22nd Oct 2007 10:30
22 October 2007
RE: NOTICE OF ANNUAL GENERAL MEETING - 22 NOVEMBER 2007
Please find attached here to a copy of Notice of Annual General Meeting for 22 November 2007, including an Explanatory Memorandum and Proxy Form, forwarded to shareholders today.
For and on behalf of the Board
Max CozijnCompany SecretaryAttachcc: Directors ABN 50 078 652 632 NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS THURSDAY 22 NOVEMBER 2007 5.00PM AT THE CELTIC CLUB, 48 ORD STREET, WEST PERTH WESTERN AUSTRALIA NOTICE OF ANNUAL GENERAL MEETING The attached Annexure A "Explanatory Memorandum" should be read in conjunction with this Notice of Meeting.
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of Oilex Ltd ABN 50 078 652 632 ("Company") will be held at First Floor, The Celtic Club, 48 Ord Street, West Perth, Western Australia on Thursday 22 November 2007 at 5:00 pm, to conduct the following business:
BUSINESS OF THE MEETING
Annual Report 2007
To receive and consider the financial report, together with the directors' report (including the remuneration report) and the auditor's report for the financial year ended 30 June 2007.
ORDINARY BUSINESS - RESOLUTIONS
1. To Re-Elect Mr Raymond Barnes as a Director
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That Mr Raymond Barnes, who retires as a Director of the Company in accordance with the Company's constitution and, being eligible, offers himself for re-election, be and is hereby re-appointed as a Director of the Company."
2. Adoption of Remuneration Report
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That for the purpose of section 250R(2) of the Corporations Act and for all other purposes, the remuneration report for the period ended 30 June 2007 be adopted."
SPECIAL BUSINESS - RESOLUTIONS
3. Issue of Options to Director - Dr Bruce McCarthy or his nominee
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, shareholders approve and authorise the allotment and issue of a total of 4,000,000 Options, for no consideration to Dr Bruce McCarthy, a Director of the Company, or his nominee, in accordance with the terms and conditions set out in the attached Explanatory Memorandum."
4. Issue of Options to Director - Mr Raymond Barnes or his nominee
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, shareholders approve and authorise the allotment and issue of a total of 3,000,000 Options, for no consideration to Mr Raymond Barnes, a Director of the Company, or his nominee, in accordance with the terms and conditions set out in the attached Explanatory Memorandum."
5. Issue of Options to Director - Mr Max Cozijn or his nominee
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, shareholders approve and authorise the allotment and issue of a total of 500,000 Options, for no consideration to Mr Max Cozijn, a Director of the Company, or his nominee, in accordance with the terms and conditions set out in the attached Explanatory Memorandum."
6. Issue of Options to Director - Mr Laxmi Bhandari or his nominee
To consider, and if thought fit, to pass the following resolution as an ordinary resolution:
"That for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, shareholders approve and authorise the allotment and issue of a total of 300,000 Options, for no consideration to Mr Laxmi Bhandari, a Director of the Company, or his nominee, in accordance with the terms and conditions set out in the attached Explanatory Memorandum."
All members are invited to attend. An Explanatory Memorandum to Shareholders follows this notice as detailed in Annexure A.
By Order of the BoardMax D.J. CozijnCompany Secretary15 October 2007VOTING EXCLUSIONS
The Company will disregard any votes cast on Resolution 3 by Dr Bruce McCarthy or his nominee and any associate of Dr Bruce McCarthy or his nominee.
However, the Company need not disregard a vote 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 a direction on the proxy form to vote as the proxy decides.
The Company will disregard any votes cast on Resolution 4 by Mr Raymond Barnes or his nominee and any associate of Mr Raymond Barnes or his nominee.
However, the Company need not disregard a vote 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, in accordance with a direction on the proxy form to vote as the proxy decides.
The Company will disregard any votes cast on Resolution 5 by Mr Max Cozijn or his nominee and any associate of Mr Max Cozijn or his nominee.
However, the Company need not disregard a vote 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, in accordance with a direction on the proxy form to vote as the proxy decides.
The Company will disregard any votes cast on Resolution 6 by Mr Laxmi Bhandari or his nominee and any associate of Mr Laxmi Bhandari or his nominee.
However, the Company need not disregard a vote on Resolution 6 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 a direction on the proxy form to vote as the proxy decides.
PROXIES
1. A Proxy Form is enclosed with this Notice of Meeting.
2. Each member may appoint a proxy. A proxy need not be a member.
3. A member who is entitled to cast 2 or more votes at the meeting may appoint
either 1 or 2 proxies. Where a member appoints 2 proxies and does not
specify the proportion or number of the member's votes each proxy may
exercise half of the member's rights.
4. An instrument appointing a proxy may not be treated as valid unless the
instrument, and the power of attorney or other authority (if any) under which the instrument is signed or proof of the power or authority to the satisfaction of the Directors, is or are deposited at the Company's registered office at Level 3, 50 Kings Park Road, West Perth, Western Australia, fax number (08) 9485 3290 or at the Company's share registry not less than 24 hours before the time for the holding of the particular meeting or adjourned meeting, as the case may be, at which the person named in the instrument proposes to vote.
5. An instrument appointing a proxy must be in writing under the hand of the
appointor or of the appointor's attorney duly authorised in writing or, if the appointor is a body corporate, either under its common seal if it has a common seal, or under the hand of an officer or duly authorised attorney or duly authorised representative.
6. In accordance with regulation 7.11.37 of the Corporations Regulations 2001,
the Company has determined that the shareholding of each person for the purposes of determining entitlements to attend and vote at the meeting will be the entitlement of that person set out in the Company's register as at 5.00 pm WST on 21 November 2007. Accordingly, transactions registered after this time will be disregarded in determining entitlements to attend and vote at the meeting.
