Announcement PDF Energy Technologies Limited ABN 38 002 679 469 Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of the members of Energy Technologies Limited (the Company) will be held at Bambach Wires and Cables, 102 Old Pittwater Road, Brookvale NSW 2100 on 19 November 2015 at 10.30am. BUSINESS OF THE MEETING ORDINARY BUSINESS Address by the Chairman Financial Statements and Reports To receive and consider the Audited Financial Statements of the Company and the Reports of the Directors of the Company, and Russell Bedford NSW as the auditors of the Company, for the year ended 30 June 2015. 1. Remuneration Report (Resolution 1): To consider and if thought fit to pass the following non-binding resolution as an ordinary resolution: "That the remuneration report for the year ended 30 June 2015 be adopted. 2. Re-election of Director (Resolution 2): To consider and if thought fit to pass the following resolution as an ordinary resolution: “That Mr Phillip W Dulhunty, who retires by rotation in accordance with Article 10.03 of the Company's Constitution, and being eligible, offers himself for re-election, be elected as a director of the Company.” SPECIAL BUSINESS 3. The issue to and conversion of convertible notes by Auster Holdings Pty Ltd (Resolution 3) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of Section 611 of the Corporations Act, and for all other purposes, the issue of 500 secured convertible notes to Auster Holdings Pty Ltd and the conversion of those notes to 50,000,000 fully paid ordinary shares by Auster Holdings Pty Ltd, notwithstanding that the conversion would or may result in an increase in the voting power of Auster Holdings Pty Ltd to more than 20% of the Company, is approved. 4. The issue of convertible notes under an unsecured convertible note facility (Resolution 4) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 7.1 and for all other purposes, the issue of up to 1,400 unsecured convertible notes in the ordinary shares of the Company, in accordance with a Deed Poll containing the terms of the unsecured convertible note facility to be entered into for that purpose, potentially requiring an issue of ninety three million three hundred and thirty three thousand eight hundred (93,333,800) fully paid ordinary shares in the Company, is approved. M:6537639_1 PJF 5. The issue of convertible notes under an unsecured convertible note facility to interests associated with Alfred J Chown (Resolution 5) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 10.11, and for all other purposes, the participation by Alfred J Chown, or interests associated with him, in the unsecured convertible note facility referred to in resolution 5 is approved, including the issue by the Company of fully paid ordinary shares to him or his associates who convert notes in accordance with terms of the unsecured convertible note facility. 6. The issue of convertible notes under an unsecured convertible note facility to interests associated with Gary A Ferguson (Resolution 6) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 10.11, and for all other purposes, the participation by Gary A Ferguson, or interests associated with him, in the unsecured convertible note facility referred to in resolution 5 is approved, including the issue by the Company of ordinary shares to him or his associates who convert notes in accordance with terms of the unsecured convertible note facility. 7. The ratification of the issue of ordinary shares to Auster Holdings Pty Ltd (Resolution 7) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 7.4 and 7.1, and for all other purposes, the issue of thirty three million, six hundred and seventy nine thousand, two hundred and sixty nine (33,679,269) ordinary shares in the company to Auster Holdings Pty Ltd for the price of one cent ($0.01) per share, which issue occurred on 19 October 2015, is ratified. 8. The approval under Listing Rule 7.1A to issue additional shares in the company over the next twelve months (Resolution 8) To consider and if thought fit to pass the following resolution as a special resolution: That for the purposes of ASX Listing Rule 7.1A, and for all other purposes, approval is given to the company to issue or agree to issue ordinary shares in accordance with ASX Listing Rule 7.1A. 9. The issue of ordinary shares to interests associated with Mr Alfred J Chown (Resolution 9) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 10.11, and for all other purposes, approval is given to the company to issue or agree to issue 12,500,000 ordinary shares at the price of one cent per share to interests associated with Mr Alfred J Chown. 10. The issue of ordinary shares to interests associated with Mr Gary A Ferguson (Resolution 10) To consider and if thought fit to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule 10.11, and for all other purposes, approval is given to the company to issue or agree to issue 5,000,000 ordinary shares at the price of one cent per share to interests associated with Mr Gary A Ferguson. By order of the Board and Directors of the Company Gregory Knoke Company Secretary 21 October 2015 M:6537639_1 PJF page 2 Notes: Entitlement to Vote For the purposes of the Corporations Regulation 7.11.37, the Board has determined that in relation to the Annual General Meeting being convened by this Notice shares will be taken to be held by the persons who are registered holders at 7.00 pm (Sydney time) on 17 November 2015. Accordingly share transfers registered after that date will be disregarded in determining entitlements to attend and vote at the meeting. Corporate Representation If your holding is registered in a company name and you would like to attend the meeting (and do not intend to return a proxy form), please bring with you to the meeting a duly completed Appointment of Corporate Representative Form to enable you to attend and vote at the Annual General Meeting. Alternatively contact the Company's share registry, Computershare Investor Services Pty Limited, investor enquiries 1300 850 505, who will forward to you a form for completion. Proxies 1. A member entitled to attend and vote is entitled to appoint a proxy. 