appoint an individual to act as its representative and vote in person at the Meeting. The appointment must comply with the requirements of section 250D of the Corporations Act. Written proof of the representative’s appointment (including any authority under which it is signed) must be lodged with, or presented to the Company before the Meeting.

Voting by proxy

• A Shareholder entitled to attend and vote is entitled to appoint not more than two proxies. Each proxy will have the right to vote on a poll and also to speak at the Meeting.

• The appointment of the proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, the votes will be divided equally among the proxies (i.e. where there are two proxies, each proxy may exercise half of the votes).

• A proxy need not be a Shareholder. The proxy can be either an individual or a body corporate.

• If a proxy is not directed how to vote on an item of business, the proxy may generally vote, or abstain from voting, as they think fit. However, where a Restricted Voter is appointed as a proxy, the proxy may only vote on Resolutions 1 and 2 if the proxy is the Chairman of the Meeting and the appointment expressly authorises the Chairman to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

item of business, they are directed not to vote on the Shareholder's behalf on the poll and the Shares that are the subject of the proxy appointment will not be counted in calculating the required majority.

• A Shareholder who returns their Proxy Form with a direction how to vote, but does not nominate the identity of their proxy, will be taken to have appointed the Chairman of the Meeting as their proxy to vote on their behalf. If a Proxy Form is returned with a direction how to vote, but the nominated proxy (who is not the Chairman of the Meeting) does not attend the Meeting or does not vote on the relevant Resolution(s), the Chairman of the Meeting will act in place of the nominated proxy and vote in accordance with any instructions.

•  Proxy appointments in favour of the Chairman of the Meeting, the secretary or any Director that do not contain a direction how to vote will be used, where possible, to support each of the Resolutions proposed in this Notice, provided they are entitled to cast votes as a proxy under the voting exclusion rules which apply to some of the proposed Resolutions. These rules are explained in this Notice.

• Proxies must be received by 11.30am (WST) on 28 January 2020 . Proxies received after this time will be invalid.

• Proxies may be lodged using any of the following methods:

Online : at

http://investor.automic.com.au/#/loginsah

• By mobile : Scan the QR Code on your proxy form and follow the prompts.

• By mail :

Automic GPO Box 5193

Sydney NSW 2001

• By email : meetings@automicgroup.com.au

• By facsimile :

(within Australia) (02) 8583 3040 (outside Australia) +61 2 8583 3040 For all enquiries call: (within Australia) 1300 288 664 (outside Australia) +61 2 9698 5414

Shareholders who are entitled to vote

In accordance with regulation 7.11.37 and 7.11.38 of the Corporations Regulations, the Board has determined that a person's entitlement to vote at the Annual General Meeting will be the entitlement of that person set out in the Register of Shareholders as at 4.00pm (WST) on 28 January 2020.

• Should any resolution, other than those specified in this Notice, be proposed at the Meeting, a proxy may vote on that resolution as they think fit.

• If a proxy is instructed to abstain from voting on an

Vysarn Limited – Notice of General Meeting

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ACN 124 212 175

Vysarn Limited

Explanatory Memorandum

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

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

Background to Resolutions 1 and 2

As announced by the Company to ASX on 28 November 2019, Mr James Clement has been appointed as the Company's Chief Executive Officer and Managing Director and is expected to commence in this role in February 2020.

As noted in the announcement, as part of his remuneration package and subject to shareholder approval, the Company will issue Mr Clement 5,000,000 Performance Rights and 10,000,000 Incentive Options as performance incentives to align his interests with that of shareholders and the performance and success of the Company. The terms and conditions of the Performance Rights are set out in Annexure A and the terms and conditions of the Incentives Options are set out in Annexure B.

Resolutions 1 and 2 seek shareholder approval to issue the Performance Rights and Incentive Options to Mr Clement (or his nominees).

The grant of the Performance Rights and Incentive Options will encourage Mr Clement, as the Company’s Chief Executive Officer and Managing Director, to have a greater involvement in the achievement of the Company’s objectives and to provide an incentive to strive to that end by participating in the future growth and prosperity of the Company through Share ownership. Under the Company’s current circumstances, the Directors consider that the incentive intended for Mr Clement represented by the grant of 5,000,000 Performance Rights and 10,000,000 Incentive Options is a cost effective and efficient means for the Company to provide a reward and an incentive, as opposed to alternative forms of incentive, such as the payment of additional cash compensation.

If Resolution 1 is not passed, the Company will not be able to proceed with the issue of Performance Rights to Mr Clement. If Resolution 2 is not passed, the Company will not be able to proceed with the issue of Incentive Options to Mr Clement. Under the employment agreement between the Company and Mr Clement, the appointment of Mr Clement as Chief Executive Officer and Managing Director is not conditional on the issue of the Performance Rights and/or the Incentive Options. Therefore, the Company expects that Mr Clement will commence in this role even if Resolution 1 and/or 2 is not passed. However, as detailed above, the Company notes that a key objective of the proposed issue of the Performance Rights and Incentive Options to Mr Clement is to encourage Mr Clement, as the Company’s Chief Executive Officer and Managing Director, to have a greater involvement in the achievement of the Company’s objectives and to provide an incentive to strive to that end by participating in the future growth and prosperity of the Company through Share ownership. As such, if Resolution 1 and/or Resolution 2 is not passed, the Company may consider alternative means of incentivising Mr Clement to ensure this objective is met, which may potentially involve the Company convening a further meeting to seek approval for a restructured long term incentive package for Mr Clement.