OTHER
Words which are defined in the Explanatory Memorandum have the same meaning when used in this Notice of Meeting unless the context requires otherwise. For assistance in considering the Notice of Meeting the following words are defined here:
"ASX" means ASX Limited (the Australian Securities Exchange).
"Board" means the board of Directors of the Company.
"Company" means Oilex Ltd ABN 50 078 652 632.
"Corporations Act" means the Corporations Act 2001 (Cth).
"Director" means a director of the Company from time to time.
"Explanatory Memorandum" means the explanatory memorandum set out in Annexure A to this Notice of Meeting.
"Listing Rules" means the listing rules of ASX.
"Notice of Meeting" means this notice of Annual General Meeting and the accompanying Explanatory Memorandum.
"Option" means an option to acquire a Share on the terms detailed in Appendix 1 to Annexure A.
"Optionholder" means a holder of Option.
"Proxy Form" means the proxy form accompanying the Notice of Meeting.
"Resolution" means a resolution set out in the Notice of Meeting.
"Share" means a fully paid ordinary share in the capital of the Company.
"Shareholder" means a holder of Shares.
OILEX LTD EXPLANATORY MEMORANDUM
This Explanatory Memorandum has been prepared for the information of Shareholders of Oilex Ltd ("Oilex" or "the Company") in connection with the business to be conducted at the Annual General Meeting of Shareholders to be held on Thursday 22 November 2007.
This Explanatory Memorandum should be read in conjunction with the accompanying Notice of Annual General Meeting ("Notice").
BUSINESS OF THE MEETING
Annual Report 2007
Section 317 of the Corporations Act requires the directors of the Company to lay before the annual general meeting the financial report, directors' report (including the remuneration report) and the auditor's report for the last financial year that ended before the annual general meeting.
In accordance with section 250S of the Corporations Act, Shareholders will be provided with a reasonable opportunity to ask questions or make statements in relation to those reports but no formal resolution to adopt the reports will be put to Shareholders at the annual general meeting (save for Resolution 2 for adoption of the remuneration report).
A copy of the Annual Report 2007 is available at www.oilex.com.au, in the Investor Information section.
ORDINARY BUSINESS - RESOLUTIONS
1. Resolution 1 - Re-election of Mr Raymond Barnes as Director
In accordance with rule 5 of the Company's constitution, one third of the Directors need to retire by rotation each year. For this purpose, the longest serving director is selected. Accordingly, Mr Raymond Barnes is required to retire by rotation at the forthcoming annual general meeting, and being eligible, offers himself for re-election.
The Board of the Company, with the exception of Mr Raymond Barnes, unanimously recommends that members vote in favour of Mr Barnes's re-election as a Director of the Company.
2. Resolution 2 - Adoption of Remuneration Report
Section 250R of the Corporations Act requires that a resolution to adopt the remuneration report must be put to the vote at the Company's annual general meeting. The vote on this Resolution is advisory only and does not bind the Directors or the Company.
In accordance with section 250SA of the Corporations Act, Shareholders will be provided with a reasonable opportunity to ask questions concerning, or make comments on, the remuneration report at the annual general meeting.
SPECIAL BUSINESS - RESOLUTIONS
3. Resolution 3 - Issue of Options to Director - Dr Bruce McCarthy or his
nominee
Resolution 3 seeks Shareholder approval for the Company to grant a total of 4,000,000 Options to Dr Bruce McCarthy, a Director of the Company, or his nominee.
Shareholder approval for the grant of the Options the subject of this Resolution is sought for the purposes of:
a. Chapter 2E of the Corporations Act - which governs the giving of financial
benefits to "related parties", which include directors of a company; and
b. ASX Listing Rule 10.11 - which generally provides that except in certain
circumstances, (which do not apply in the present case), a company listed
on ASX cannot issue or grant securities to a related party without prior
shareholder approval.
As approval of Shareholders is being sought pursuant to ASX Listing Rule 10.11, under Exception 14 of Listing Rule 7.2 shareholder approval under Listing Rule 7.1 is not required.
Purpose and Key Terms of Options
The purpose of the proposed grant of Options is in recognition of Dr McCarthy's contribution to the Company's successful progress and development to date, and to provide an added incentive to Dr McCarthy to contribute to increasing Shareholder value.
Each Option proposed to be granted is exercisable into one Share upon payment of the exercise price. The Options will only be exercisable after reaching their vesting date but must be exercised before their expiry date. Unexercised Options will lapse on their expiry date.
The Board has made the decision to issue the Options to Dr McCarthy on the basis of an assessment of Dr McCarthy's contribution to the Company. The Board also considered that Dr McCarthy's continuing involvement and contribution to the Company, taking into account the fact that the Company operates with a very small number of Directors, will be significant in achieving sustainable growth in Shareholder value. The Board also took into account Dr McCarthy's existing remuneration package (details of which are set out in paragraph (f) on page 8 of this Explanatory Memorandum). The Board determined that it is appropriate to issue 4,000,000 Options to Dr McCarthy given these factors. The options were determined to be issued subject to share holder approval as part of the Annual Remuneration review effective as from 1 July 2007, with 50% of the Options vesting at date of grant and 50% vesting on 1 July 2008, exercisable at $2.00 and $2.50 per share respectively.