The number of Performance Rights and the exercise price of the Incentive Options proposed to be granted to Mr Clement, subject to Shareholder approval, has been determined based upon a consideration of a number of factors including the critical role Mr Clement will play in the future operations of the Company and implementation of its growth strategy, the remuneration paid to CEO and Managing Directors of peer ASX listed companies, and the desire to attract someone of the calibre of Mr Clement to the Company.

As at the date of this Notice, Mr Clement has a relevant interest in 3,000,000 Shares in the Company.

Mr Clement's proposed total remuneration package as detailed in the 28 November 2019 announcement is as follows:

(a) Base Salary: $350,000 per annum inclusive of mandatory superannuation contributions

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• (b) Short Term Incentive ( STI ): up to $100,000 per annum, subject to the achievement of specified STI key performance indicators; and

• (c) Long Term Incentive ( LTI ): subject to shareholder approval the subject of Resolutions 1 and 2, 5,000,000 Performance Rights on the terms and conditions as set out in Annexure A and 10,000,000 Incentive Options on the terms and conditions as set out in Annexure B.

The Performance Rights are rights to acquire Shares in the Company subject to the satisfaction of specified performance conditions within specified performance periods. As detailed in Annexure A, the performance conditions of Mr Clement’s Performance Rights are tied to growth in the Company’s earnings per Share, which directly aligns his interests with that of shareholders and the performance and success of the Company.

The Incentive Options have an exercise price of $0.075 and expire 3 years from the date of issue. 5,000,000 Incentive Options vest when the Company’s 30 business days VWAP of Shares as traded on ASX reaches $0.085 ( Class A Options ) and 5,000,000 the Incentive Options vest when the Company’s 30 business days VWAP reaches $0.10 ( Class B Options ).

The Company has obtained an independent valuation of the Performance Rights and Incentive Options proposed to be issued to Mr Clement. Details of these valuations are provided in Annexure C. As detailed in this Annexure, the indicative value of each:

• (a) Performance Right is nil, based on the assumption that the Performance Right hurdles will not be met. See further details in Annexure C;

• (b) Class A Option (which is a theoretical valuation using the trinomial model) is $0.0127) and;

• (c) Class B Option (which is a theoretical valuation using the trinomial model) is $0.0119.

The total financial benefit to be provided to Mr Clement under his remuneration package taking into account the theoretical valuations of the Performance Rights and Incentive Options is detailed below:

Base Salary (inclusive of superannuation)	Value of Performance rights	Value of Incentive Options*	Total financial benefit
$350,000	Nil	$123,000	$473,000

If passed, Resolutions 1 and 2 will give the Directors power to grant a total of 5,000,000 Performance Rights on the terms and conditions as set out in Annexure A and 10,000,000 Incentive Options on the terms and conditions as set out in Annexure B.

As at the date of this Notice, the Company has 297,658,248 Shares, 5,000,000 Performance Rights and 10,000,000 Options on issue.

If all Performance Rights proposed to be granted to Mr Clement as detailed are exercised, and assuming all existing Convertible Securities. have been exercised, the effect of the exercise of Mr Clements’s Performance Rights would be to dilute the shareholding of existing Shareholders (including new shareholders as a result of the existing Options and Performance Rights being exercised) by 1.6%.

If all Incentive Options proposed to be granted to Mr Clement as detailed above are exercised, and assuming all existing Convertible Securities on issue have been exercised, the effect of the exercise of the Incentive Options would be to dilute the shareholding of existing Shareholders (including new shareholders as a result of the existing Options and Performance Rights being exercised) by 3.1%. The market price of the Company’s Shares during the period of the Incentive Options will normally determine whether or not the Incentive Options are exercised. At the time any Incentive Options are exercised and Shares are issued pursuant to the exercise, the Company’s Shares may be trading at a price which is higher than the exercise price of the Incentive Options. The Incentive Options will not be quoted on ASX.

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The Company was reinstated to the Official List of ASX on 11 September 2019 following completion of a transaction under which it acquired various waterwell drilling assets from a subsidiary of Ausdrill Limited. The following table gives details of the highest, lowest and latest closing prices of the Company’s Shares trading on ASX from 11 September 2019 to 23 December 2019:

Highestprice/date	Lowestprice/date	Latestprice/date
6.7c / 13 December 2019	5.7c / 24 September 2019, 15 and 17 October 2019 and 18 to 21 November 2019	6.5c / 23 December 2019

Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of a public company unless either:

• (a) the giving of the financial benefit falls within one of the nominated exceptions to the provision; or

• (b) Shareholder approval is obtained prior to the giving of the financial benefit and the benefit is given within 15 months after obtaining such approval.

Mr Clement is a proposed Director of the Company. As such, for the purposes of Chapter 2E of the Corporations Act, Mr Clement is a related party of the Company. The grant of the Performance Rights and Incentive Options is a financial benefit.

One of the nominated exceptions referred to in paragraph (a) above is where the financial benefit is remuneration to a related party as an officer or employee of the company, and to give the remuneration would be reasonable given the circumstances of the public company, and the related party’s circumstances (including the responsibilities involved in the office or employment). The Board has determined that the proposed grant of the Performance Rights and the Incentive Options to Mr Clement is a benefit that constitutes reasonable remuneration for the purposes of section 211 of the Corporations Act. Accordingly, Shareholder approval is not being sought for the purposes of Chapter 2E of the Corporations Act but is being sought for the purposes of Listing Rule 10.11 and sections 200B and 200E of the Corporations Act as discussed below.