Information required by Listing Rule 10.13
In order to obtain shareholder approval for the purpose of Listing Rule 10.11, Listing Rule 10.13 provides that the following information must be provided to Shareholders:
* the Options will be issued to Dr McCarthy or his nominee(s);
* the number of Options to be issued is 4,000,000;
* the Company will issue the Options as soon as practicable after the date of
this meeting, but in any event no later than 1 month after the date of the
meeting;
* the Options will be issued for nil consideration. The exercise price and
vesting of the Options is as follows:
i. 2,000,000 options vesting at date of grant and exercisable at $2.00 per
share.
ii. 2,000,000 options vesting on 1 July 2008 and exercisable at $2.50 per
share. * the Options will be issued on the terms and conditions contained in Appendix 1 attached to this Annexure A. All Shares issued upon exercise of any Options will rank equally with all existing Shares of the Company; and * there will be no funds raised from the issue of the Options. However, any funds raised from the exercise of the Options will be used for the working capital purposes of the Company.
Chapter 2E of the Corporations Act
Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit (which includes the granting of an option) to a related party (which includes a director) of the Company, unless either:
a. the giving of the financial benefit falls within one of the nominated
exemptions in Chapter 2E of the Corporations Act; or
b. prior shareholder approval is obtained for the giving of the financial
benefit.
For the purposes of Chapter 2E each Director is considered to be a related party of the Company. The proposed grant of Options to Dr McCarthy, a Director, involves the provision of a financial benefit to a related party of the Company and, therefore, requires prior Shareholder approval.
In accordance with the requirements of Chapter 2E, the following information is provided to Shareholders to allow them to assess the proposed grant of Options:
a. Dr McCarthy is the related party of the Company to whom the financial
benefit would be given.
b. The nature of the financial benefit to be given is the grant of 4,000,000
Options in the Company. If the Company's Shares are trading on the ASX at a higher price than the exercise price of the Options at the time of the exercise of the Options, the effect will be to give an immediate financial benefit to Dr McCarthy at the time the Options are exercised.
c. Dr McCarthy declines to make a recommendation about Resolution 3 as he has
a material personal interest in the outcome of the Resolution.
Neither Mr Cozijn, Mr Barnes nor Mr Bhandari make a recommendation about Resolution 3 due to their interests in Resolutions 4, 5 and 6.
d. The Options are issued for no consideration. The exercise price and vesting
of the Options is as follows:
e.
i. 2,000,000 options vesting at date of grant and exercisable at $2.00 per share. ii. 2,000,000 options vesting on 1 July 2008 and exercisable at $2.50 per share.
e. An estimate of the value of the Options proposed to be granted pursuant to
Resolution 3 using the Black and Scholes option pricing model has been
calculated as set out below:
Name of Related Number of Total Value using Black & Party
Options Scholes Model Dr Bruce McCarthy 4,000,000 $1,819,698
This has been calculated with the following assumptions:
(i) risk free interest rate of 6.50%;
(ii) current Share price of $1.658, being the average closing price of the Company's Shares on ASX over the last 5 trading days;
(iii) dividend yield of 0%;
(iv) forecast volatility of 40%;
(v) an Option exercise price of $2.00 and $2.50; and
(vi) an Option term of 4 years from 1/7/2007.
(f) Dr McCarthy received a cash based remuneration totaling $345,669 from the Company during the year ended 30 June 2007 for his role as Managing Director in addition to $269,100 in share based payments. As at the date of this Notice of Meeting the total cash based remuneration package for Dr McCarthy is $376,050 per annum. Any Options issued in accordance with Resolution 3 will be in addition to the remuneration package of Dr McCarthy.
(g) Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision whether it is in the best interests of the Company to pass Resolution 3 other than as follows:
i. following the passage of Resolution 3 the direct and indirect interest of
Dr McCarthy in Shares and Options in the Company will be as follows:
Director Shares Options Dr Bruce 800,000 1,000,000 @ 40 cents expiring McCarthy (or 14/12/2008 his nominee) 2,000,000 @ 50 cents expiring 14/12/2008 3,000,000 @ 80 cents expiring 14/12/2009 2,000,000 @ $2.00 expiring 1/7/ 2011 2,000,000 @ $2.50 expiring 1/7/ 20011
ii. if the 4 million Options are granted and are exercised, the Company's Share
capital will be diluted by approximately 3.08% (based on the number of
Shares on issue at the date of the Notice of Meeting which is 129,883,885);
and
iii. the primary purpose of the grant of the Options is to recognise Dr
McCarthy's contribution to the Company's successful development to date and
to provide an added incentive to Dr McCarthy to contribute to increasing
Shareholder value.
(h) Over the last 12 months prior to the date of this Notice of Meeting, the Company's Shares have traded as follows on the ASX:
Cents Date High 180.0 6 February 2007 Low 97.0 17 August 2007 Last 174.0 15 October 2007
Australian International Financial Reporting Standards
Under AASB 2 Share Based Payments, pursuant to the adoption of Australian International Financial Reporting Standards ("AIFRS"), the Company is required to recognise the fair value of Options granted to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity.
The allotment of the 4,000,000 Options to Dr McCarthy will result in the following impact on the Company's income statements based on the Black and Scholes option pricing model calculated at the date of this notice:
30 June 2008 $1,819,698 (Assume Options granted in Nov Expense '07)
It should be noted that this expense amount may change depending on the parameters applying at the date of grant of these Options (as set out in paragraph (e) above).
1. Resolution 4 - Issue of Options to Director - Mr Raymond Barnes or his
nominee
Resolution 4 seeks Shareholder approval for the Company to grant a total of 3,000,000 Options to Mr Raymond Barnes, a Director of the Company, or his nominee.
Shareholder approval for the grant of the Options the subject of this Resolution is sought for the purposes of:
a. Chapter 2E of the Corporations Act - which governs the giving of financial
benefits to "related parties" which include directors of a company; and
b. ASX Listing Rule 10.11 - which generally provides that except in certain
circumstances, (which do not apply in the present case), a company listed
on ASX cannot issue or grant securities to a related party without prior
shareholder approval.
As approval of Shareholders is being sought pursuant to ASX Listing Rule 10.11, under Exception 14 of Listing Rule 7.2 shareholder approval under Listing Rule 7.1 is not required.
Purpose and Key Terms of Options
The purpose of the proposed grant of Options is in recognition of Mr Barnes' contribution to the Company's successful progress and development to date, and to provide an added incentive to Mr Barnes to contribute to increasing Shareholder value.
Each Option proposed to be granted is exercisable into one Share upon payment of the exercise price. The Options will only be exercisable after reaching their vesting date but must be exercised before their expiry date. Unexercised Options will lapse on their expiry date.
The Board has made the decision to issue the Options to Mr Barnes on the basis of an assessment of Mr Barnes' contribution to the Company. The Board also considered that Mr Barnes' continuing involvement and contribution to the Company, taking into account the fact that the Company operates with a very small number of Directors, will be significant in achieving sustainable growth in Shareholder value. The Board also took into account Mr Barnes' existing remuneration package (details of which are set out in paragraph (f) on page 11 of this Explanatory Memorandum). The Board determined that it is appropriate to issue 3,000,000 Options to Mr Barnes given these factors. The options were determined to be issued subject to share holder approval as part of the Annual Remuneration review effective as from 1 July 2007, with 50% of the Options vesting at date of grant and 50% vesting on 1 July 2008, exercisable at $2.00 and $2.50 per share respectively.
Information required by Listing Rule 10.13
In order to obtain shareholder approval for the purposes of Listing Rule 10.11, Listing Rule 10.13 provides that the following information must be provided to Shareholders:
* the Options will be issued to Mr Barnes or his nominee(s); * the number of Options to be issued to Mr Barnes is 3,000,000; * the Company will issue the Options as soon as practicable after the date of this meeting, but in any event no later than 1 month after the date of the meeting; * the Options will be issued for nil consideration; The exercise price and vesting of the Options is as follows: * 1,500,000 options vesting at date of grant and exercisable at $2.00 per share. * 1,500,000 options vesting on 1 July 2008 and exercisable at $2.50 per share * the Options will be issued on the terms and conditions contained in Appendix 1 attached to this Annexure A. All Shares issued upon exercise of any Options will rank equally with all existing Shares of the Company; and * there will be no funds raised from the issue of the Options. However, any funds raised from the exercise of the Options will be used for the working capital purposes of the Company.
Chapter 2E of the Corporations Act
Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit (which includes the granting of an option) to a related party (which includes a director) of the Company, unless either:
a. the giving of the financial benefit falls within one of the nominated
exemptions in Chapter 2E of the Corporations Act; or
b. prior shareholder approval is obtained for the giving of the financial
benefit.
For the purposes of Chapter 2E each Director is considered to be a related party of the Company. The proposed grant of Options to Mr Barnes, a Director, involves the provision of a financial benefit to a related party of the Company and, therefore, requires prior Shareholder approval.
In accordance with the requirements of Chapter 2E, the following information is provided to Shareholders to allow them to assess the proposed grant of Options:
a. Mr Barnes is the related party of the Company to whom the financial benefit
would be given.
b. The nature of the financial benefit to be given is the grant of 3,000,000
Options in the Company. If the Company's Shares are trading on the ASX at a higher price than the exercise price of the Options at the time of the exercise of the Options, the effect will be to give an immediate financial benefit to Mr Barnes at the time the Options are exercised.
c. Mr Barnes declines to make a recommendation about Resolution 4 as he has a
material personal interest in the outcome of the Resolution.
Neither Dr McCarthy, Mr Cozijn or Mr Bhandari make a recommendation about Resolution 4 due to their interests in Resolutions 3, 5 and 6.
d. The Options are issued for no consideration. The exercise price and vesting
of the Options is as follows:
e.
i. 1,500,000 options vesting at date of grant exercisable at $2.00 per share. ii. 1,500,000 options vesting on 1 July 2008 and exercisable at $2.50 per share
e. An estimate of the value of the Options proposed to be granted pursuant to
Resolution 4 using the Black and Scholes option pricing model has been
calculated as set out below:
Name of Related Number of Total Value using Black & Party
Options Scholes Model Mr Raymond Barnes 3,000,000 $1,364,773
This has been calculated with the following assumptions:
(i) risk free interest rate of 6.50%;
(ii) current Share price of $1.658, being the average closing price of the Company's Shares on ASX over the last 5 trading days;
(iii) dividend yield of 0%;
(iv) forecast volatility of 40%;
(v) an Option exercise price of $2.00 and $2.50 and
(vi) an Option term of 4 years from 1/7/2007.
(f) Mr Barnes received a remuneration package totaling $301,000 from the Company during the year ended 30 June 2007 for his role as Technical Director in addition to $148,999 in Share based payments. As at the date of this Notice of Meeting the total remuneration package for Mr Barnes is $308,000 per annum. Any Options issued in accordance with Resolution 4 will be an addition to the remuneration package of Mr Barnes.
(g) Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision whether it is in the best interests of the Company to pass Resolution 4 other than as follows:
i. following the passage of Resolution 4 the direct and indirect interest of
Mr Barnes in Shares and Options in the Company will be as follows:
Director Shares Options Mr Raymond 623,871 23,871 @ 50 cents expiring 7/Barnes (or his 12/2008 nominee) 1,000,000@40 cents expiring 14/12/2008 1,000,000@50 cents expiring 14/12/2008 1,000,000@80 cents expiring 14/12/2009 1,500,000 @ $2.00 expiring 1/ 7/2011 1,500,000 @ $2.50 expiring 1/ 7/2011
ii. if the 3,000,000 Options are granted and are exercised, the Company's Share
capital will be diluted by approximately 2.31% (based on the number of
Shares on issue at the date of the Notice of Meeting which is 129,883,885);
and
iii. the primary purpose of the grant of the Options is to recognise Mr
Barnes's contribution to the Company's successful development to date, and
to provide an added incentive to Mr Barnes to contribute to increasing
Shareholder value.