Resolution 1 – Approval to issue Performance Rights to Mr James Clement

Listing Rules 10.11 and 10.13

As noted above, the Company is proposing to issue 5,000,000 Performance Rights to Mr James Clement.

Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, a listed company must not issue or agree to issue equity securities to:

• 10.11.1 a related party;

• 10.11.2 a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the company;

• 10.11.3 a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holder in the company and who has nominated a director to the board of the company pursuant to a relevant agreement which gives them a right or expectation to do so;

• 10.11.4 an associate of a person referred to in Listing Rule 10.11.1 to 10.11.3; or

• 10.11.5 a person whose relationship with the company or a person referred to in Listing Rules 10.11.1 to 10.11.4 is such that, in ASX's opinion, the issue or agreement should be approved by its shareholders,

unless it obtains the approval of its shareholders.

For the purposes of Listing Rule 10.11, Mr Clement is a related party of the Company as he is a proposed director of the Company. The issue falls within Listing Rule 10.11 and does not fall within any of the exceptions in Listing Rule 10.12. It therefore requires the approval of the Company's shareholders under Listing Rule 10.11. Accordingly, Resolution 1 seeks Shareholder approval to issue 5,000,000 Performance Rights to Mr Clement for the purposes of Listing Rule 10.11.

In accordance with Listing Rule 10.13, the following information is provided in relation to Resolution 1:

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The name of the person	The Performance Rights will be issued to Mr James Clement and/or his nominees.
Listing Rule 10.11 Category	Mr Clement is a related party of the Company as he is a proposed director of the Company.
Number of class of securities to be issued	5,000,000 Performance Rights
Summary of material terms of Performance Rights	The terms and conditions of the Performance Rights are set out in Annexure A.
The date by which the Company will issue the securities	The Company will issue the Performance Rights on one date not more than one month after the date of the Meeting.
The price or other consideration the Company will receive for the issue	The Performance Rights will be issued as a performance incentive under Mr Clement's employment agreement with the Company, and as such will be issued for nil cash consideration.
Purpose of the issue, including intended use of funds raised	The Performance Rights will be issued as a performance incentive and as part of Mr Clement's proposed remuneration package. No funds will be raised from the issue of the Performance Rights.
Details of Mr Clement's remuneration package	Please refer to Mr Clement's remuneration package as set out on page 1 above.
Material terms of agreement	The Performance Rights will be issued under the terms of the employment agreement between the Company and Mr Clement, the material terms of which are: - Commencement Date: 3 February 2020 (or as otherwise agreed between the parties) - Remuneration: see page 1 - Term: No fixed term. Ongoing until terminated by either party in accordance with the agreement. - Termination: Either party may terminate by 3 months notice. The Company may terminate immediately in the event the executive engages in serious misconduct, including serious breach of the agreement, being charged with a criminal offence, being declared bankrupt, becoming of unsound mind or other similar grounds. - Restraint: a 6 month restraint provision applies.
A voting exclusion statement	A voting exclusion statement is included in the Notice in relation to Resolution 1.

Sections 200B and 200E of the Corporations Acts

The Corporations Act restricts the benefits which can be given to certain persons (those who hold a managerial or executive office, as defined in the Corporations Act) on leaving their employment with the Company or a related body corporate (the Group ). Under Section 200B of the Corporations Act, a company may only give a person a benefit in connection with their ceasing to hold a managerial or executive office (as defined in the Corporations Act) in the Group if it is approved by shareholders or an exemption applies.

The provisions of the Corporations Act relating to termination benefits apply to a director. Additionally, persons subject to the restrictions remain subject to them for at least three years after they cease to hold a managerial or executive officer.

Under the termination benefits laws, the term “benefit” has a wide operation and includes automatic or accelerated vesting of share-based payments for a person or the exercise of a discretion to allow a person to maintain a benefit

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they would not otherwise be entitled to retain on, or as a result of, retirement from their position as a director of the company.

The terms of the Performance Rights give the Board the discretion to permit Mr Clement to continue to hold the Performance Rights even if he ceases to be employed by the Company ( Potential Retirement Benefit ). The Board has formed the view that the Potential Retirement Benefit may constitute a benefit for the purposes of section 200B of the Corporations Act. Shareholder approval is therefore being sought under sections 200B and 200E of the Corporations Act for any Potential Retirement Benefit granted to Mr Clement so that the value of the Potential Retirement Benefit will be disregarded when calculating the cap for the purposes of calculating the permissible termination benefits payable under the Corporations Act.

Section 200E of the Corporations Act requires the following information to be provided to Shareholders in approving a potential termination benefit as follows:

Details of the Potential Retirement Benefit	The terms of the Performance Rights give the Board the discretion to permit Mr Clement to continue to hold the Performance Rights even if he ceases to be employed by the Company in circumstances other than death or total and permanent disability, bona fide redundancy, bona fide retirement or removal from a position of managerial or executive office. For example, if Mr Clement ceases to be an employee because his employment was terminated for cause, this would ordinarily result in all Performance Rights lapsing. However, Performance Right terms give the Board discretion to waive or amend this provision such that Mr Clement continues to hold some or all of those Performance Rights.
Value of the Potential Retirement Benefit	The value of the potential termination benefits cannot be quantified at this point, as the manner in which the value is calculated depends on various matters, events and circumstances that will, or are likely to, affect the calculation of the value. Specifically, the value of a particular benefit will depend on factors such as the Company's Share price at the time and the number and value of the Performance Rights held byMr Clements at that time.
Voting exclusion statement	A voting exclusion statement has been included in the Notice in relation to Resolution 1.

Resolution 2 – Approval to issue Incentive Options to Mr James Clement

Listing Rules 10.11 and 10.13

As noted above, the Company is proposing to issue 10,000,000 Incentive Options to Mr James Clement.

A description of Listing Rule 10.11 is set out above in relation to Resolution 1 on page 3 of this Explanatory Memorandum.

For the purposes of Listing Rule 10.11, Mr Clement is a related party of the Company as he is a proposed director of the Company. The issue falls within Listing Rule 10.11 and does not fall within any of the exceptions in Listing Rule 10.12. It therefore requires the approval of the Company's shareholders under Listing Rule 10.11. Accordingly, Resolution 2 seeks Shareholder approval to issue 10,000,000 Incentive Options to Mr Clement for the purposes of Listing Rule 10.11.

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In accordance with Listing Rule 10.13, the following information is provided in relation to Resolution 2:

The name of the person	The Incentive Options will be issued to Mr James Clement and/or his nominees.
Listing Rule 10.11 Category	Mr Clement is a related party of the Company as he is a proposed director of the Company.
Number of class of securities to be issued	10,000,000 Incentive Options comprising 5,000,000 Class A Options and 5,000,000 Class B Options.
Summary of material terms of Performance Rights	The Incentive Options have an exercise price of $0.075 and expire 3 years from the date of issue. The Class A Options vest when the Company’s 30 business days VWAP of Shares as traded on ASX reaches $0.085 and the Class B Options vest when the Company’s 30 business days VWAP reaches $0.10. The full terms and conditions of the Incentive Options are set out in Annexure B.
The date by which the Company will issue the securities	The Company will issue the Incentive Options on one date not more than one month after the date of the Meeting.
The price or other consideration the Company will receive for the issue	The Incentive Options will be issued as a performance incentive under Mr Clement's employment agreement with the Company, and as such will be issued for nil cash consideration.
Purpose of the issue, including intended use of funds raised	The Incentive Options will be issued as a performance incentive and as part of Mr Clement's proposed remuneration package. No funds will be raised from the issue of the Incentive Options.
Details of Mr Clement's remuneration package	Please refer to Mr Clement's remuneration package as set out on page 1 above.
Material terms of agreement	The Incentive Options will be issued under the terms of the employment agreement between the Company and Mr Clement, the material terms of which are provided on page 3.
A voting exclusion statement	A voting exclusion statement is included in the Notice in relation to Resolution 2.

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Glossary

$ means Australian dollars.

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

Annexure A means the annexure to the Explanatory Memorandum marked A.

Annexure B means the annexure to the Explanatory Memorandum marked B.

Annexure C means the annexure to the Explanatory Memorandum marked C.

Associate has the meaning given in the Listing Rules.

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

Board means the Directors.

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

Child Entity has the meaning given to that term in the Listing Rules.

Class A Option means an option to acquire a Share on the terms and conditions set out in Annexure B.

Class B Options means an option to acquire a Share on the terms and conditions set out in Annexure B. Closely Related Party has the meaning given to that term in the Corporations Act.

Company means Vysarn Limited ABN 34 108 102 432.

Constitution means the Company's constitution, as at the date of this Notice.

Convertible Securities means Options and performance rights, being a right to acquire a Share subject to the satisfaction of specified performance conditions.

Corporations Act means Corporations Act 2001 (Cth).

Directors means the directors of the Company.

Equity Securities has the meaning set out in the ASX Listing Rules.

Explanatory Memorandum means the explanatory memorandum accompanying this Notice.

Incentive Options means the Options proposed to be issued to Mr James Clement the subject of Resolution 2, comprising 5,000,000 Class A Options and 5,000,000 Class B Options.

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

Listing Rules means the ASX Listing Rules.

Meeting means the General Meeting convened by the Notice.

Notice means this Notice of General Meeting.

Option means an option to acquire a Share.

Performance Right means a right to acquire a Share subject to the satisfaction of specified performance conditions on the terms and conditions set out in Annexure A.

Resolution means a resolution contained in the Notice.

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

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

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

VWAP means volume weighted average price.

WST means Australian Western Standard Time.

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Annexure A – Terms and Conditions of Performance Rights

1. NUMBER OF PERFORMANCE RIGHTS AND ISSUE PRICE

The Company will grant 5,000,000 Performance Rights to Mr James Clement (or his nominees) for no cash consideration.

1. EXPIRY DATE AND PERFORMANCE CONDITIONS

• (a) Each Performance Right shall expire 5 years from the date of grant of the Performance Right ( Expiry Date ).

• (b) Before the Performance Rights vest and can be exercised:

(i) the vesting conditions for each tranche of Performance Rights is set out below:

Tranche	Number of Performance Rights to vest	Condition Test Date	Vesting Conditions
1	1,666,666	30 June 2022	• Employment Condition • Cumulative EPS Condition
2	1,666,666	30 June 2023
3	1,666,668	30 June 2024

where the:

Employment Condition - means the holder of the Performance Rights remains employed by the Company at the Condition Test Date; and

Cumulative EPS Condition - means the earnings per Share (EPS) based on the achievement of compound annual growth in the Company’s EPS of 15% per annum from the financial year 30 June 2020, subject to a minimum EPS of $0.01 for the financial year ending 30 June 2020. The EPS calculation will be based on the Company’s cumulative net profit after tax up until the relevant Condition Test Date divided by the weighted average number of Shares on issue over the relevant period, taking into account any new Shares issued (or cancelled by the Company in the relevant period).

( together, the Performance Conditions).