(h) Over the last 12 months prior to the date of this Notice of Meeting, the Company's Shares have traded as follows on the ASX:
Cents Date High 180.0 6 February 2007 Low 97.0 17 August 2007 Last 174.0 15 October 2007
Australian International Financial Reporting Standards
Under AASB 2 Share Based Payments, pursuant to the adoption of Australian International Financial Reporting Standards ("AIFRS"), the Company is required to recognise the fair value of Options granted to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity.
This will result in the following impact on the Company's income statements based on the Black and Scholes option pricing model calculated at the date of this notice:
30 June 2008 $1,364,773 (Assume granted in Nov '07) Expense
It should be noted that this expense amount may change depending on the parameters applying at the date of grant of these Options (as set out in paragraph (e) above).
4. Resolution 5 - Issue of Options to Director - Mr Max Cozijn or his nominee
Resolution 5 seeks Shareholder approval for the Company to grant a total of 500,000 Options to Mr Max Cozijn, a Director of the Company, or his nominee.
Shareholder approval for the grant of the Options the subject of this Resolution is sought for the purposes of:
a. Chapter 2E of the Corporations Act - which governs the giving of financial
benefits to "related parties" which include directors of a company; and
b. ASX Listing Rule 10.11 - which generally provides that except in certain
circumstances, (which do not apply in the present case), a company listed
on ASX cannot issue or grant securities to a related party without prior
shareholder approval.
As approval of Shareholders is being sought pursuant to ASX Listing Rule 10.11, under Exception 14 of Listing Rule 7.2 shareholder approval under Listing Rule 7.1 is not required.
Purpose and Key Terms of Options
The purpose of the proposed grant of Options is in recognition of Mr Cozijn's contribution to the Company's successful development to date, and to provide an added incentive to Mr Cozijn to contribute to Shareholder value.
Each Option proposed to be granted is exercisable into one Share upon payment of the exercise price. The Options will only be exercisable after reaching their vesting date but must be exercised before their expiry date. Unexercised Options will lapse on their expiry date.
The Board has made the decision to issue the Options to Mr Cozijn on the basis of an assessment of Mr Cozijn's contribution to the Company. The Board also considered that Mr Cozijn's continuing involvement and contribution to the Company, taking into account the fact that the Company operates with a very small number of Directors, will be significant in achieving sustainable growth in Shareholder value. Mr Cozijn was one of the founders of the Company and has been involved with the Company since inception. The Board also took into account Mr Cozijn's existing remuneration package (details of which are set out in paragraph (f) on page 13 of this Explanatory Memorandum). The Board determined that it is appropriate to issue 500,000 Options to Mr Cozijn given these factors. The options were determined to be issued subject to share holder approval as part of the Annual Remuneration review effective as from 1 July 2007, with 50% of the Options vesting at date of grant and 50% vesting on 1 July 2008, exercisable at $2.00 and $2.50 per share respectively.
Information required by Listing Rule 10.13
In order to obtain shareholder approval for the purposes of Listing Rule 10.11, Listing Rule 10.13 provides that the following information must be provided to Shareholders:
* the Options will be issued to Mr Cozijn or his nominee(s); * the number of Options to be issued to Mr Cozijn is 500,000; * the Company will issue the Options as soon as practicable after the date of this meeting, but in any event no later than 1 month after the date of the meeting; * the Options will be issued for nil consideration. The exercise price and vesting of the Options is as follows: * i. 250,000 options vesting at date of grant and exercisable at $2.00 per share ii. 250,000 options vesting on 1 July 2008 and exercisable at $2.50 per share + the Options will be issued on the terms and conditions contained in Appendix 1 attached to this Annexure A. All Shares issued upon exercise of any Options will rank equally with all existing Shares of the Company; and + there will be no funds raised from the issue of the Options. However, any funds raised from the exercise of the Options will be used for the working capital purposes of the Company. Chapter 2E of the Corporations Act Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit (which includes the granting of an option) to a related party (which includes a director) of the Company, unless either: a. the giving of the financial benefit falls within one of the nominated exemptions in Chapter 2E of the Corporations Act; or b. prior shareholder approval is obtained for the giving of the financial benefit. For the purposes of Chapter 2E each Director is considered to be a related party of the Company. The proposed grant of Options to Mr Cozijn, a Director, involves the provision of a financial benefit to a related party of the Company and, therefore, requires prior Shareholder approval. In accordance with the requirements of Chapter 2E, the following information is provided to Shareholders to allow them to assess the proposed grant of Options: a. Mr Cozijn is the related party of the Company to whom the financial benefit would be given. b. The nature of the financial benefit to be given is the grant of 500,000 Options in the Company. If the Company's Shares are trading on the ASX at a higher price than the exercise price of the Options at the time of the exercise of the Options, the effect will be to give an immediate financial benefit to Mr Cozijn at the time the Options are exercised. c. Mr Cozijn declines to make a recommendation about Resolution 5 as he has a material personal interest in the outcome of the Resolution. Neither Dr McCarthy, Mr Barnes or Mr Bhandari make a recommendation about Resolution 5 due to their interests in Resolution 3, 4 and 6. d. The Options are issued for no consideration. The exercise price and vesting of the Options is as follows: + 250,000 options vesting at date of grant and exercisable at $2.00 per share. + 250,000 options vesting on 1 July 2008 and exercisable at $2.50 per share. e. An estimate of the value of the Options proposed to be granted pursuant to Resolution 5 using the Black and Scholes option pricing model has been calculated as set out below: Name of Related Number of Total