• (c) Subject to the satisfaction of the relevant Performance Conditions, the Performance Rights will vest in equal proportions after the end of the financial years ending 30 June 2022, 30 June 2023 and 30 June 2024.

• (d) If the Performance Conditions for the Performance Rights are not satisfied for the financial years ended 30 June 2020 or 30 June 2021 but subsequently satisfied on a cumulative basis for the financial year ended 30 June 2022, then the Performance Conditions for the prior two financial years will also be deemed to have been satisfied.

• (e) The Board, in its sole discretion, will determine if the relevant Performance Condition has been satisfied.

• (f) If the Board determines, in its sole discretion, that the relevant Performance Condition has been satisfied prior to the earlier of the Condition Test Date (if any) or Expiry Date, then the Company shall notify the Holder in writing that the Performance Right has vested (such Performance Right being a Vested Performance Right ).

• (g) The applicable Performance Rights shall immediately lapse and the Company shall notify the Holder of the same (however, any failure by the Company to make such notification will have no impact on the lapse of the applicable Performance Right(s)), if:

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• (i) any Performance Condition is not satisfied by the earlier of the Condition Test Date (if any) or Expiry Date; or

• (ii) the Board determines in its sole discretion that any applicable Performance Conditions have not been met and cannot be met prior to the Condition Test Date (if any) or Expiry Date.

2. QUOTATION

The Performance Rights are not quoted. No application for the quotation of Performance Rights will be made by the Company.

3. EXERCISE OF VESTED PERFORMANCE RIGHTS

• (a) Subject to the remainder of this clause 3 and any adjustment prescribed hereby, the Vested Performance Right may be exercised at any time during the Exercise Period for that Vested Performance Right by giving the Company an Exercise Notice signed by the Holder.

• (b) The issue of Performance Right Shares to a Holder following the exercise of Vested Performance Rights is subject to such issue not contravening the Corporations Act, the Listing Rules, any Class Order on which the Company is reliant, the Securities Trading Policy or any other applicable law.

• (c) A Holder must exercise Vested Performance Rights in multiples of 1,000 or such other multiple as the Board determines unless the Holder exercises all Vested Performance Rights able to be exercised by the Holder at that time. The exercise by a Holder of only some of the Vested Performance Rights held by the Holder will not affect the Holder's right, during the relevant Exercise Period, to exercise at a later date Vested Performance Rights held by the Holder.

• (d) Following the exercise of Vested Performance Rights in accordance with clause 4(a), the Company must:

• (i) issue the relevant number of Performance Right Shares to the Holder;

• (ii) apply for official quotation on ASX of the Performance Right Shares within the period required by ASX; and

• (iii) if required to enable the Performance Rights Shares to be freely tradeable, subject to clause 4(e), within 5 Business Days of the issue of the Performance Right Shares under clause 4(i), issue a cleansing notice under section 708A(5) of the Corporations Act.

• (e) If the Company is not permitted to issue a cleansing notice under section 708A(5) of the Corporations Act within the time required under clause 4(d)(iii), or for any reason that cleansing notice is not effective to enable the Performance Right Shares to be freely tradable, the Company must either:

• (i) issue a prospectus on the date that the Performance Right Shares are issued (in which case the date for issuing those Performance Right Shares may be extended to not more than 25 Business Days after the exercise of the Vested Performance Rights, to allow the Company time to prepare that prospectus); or

• (ii) issue a prospectus before the date that the Performance Right Shares are issued, provided that offers under that prospectus must still be open for acceptance on the date those Performance Right Shares are issued,

in accordance with the requirements of section 708A(11) of the Corporations Act.

• (f) Subject to clause 4(c), if the Holder dies during the term of a Vested Performance Right, the Holder's legal personal representative shall stand in the place of the Holder for the purposes of clause 3(d), subject only to prior production to the Company of such evidence as would be required to permit the legal personal representative to become registered as a shareholder in respect of any Shares held by the Holder.

• (g) From and including the date of issue to a Holder of any Performance Right Shares, the Holder must not sell or transfer those Performance Right Shares if to do so would be in breach of the insider trading provisions of the Corporations Act (Part 7.10 Division 3), section 707(3) of the Corporations Act, any other applicable law or any Securities Trading Policy.

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• (h) From and including the date of issue to a Holder of any Performance Right Shares the Holder shall:

• (i) be the absolute indefeasible beneficial owner of those Performance Right Shares; and

• (ii) subject to clause 3(g), the Corporations Act, the Listing Rules, any Securities Trading Policy, any Class Order on which the Company is relying or any other applicable law, be entitled to sell, transfer, dispose of, mortgage, pledge or otherwise deal with those Shares or any interest therein in every manner whatsoever.

• (i) Subject to clause 3(f), where the Holder dies or becomes bankrupt the legal personal representative of the deceased Holder or the trustee in bankruptcy of the bankrupt Holder, as the case may be, shall be the only person recognised as being entitled to the Performance Right Shares issuable to the Holder.

• (j) All Performance Right Shares will rank equally in all respects with all previously issued Shares at the time being on issue except as regards to any entitlements attaching to such Shares by reference to a record date that is prior to the date of issue of the Performance Right Shares.

4. FORFEITURE AND CESSATION AS AN ELIGIBLE PERSON IN RELATION TO PERFORMANCE RIGHTS

Lapse of a Performance Right

• (a) An unvested Performance Right will lapse upon the earliest of the events specified in clauses 1(g) and clauses 5(b), 5(c) and 5(d) (if applicable to that class of Performance Right) occurring.

Fraudulent or dishonest action

• (b) Unless the Board resolves otherwise, where, in the opinion of the Board, an Eligible Holder of Performance Rights at any time:

• (i) acts or has acted fraudulently or dishonestly; or

• (ii) is in breach or has breached any of his or her obligations to the Company,

the Board may do one or more of the following:

• (iii) deem any unvested Performance Rights of the Holder to have immediately lapsed;

• (iv) deem all or any Performance Right Shares issued to the Holder on the exercise of Performance Rights to be forfeited, in which event the Holder will be deemed to either have:

• (A) agreed to sell such Performance Right Shares to the Company pursuant to a share scheme buy-back (as defined in the Corporations Act) for no consideration; or

• (B) appointed an officer of the Company as his or her agent to sell such Shares; and

• (C) where any Performance Right Shares issued to the Holder on the exercise of Performance Rights have been sold by the Holder, require the Holder to pay all or part of the net proceeds of that sale to the Company.

Ceasing to be an Eligible Person

• (c) Subject to clauses 5(d) and 5(e), where an Eligible Holder of Performance Rights ceases to be an Eligible Person before the Performance Rights then held by him become Vested Performance Rights by reason of his:

• (i) death or total and permanent disability,

• (ii) bona fide redundancy;

• (iii) bona fide retirement, or

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• (iv) removal from a position of managerial or executive office (as defined in the Corporations Act) with the Company or a related body corporate (as defined in the Corporations Act),

unless the Board determines otherwise, in respect of those Performance Rights which have not satisfied the Performance Condition but have not lapsed, the Holder will be permitted to continue to hold those Performance Rights as if the Eligible Holder was still an Eligible Person.

Ceasing to satisfy relevant conditions

• (d) Without prejudice to clause 5(b), unless the Board determines otherwise:

• (i) if an Eligible Holder of Performance Rights ceases to be an Eligible Person for any reason other than contemplated by clause 5(c); or

• (ii) if a Holder who is a Nominee ceases to meet the requirements to qualify as a Nominee,

all Performance Rights then held by the Holder will lapse immediately.

When employment or engagement ceases

• (e) Notwithstanding clause 5(c), and subject to all applicable laws, unless otherwise resolved by the Board, an Eligible Holder of Performance Rights granted an approved leave of absence and who exercises their right to return to work under any applicable award, enterprise agreement, other agreement, statute or regulation before the exercise of an Performance Right will be treated for the purposes of clauses 5(c) and 5(d) as not having ceased to be an Eligible Person.

5. TRANSFER OF RIGHTS

Except on the death of a Holder, Performance Rights may not be transferred, assigned or novated except with the prior approval of the Board.

6.

SECURITY INTEREST

Subject to clause 5, Holders must not grant a Security Interest in or over or otherwise dispose of or deal with any Performance Rights or any interest in them until the underlying Performance Right Shares are issued to that Holder, and any such Security Interest or disposal or dealing will not be recognised in any manner by the Company and shall at the election of the Board result in the Performance Rights being declared to lapse immediately.

7. DIVIDEND AND VOTING RIGHTS

Performance Rights will not confer upon the Holder the right to dividends or to vote as a Shareholder until the Vested Performance Rights have been exercised and the Performance Right Shares issued or transferred to the Holder.

8. TAKEOVER, SCHEME OF ARRANGEMENT AND CHANGE IN CONTROL

If any of the following events occurs, or the Board determines that such event is likely to occur:

• (a) the Company announcing that its Shareholders have at a Court convened meeting of Shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement (excluding a merger by way of scheme of arrangement for the purposes of a corporate restructure (including change of domicile, consolidation, sub-division, reduction or return) of the issued capital of the Company) and the Court, by order, approves the scheme of arrangement;

• (b) a Takeover Bid:

• (i) is announced;

• (ii) has become unconditional; and

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(iii) the person making the Takeover Bid has a Relevant Interest in 50% or more of the Shares;

• (c) any person acquires a Relevant Interest in 50.1% or more of the Shares by any other means; or

• (d) any person acquires Control of the Company,

(each, a Change in Control Event ) unless the Board determines otherwise:

• (e) if the Change in Control Event occurs within 12 months of the date of issue of the Performance Rights, the Tranche 1 Performance Rights (which have not already vested or lapsed) shall vest and become Vested Performance Rights;

• (f) if the Change in Control Event occurs after 12 months but within 24 months of the date of issue of the Performance Rights, the Tranche 1 Performance Rights and Tranche 2 Performance Rights (which have not already vested or lapsed) shall vest and become Vested Performance Rights; and

• (g) if the Change in Control Event occurs after 24 months of the date of issue of the Performance Rights, all Performance Rights which have not already vested or lapsed shall vest and become Vested Performance Rights.

The Board shall also have discretion to deal with the Performance Rights in such other manner that allows the holder of the Performance Right to participate in and/or benefit from any Change in Control Event.

9. PRO RATA ISSUE OF SECURITIES

• (a) If during the term of any Performance Right, the Company makes a pro rata issue of securities to the Shareholders by way of a rights issue, a Holder shall not be entitled to participate in the rights issue in respect of any Performance Rights, only issued Performance Right Shares.

• (b) A Holder will not be entitled to any adjustment to the number of Performance Right Shares he is entitled to or adjustment to any Performance Condition which is based, in whole or in part, upon the Company’s share price, as a result of the Company undertaking a rights issue.