Value using Black & Party Options Scholes Model Mr Max Cozijn 500,000 $227,462 This has been calculated with the following assumptions: (i) risk free interest rate of 6.5%; (ii) current Share price of $1.658, being the average closing price of the Company's Shares on ASX over the last 5 trading days; (iii) dividend yield of 0%; (iv) forecast volatility of 40%; (v) an Option exercise price of $2.00 and $2.50 and (vi) an Option term of 4 years from 1/7/2007. (f) Mr Cozijn received a remuneration package totaling $109,000 from the Company during the year ended 30 June 2007 for his role as Company Secretary/Director. As at the date of this Notice of Meeting the total remuneration package for Mr Cozijn is $109,000 per annum. Any Options issued in accordance with Resolution 5 will be an addition to the remuneration package of Mr Cozijn. (g) Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision whether it is in the best interests of the Company to pass Resolution 5 other than as follows: i. following the passage of Resolution 5 the direct and indirect interest of Mr Cozijn in Shares and Options in the Company will be as follows: Director Shares Options Mr Max Cozijn 500,000 1,000,000@ 20 cents expiring (or his 28/2/2008 nominee) 500,000@ $1.50 expiring 31/ 12/2009 250,000@ $2.00 expiring 1/7/ 2011 250,000@ $2.50 expiring 1/7/ 2011 i. if the Options are granted and are exercised, the Company's Share capital will be diluted by approximately 0.38% (based on the number of Shares on issue at the date of the Notice of Meeting which is 129,883,885); and ii. the primary purpose of the grant of the Options is to recognise Mr Cozijn's contribution to the Company's successful development to date and to provide an added incentive to Mr Cozijn to contribute to increasing Shareholder value. (h) Over the last 12 months prior to the date of this Notice of Meeting, the Company's Shares have traded as follows on the ASX: Cents Date High 180.0 6 February 2007 Low 97.0 17 August 2007 Last 174.0 15 October 2007 Australian International Financial Reporting Standards Under AASB 2 Share Based Payments, pursuant to the adoption of Australian International Financial Reporting Standards ("AIFRS"), the Company is required to recognise the fair value of Options granted to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity. This will result in the following impact on the Company's income statements based on the Black and Scholes option pricing model calculated at the date of this notice: 30 June 2008 (Assume granted $227,462 in Nov '07) Expense It should be noted that this expense amount may change depending on the parameters applying at the date of grant of these Options (as set out in paragraph (e) above). 4. Resolution 6 - Issue of Options to Director - Mr Laxmi Bhandari or his nominee Resolution 5 seeks Shareholder approval for the Company to grant a total of 300,000 Options to Mr Laxmi Bhandari, a Director of the Company, or his nominee. Shareholder approval for the grant of the Options the subject of this Resolution is sought for the purposes of: (a) Chapter 2E of the Corporations Act - which governs the giving of financial benefits to "related parties" which includes directors of a company; and (b) ASX Listing Rule 10.11 - which generally provides that except in certain circumstances, (which do not apply in the present case), a company listed on ASX cannot issue or grant securities to a related party without prior shareholder approval. As approval of Shareholders is being sought pursuant to ASX Listing Rule 10.11, under Exception 14 of Listing Rule 7.2 shareholder approval under Listing Rule 7.1 is not required. Purpose and Key Terms of Options The purpose of the proposed grant of Options is in recognition of Mr Bhandari's contribution to the Company's successful development to date, and provide an added incentive to Mr Bhandari to contribute to Shareholder value. Each Option proposed to be granted is exercisable into one Share upon payment of the exercise price. The Options will only be exercisable after reaching their vesting date but must be exercised before their expiry date. Unexercised Options will lapse on their expiry date. The Board has made the decision to issue the Options to Mr Bhandari on the basis of an assessment of Mr Bhandari's contribution to the Company. The Board also considered that Mr Bhandari's continuing involvement and contribution to the Company, taking into account the fact that the Company operates with a very small number of Directors, will be significant in achieving sustainable growth in Shareholder value. The Board also took into account Mr Bhandari's existing remuneration package (details of which are set out in paragraph (f) on page 16 of this Explanatory Memorandum). The Board determined that it is appropriate to issue 300,000 Options to Mr Bhandari given these factors. The options were determined to be issued subject to share holder approval as part of the Annual Remuneration review effective as from 1 July 2007, with 50% of the Options vesting at date of grant and 50% vesting on 1 July 2008, exercisable at $2.00 and $2.50 per share respectively. Information required by Listing Rule 10.13 In order to obtain shareholder approval for the purposes of Listing Rule 10.11, Listing Rule 10.13 provides that the following information must be provided to Shareholders: + the Options will be issued to Mr Bhandari or his nominee(s); + the number of Options to be issued to Mr Bhandari is 300,000; + the Company will issue the Options as soon as practicable after the date of this meeting, but in any event no later than 1 month after the date of the meeting; + the Options will be issued for nil consideration. The exercise price and vesting of the Options is as follows: (i) 150,000 options vesting at date of grant and exercisable at $2.00 per share. (ii) 150,000 options vesting on 1 July 2008 and exercisable at $2.50 per share. + the Options will be issued on the terms and conditions contained in Appendix 1 attached to this Annexure A. All Shares issued upon exercise of any Options will rank equally with all existing Shares of the Company; and + there will be no funds raised from the issue of the Options. However, any funds raised from the exercise of the Options will be used for the working capital purposes of the Company. Chapter 2E of the Corporations Act Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit (which includes the granting of an option) to a related party (which includes a director) of the Company, unless either: (a) the giving of the financial benefit falls within one of the nominated exemptions in Chapter 2E of the Corporations Act; or (b) prior shareholder approval is obtained for the giving of the financial benefit. For the purposes of Chapter 2E each Director is considered to be a related party of the Company. The proposed grant of Options to Mr Bhandari, a Director, involves the provision of a financial benefit to a related party of the Company and, therefore, requires prior Shareholder approval. In accordance with the requirements of Chapter 2E, the following information is provided to Shareholders to allow them to assess the proposed grant of Options: a. Mr Bhandari is the related party of the Company to whom the financial benefit would be given. b. The nature of the financial benefit to be given is the grant of 300,000 Options in the Company. If the Company's Shares are trading on the ASX at a higher price than the exercise price of the Options at the time of the exercise of the Options, the effect will be to give an immediate financial benefit to Mr Bhandari at the time the Options are exercised. c. Mr Bhandari declines to make a recommendation about Resolution 5 as he has a material personal interest in the outcome of the Resolution. Neither Dr McCarthy, Mr Barnes or Mr Cozijn make a recommendation about Resolution 6 due to their interests in Resolution 3, 4 and 5 d. The Options are issued for no consideration. The exercise price and vesting of the Options is as follows: (i) 150,000 options vesting at date of grant and exercisable at $2.00 per share. (ii) 150,000 options vesting on 1 July 2008 and exercisable at $2.50 per share. e. An estimate of the value of the Options proposed to be granted pursuant to Resolution 5 using the Black and Scholes option pricing model has been calculated as set out below: Name of Related Number of Total Value using Black & Party Options Scholes Model Mr Laxmi 300,000 $136,477 Bhandari This has been calculated with the following assumptions: (i) risk free interest rate of 6.5%; (ii) current Share price of $1.658, being the average closing price of the Company's Shares on ASX over the last 5 trading days; (iii) dividend yield of 0%; (iv) forecast volatility of 40%; (v) an Option exercise price of $2.00 and $2.50; and (vi) an Option term of 4 years from 1/7/2007. (f) Mr Bhandari received a remuneration package totaling $24,111 from the Company during the year ended 30 June 2007 for his role as a Director. As at the date of this Notice of Meeting the total remuneration package for Mr Bhandari is $40,000 per annum. Any Options issued in accordance with Resolution 6 will be an addition to the remuneration package of Mr Bhandari. (g) Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision whether it is in the best interests of the Company to pass Resolution 6 other than as follows: i. following the passage of Resolution 6 the direct and indirect interest of Mr Bhandari in Shares and Options in the Company will be as follows: Director Shares Options Mr Laxmi Nil 150,000 @ $2.00 expiring 1/7 Bhandari (or /2011 his nominee) 150,000 @ $2.50 expiring 1/7 /2011 ii. if the Options are granted and are exercised, the Company's Share capital will be diluted by approximately 0.23% (based on the number of Shares on issue at the date of the Notice of Meeting which is 129,883,885); and iii. the primary purpose of the grant of the Options is to recognise Mr Bhandari's contribution to the Company's successful listing and establishment to date and to provide an added incentive to Mr Bhandari to contribute to increasing Shareholder value. (h) Over the last 12 months prior to the date of this Notice of Meeting, the Company's Shares have traded as follows on the ASX: Cents Date High 180.0 6 February 2007 Low 97.0 17 August 2007 Last 174.0 15 October 2007 Australian International Financial Reporting Standards Under AASB 2 Share Based Payments, pursuant to the adoption of Australian International Financial Reporting Standards ("AIFRS"), the Company is required to recognise the fair value of Options granted to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity. This will result in the following impact on the Company's income statements based on the Black and Scholes option pricing model calculated at the date of this notice: 30 June 2008 (Assume granted $136,477 in Nov '07) Expense It should be noted that this expense amount may change depending on the parameters applying at the date of grant of these Options (as set out in paragraph (e) above). APPENDIX 1 TO ANNEXURE A OILEX LTD ABN 58 078 652 632 DIRECTORS' OPTIONS TERMS & CONDITIONS 1. The Options are exercisable at any time between the vesting date (TBA) and 5.00 pm WST on the expiry date 1 July 2011 by notice in writing to the Company accompanied by payment of the exercise price. 2. Should the Director resign after the Employee Option vesting date, then the Options remain with the employee for their remaining term. 3. An Option can only be exercised after the vesting date. 4. An Option will lapse if the Director has resigned or his employment ceased prior to the Option vesting date. 5. The Options can be exercised in whole or in part, and if exercised in part multiples of 10,000 must be exercised on each occasion except where the number of Director Options held is less than 10,000 in which case all such Employee Options must be exercised at the same time. 6. The exercise price of the Options shall be [to insert $2.00 or $2.50, as applicable] per share. 7. The Options cannot be transferred and will be unlisted. 8. There are no participating rights or entitlements inherent in the Option to participate in any new issue of securities which may be offered to Shareholders of the Company from time to time prior to their expiry date. The Company will ensure that, at least 10 business days before the record date to determine entitlements to any such new issue, the Company will notify the Optionholder of the proposed new issue. This will afford the Optionholder an opportunity to exercise all or some of the Options prior to the books closing date of any such new issue. Optionholders have no rights to participate in any new issue of securities without exercising the option. 9. The Optionholder will be permitted to participate in any new pro-rata issue of securities of the Company on prior exercise of the Options in which case the Optionholder will be afforded the period of at least 10 business days prior to and inclusive of the record date to determine entitlements to the issue to exercise the Options. 10. The Options do not confer on the Optionholder any right to participate in dividends until Shares are allotted pursuant to the exercise of the Options. 11. In the event of a reorganisation of the issued capital of the Company prior to the expiry of the Options, the rights of Optionholders will be reorganised in accordance with the Listing Rules of the ASX (if applicable) and in any case in a manner which will not result in any benefits being conferred on Optionholders which are not conferred on Shareholders. 12. The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to exercise of the Options so that, upon exercise of the Options, the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date to determine entitlements for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issues. NOTICE OF EXERCISE OF OPTIONS To: The Directors Oilex Ltd Level 3 50 Kings Park Road WEST PERTH WA 6005 Share Registry: Security Transfer Registrars Pty Ltd Suite 1 770 Canning Highway APPLECROSS WA 6153 Email: [email protected] Website: www.securitytransfer.com.au Ph: (618) 9315 2333 Fax: (618) 9315 2233 I/We Shareholder Number: ¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦. Of Being the registered holder of Options hereby exercise such Options to subscribe for¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦ Ordinary fully paid shares at $(TBA) per share. I/We enclose application money of $ ¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦¢â‚¬¦ and authorise you to register me/us as the holder of the shares to be allotted to me/us and I/we agree to accept such shares subject to the Rules of the Constitution of the Company Individual or Holder 1 Security holder 2 Security holder 3 Date: Sole Director Director/Secretary Director/Secretary Day/Month/Year Contact Name Contact Telephone Number This application, with application money in Australian Currency, should be lodged at the Company's Share Registry on or before the Expiry Date. Cheques should be made payable to OILEX LTD. To: The Secretary Oilex Ltd PO Box 588 West Perth, Western Australia, 6872 I/We Of Full name and address in block letters Being a member/members of Oilex Ltd, hereby appoint of Or failing him/ her Or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me on my/our behalf in accordance with the directions indicated below or in the absence of indication, as he/she/they think fit at the Annual General Meeting of the Company to be held at First Floor, The Celtic Club, 48 Ord Street, West Perth, Western Australia on Thursday 22 November 2007 at 5:00pm and at any adjournment thereof. Instructions as to voting: IMPORTANT NOTICE The Chairman intends to vote all undirected proxies in favour of resolutions 1 to 6. In respect of Resolution 5: If the Chairman of the meeting is appointed as your proxy, or is appointed by default, and you do not wish to direct the Chairman how to vote on Resolution 5, please place a mark in this box. By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest. If you mark this box do not mark any of the boxes alongside Resolution 5 below. If you do not mark this box, you should mark one of the boxes alongside Resolution 5 below directing your proxy how to vote. If you have not directed your proxy how to vote by marking one of the boxes alongside Resolution 5 below , the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution. BUSINESS: Annual Report To receive and consider the financial report, together with the directors' report (including the remuneration report) and the auditor's report for the financial year ended 30 June 20076. As Ordinary Resolutions 2.To adopt the Remuneration Report3.To Issue Options to Director - Dr. Bruce McCarthy4.To Issue Options to Director - Mr. Raymond Barnes5.To Issue Options to Director - Mr. Max Cozijn6.To Issue Options to Director - Mr Laxmi Bhandari To Re-elect Mr. Raymond Barnes as a Director 1. (Please see Important Notice above. If you have marked the box under Important Notice above, do not mark any of the boxes alongside this Resolution.) A. If the member is a company, then it shall either affix its common seal below in the presence of a director and a director/secretary or sign by a duly authorised officer. EXECUTED by ACN/ABN in accordance with section 127 of the Corporations Act Director/Company Secretary Director: Date / /07 Name of Director/Company Name of Director Secretary (BLOCK LETTERS) (BLOCK LETTERS) OR Date / /07 Signature of authorized (insert capacity in which duly representative authorized officer is signing for a member which is a company) Name of authorized representative (BLOCK LETTERS) B. If the member is an individual or joint holders: Date / /07 Signature Signature NOTES 1. Each member may appoint a proxy. A proxy need not be a member. 2. A member who is entitled to cast 2 or more votes at the meeting may appoint either 1 or 2 proxies. Where a member appoints 2 proxies and does not specify the proportion or number of the member's votes each proxy may exercise half of the member's rights. 3. An instrument appointing a proxy may not be treated as valid unless the instrument, and the power of attorney or other authority (if any) under which the instrument is signed or proof of the power or authority to the satisfaction of the directors is or are deposited at the Company's registered office at Level 3, 50 Kings Park Road, West Perth, Western Australia, fax number (08) 9485 3290 or at the Company's share registry not less than 24 hours before the time for the holding of the particular meeting or adjourned meeting as the case may be at which the person named in the instrument proposes to vote. 4. An instrument appointing a proxy must be in writing under the hand of the appointor or of the appointor's attorney duly authorised in writing or, if the appointor is a body corporate, either under its common seal if it has a common seal, or under the hand of an officer or duly authorised attorney or duly authorised representative. 5. As permitted by the Corporations Act 2001 and regulation 7.11.37 of the Corporations Regulations 2001, the Company has determined that all securities of the Company registered as at 24 hours before the time appointed for the meeting will be taken for purposes of the meeting, to be held by the persons who are registered holders thereof at 5.00pm WST on 21 November 2007. Accordingly, transactions registered after this time will be disregarded in determining entitlements to attend and vote at the meeting. JAL/827683_3 JAL/827683_3 JAL/827683_3 JAL/827683_3 Notice of Meeting Page 21 ABN 50 078 652 632 Level 3, 50 Kings Park Road West Perth WA 6005 Australia, PO Box 588 West Perth WA 6872 Australia Telephone: (+61 8) 9226 5577 Facsimile: (+61 8) 9226 2108 Email: [email protected] Web: www.oilex.com.au ANNEXURE A ABN 50 078 652 632 ANNUAL GENERAL MEETING PROXY FORM FOR AGAINST ABSTAIN
OILEX LTDRelated Shares:
OEX.L