10. ADJUSTMENT FOR BONUS ISSUE

If, during the term of any Performance Right, securities are issued pro rata to Shareholders generally by way of bonus issue, the number of Performance Right Shares to which each Holder is then entitled, shall be increased by that number of securities which the Holder would have been issued if the Performance Rights then held by the Holder were exercised immediately prior to the record date for the bonus issue.

11.

ADJUSTMENT FOR RECONSTRUCTION

In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company (not being a reconstruction referred to in clauses 9 and 10 above), the number of Performance Rights shall be reconstructed (as appropriate) in accordance with the Listing Rules (applying at that time) and in a manner which will not result in any additional benefits being conferred on a Holder which is not conferred on holders of Shares generally, but in all other respects the terms of exercise will remain unchanged.

12. ACCUMULATION OF ADJUSTMENTS

Clauses 9, 10 and 11 are cumulative and shall apply (without duplication) to successive issues, subdivisions, combinations, consolidations, distributions and any other events that require adjustment of the number of Shares or the number or kind of securities that can be acquired upon the exercise of Performance Rights.

13. PARTICIPATION IN NEW ISSUES

There are no participation rights or entitlements inherent in the Performance Rights and holders will not be entitled to participate in new issues of capital offered to the Company's shareholders during the currency of the Performance Rights.

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14. DEFINITIONS

Class Order means an instrument issued by ASIC that, among other things, exempts a person(s) from compliance with certain provisions of the Corporations Act, or other acts administered by ASIC.

Company means Vysarn Limited ACN 124 212 175.

Control has the meaning given in section 50AA of the Corporations Act.

Corporations Act means the Corporations Act 2001 (Cth).

Eligible Person means an employee, director or contractor of the Company or a related body corporate (as defined in the Corporations Act) or such other person as determined by the Board to be an Eligible Person.

Eligible Holder means Mr James Clement.

Exercise Notice means a duly completed exercise notice of a Vested Performance Right signed by the Eligible Holder.

Exercise Period subject to clause 3, means the period up to the Expiry Date during which a Vested Performance Right may be exercised.

Expiry Date has the meaning given in clause 1(a).

Holder means an Eligible Holder or, where the Eligible Holder directed their Performance Rights to be held by a Nominee, that Nominee.

Performance Condition has the meaning given in clause 1(b).

Performance Right means a right granted on the terms and conditions in this Schedule to be issued one Share.

Performance Right Share means, in respect of any Performance Right, the Share a Holder is entitled to subscribe for, or take a transfer of, by reason of the grant to him of that Performance Right, including any securities resulting from an adjustment made thereto pursuant to the terms and conditions of the Performance Right.

Relevant Interest has the meaning given in the Corporations Act.

Security Interest means any mortgage, pledge, charge, lien, encumbrance, assignment, security, interest, preferential right, set-off or any other security arrangement.

Securities Trading Policy means any policy established by the Company applicable to trading in securities of the Company.

Share means a fully paid ordinary share in the Company.

Shareholder means a holder of a Share.

Takeover Bid has the meaning given to that term in section 9 of the Corporations Act.

Vested Performance Right subject to clause 8, has the meaning given in clause 1(f).

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Annexure B – Terms and Conditions of Incentive Options

1. Entitlement

The Company will issue a total of:

• (a) 5,000,000 Class A Options ; and

• (b) 5,000,000 Class B Options ,

(collectively, the Incentive Options ) to James Clement (or his nominees). Each Incentive Option entitles the holder (subject to these terms and conditions) to subscribe for one fully paid ordinary share ( Share ) in Vysarn Limited ACN 124 212 175 ( Company ) upon exercise of the Incentive Option.

2. Exercise Price

The exercise price for each Incentive Option is $0.075 each ( Exercise Price ).

3.

Expiry Date

Each Incentive Option will expire 3 years from the date of issue ( Expiry Date ).

An Incentive Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

4.

Vesting Conditions and Exercise Period

The Incentive Options are exercisable at any time after the occurrence of any of the following:

• (a) for the:

• (i) Class A Options, the Company’s 30 business days volume weighted average price of Shares as traded on ASX reaches $0.085; and

• (ii) Class B Options, the Company’s 30 business days volume weighted average price of Shares as traded on ASX reaches $0.10; or

• (b) a Change of Control Event,

and before 5.00pm (WST) on the Expiry Date ( Exercise Period ). The exercise of Incentive Options is subject at all times to the Corporations Act.

5. Notice of Exercise

The Incentive Options may be exercised during the Exercise Period by notice in writing to the Company ( Notice of Exercise ) and payment of the relevant Exercise Price for each Incentive Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

6.

Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt by the Company of the Notice of Exercise and the date of receipt of the payment of the relevant Exercise Price for each Incentive Option being exercised in cleared funds ( Exercise Date ).

7. Timing of issue of the Shares on exercise

Within 15 Business Days after the later of the following:

• (a) receipt of a Notice of Exercise given in accordance with these terms and conditions and payment of the Exercise Price for each Incentive Option being exercised; and

• (b) when excluded information in respect of the Company (as defined in section 708A(7) of the Corporations Act) (if any) ceases to be excluded information. If there is no such information, the relevant date will be the date of receipt of a Notice of Exercise as detailed in item 7(a) above,

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the Company will:

• (c) allot and issue the Shares pursuant to the exercise of the Incentive Options;

• (d) as soon as reasonably practicable and if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and

• (e) apply for official quotation on ASX of Shares issued pursuant to the exercise of the Incentive Options.

8. Shares issued on exercise

The Shares issued on exercise of the Incentive Options rank equally with the then issued shares of the Company.

9. Quotation of the Shares issued on exercise

If admitted to the official list of ASX at the time, application will be made by the Company to ASX for quotation of the Shares issued upon the exercise of the Incentive Options.

10. Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the Listing Rules at the time of the reconstruction.

11.

Participation in new issues

There are no participation rights or entitlements inherent in the Incentive Options and holders will not be entitled to participate in new issues of capital offered to the Company's shareholders during the currency of the Incentive Options without exercising the Incentive Options.

12. Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction, of dividends or by way of dividend reinvestment):

• (a) the number of Shares which must be issued on the exercise of an Incentive Option will be increased by the number of Shares which the holder would have received if the Incentive Options held by the holder had been exercised before the record date for the bonus issue; and

• (b) no change will be made to the Exercise Price.

13. Adjustment for rights issue

If the Company makes an issue of Shares pro rata to existing shareholders (other than an issue in lieu of in satisfaction of dividends or by way of dividend reinvestment) the Exercise Price of an Incentive Option will be reduced according to the following formula:

• New exercise price = O - E[P (S+D)] N+1

• O = the old Exercise Price of the Incentive Option.

• E =

• the number of underlying Shares into which one Incentive Option is exercisable.

• P = average market price per Share weighted by reference to volume of the underlying Shares during the 5 trading days ending on the day before the ex rights date or ex entitlements date.

• S = the subscription price of a Share under the pro rata issue.

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• D = the dividend due but not yet paid on the existing underlying Shares (except those to be issued under the pro rata issue).

• N = the number of Shares with rights or entitlements that must be held to receive a right to one new Share.

14. Unquoted

The Company will not apply for quotation of the Incentive Options on ASX.

15. Transferability

The Incentive Options are non-transferable.

16. Definitions

Change of Control Event occurs when any of the following events occurs, or the Board determines that such event is likely to occur:

• (a) the Company announcing that its Shareholders have at a Court convened meeting of Shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement (excluding a merger by way of scheme of arrangement for the purposes of a corporate restructure (including change of domicile, consolidation, sub-division, reduction or return) of the issued capital of the Company) and the Court, by order, approves the scheme of arrangement;

• (b) a Takeover Bid is announced, has become unconditional and the person making the Takeover Bid has a Relevant Interest in 50% or more of the Shares;

• (c) any person acquires a Relevant Interest in 50.1% or more of the Shares by any other means; or

• (d) any person acquires Control of the Company.

Company means Vysarn Limited ACN 124 212 175.

Control has the meaning given in section 50AA of the Corporations Act.

Corporations Act means the Corporations Act 2001 (Cth).

Relevant Interest has the meaning given in the Corporations Act.

Share means a fully paid ordinary shares in the capital of the Company.

Takeover Bid has the meaning given to that term in section 9 of the Corporations Act.

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Annexure C – Performance Rights and Incentive Option Valuations

Performance Rights Valuation

The independent valuer has valued the Performance Rights to be issued to Mr Clement to be nil. In reaching this valuation, the valuer requested probabilities for the likelihood of the Performance Rights hurdles being met and were informed by the Company that it is assumed the hurdles will not be met. However the valuer has noted that in the event the performance hurdles for the Performance Rights are met, the value of the Performance Rights at that time would be the Share price of the Company at that time. In valuing the Performance Rights, the valuer used the following assumptions:

• (a) Valuation Date : 13 December 2019.

• (b) Spot Price : $0.067 being the closing Share price on the day prior to the Valuation Date.

• (c) Issue Date : as this has not been determined yet, the valuer assumed the Performance Rights would be issued on the Valuation Date.

• (d) Volatility : 39% which is based on the historical and recent trading patterns of the Company.

• (e) Risk Free Rate : 0.7% which is based on the yields of Commonwealth bonds using the period which most closely corresponds to the maximum life of the Performance Rights. The interest rates are measured as the closing rate on the business day prior to the Valuation Date, with rates disclosed by the Reserve Bank of Australia.

• (f) Dividend Yield : the Company has advised the valuer that it does not expect to pay a dividend within the period of the Performance Rights.

• (g) Employee Exit : 16% annual employee exit rate, which is based on research conducted in MCSI’s “Entrenched Board” study conducted in 2015 which reported that the annual director tenure within Australian ASX listed companies is 6.2 years which equates to 16% per annum.

Incentive Options Valuation

The independent valuer has valued the Incentive Options to be issued to Mr Clement using the trinomial model, which is a theoretical option pricing model, and valued the Class A Options to be $0.0127 each and the Class B Options to be $0.0119 each.

In valuing the Incentive Options, the valuer used the following assumptions:

• (a) Valuation Date : 13 December 2019.

• (b) Spot Price : $0.067 being the closing Share price on the day prior to the Valuation Date.

• (c) Issue Date : as this has not been determined yet, the valuer assumed the Performance Rights would be issued on the Valuation Date.

• (d) Volatility : 39% which is based on the historical and recent trading patterns of the Company.

• (e) Risk Free Rate : 0.7% which is based on the yields of Commonwealth bonds using the period which most closely corresponds to the maximum life of the Performance Rights. The interest rates are measured as the closing rate on the business day prior to the Valuation Date, with rates disclosed by the Reserve Bank of Australia.

• (f) Dividend Yield : the Company has advised the valuer that it does not expect to pay a dividend within the period of the Performance Rights.

• (g) Employee Exit : 16% annual employee exit rate, which is based on research conducted in MCSI’s “Entrenched Board” study conducted in 2015 which reported that the annual director tenure within Australian ASX listed companies is 6.2 years which equates to 16% per annum.

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