2. A person who is entitled to cast two or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy appointed is entitled to exercise. 3. Appointment of a proxy by a member who is a corporation must be under its common seal or the hand of its attorney or the hand of a person duly authorised by the corporation. 4. A proxy need not be a member of the Company. 5. To be effective, the proxy form must be received by the Company at 102 Old Pittwater Road, Brookvale NSW 2100 or received by facsimile on (02) 9939 9812 not less than forty-eight (48) hours prior to the time for holding the meeting. Directing your proxy When appointing a proxy, members can direct the proxy as to how to vote on each item of business by marking either For, Against or Abstain on the proxy form for that item of business (i.e. a directed proxy), and the proxy must vote in that manner. If a member does not direct the proxy as to how to vote (i.e. an undirected proxy), the proxy appointed by the member may vote as he or she thinks sees fit, except as noted below in relation to Resolution 1 (Remuneration Report). The Chairman of the meeting will vote undirected proxies held by the Chairman on, and in favour of, all of the proposed resolutions put to the meeting, except for Resolution 1, Resolution 5 and Resolution 9. Voting proxies on Resolutions 1, 5 and 9 If you appoint the Chairman of the meeting as your proxy and do not direct the Chairman how to vote on any of Resolutions 1, 5 or 9 he will note vote your proxy on those resolutions. If you appoint any other member of the Company's Key Management Personnel or any of their closely related parties, and do not direct them how to vote, that person will not vote your undirected proxy on Resolution 1. 'Key Management Personnel' of the Company are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or non-executive) of the Company. A 'closely related party' of Key Management Personnel is a term defined in the Corporations Act and includes close family members, such as the children or spouse of the relevant Key Management Personnel, companies that person controls and other members of that person's family who may be expected to influence, or be influenced by, that person in that person's dealings with the Company. Voting proxies on Resolutions 2, 3, 4, 6, 7, 8 and 10 Shareholders entitled to vote on Resolutions 2, 3, 4, 6, 7, 8, and 10 who appoint as their proxy the Chairman of the Annual General Meeting, can direct the Chairman how to vote by marking either "For", "Against" or "Abstain" on the proxy voting form. Undirected proxies held by the Chairman will be voted in favour of resolutions 2, 3, 4, 6, 7, 8 and 10. Undirected proxies held from any parties who are the subject of a voting exclusion in respect of a resolution will not be voted on that resolution. Undirected proxies held by any parties who are the subject of a voting exclusion in respect of a resolution will not be voted on that resolution. Members are encouraged, should they chose to appoint a proxy, to direct that proxy as to how to vote on resolutions 2, 3, 4, 6, 7, 8 and 10 by marking either For, Against or Abstain on the proxy form for that item of business. M:6537639_1 PJF page 3 Voting Exclusion Statements Resolution 1 – Remuneration Report In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 1 (Remuneration Report) by a member of the Key Management Personnel of the Company details of whose remuneration are included in the Remuneration Report, or a closely related party of such a member of the Key Management Personnel (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy, appointed in writing that specifies how the proxy is to vote on the proposed resolution (i.e. a directed proxy) and the vote is not cast on behalf of an Excluded Shareholder; or (b) it is cast by the Chairman as a proxy of a person who is not an Excluded Shareholder, where the appointment does not specify how the Chairman is to vote, but 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 of the Company or the consolidated entity. Accordingly, members entitled to vote on Resolution 1 (Remuneration Report), who appoint as their proxy, a member of the Key Management Personal (other than the Chairman) of the meeting (or closely related parties of such persons), should direct their proxy as to how to vote. Failing to direct the proxy may result in that member's vote on Resolution 1 (Remuneration Report) being disregarded. Resolution 3 – Issue to and Conversion of Convertible Notes by Auster Holdings Pty Ltd In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 3 (The issue of convertible notes to Auster Holdings Pty Ltd and conversion of convertible notes by Auster Holdings Pty Ltd) by Auster Holdings Pty Ltd, or any associate of Auster Holdings Pty Ltd (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. Resolution 4 – The issue of convertible notes under an unsecured convertible note facility In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 4 (The issue of convertible notes) by any person that is a party to the funding arrangement, or any associate of such a person (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. M:6537639_1 PJF page 4 Resolution 5 – the issue of Convertible Notes under an unsecured convertible note facility to interests associated with Alfred J Chown In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 5 by Alfred J Chown, or any person who is a related party of the Company as a result of its relationship with him, or any associate of those people (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. Resolution 6 – the issue of Convertible Notes under an unsecured convertible note facility to interests associated with Gary A Ferguson In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 6 by Gary A Ferguson, or any person who is a related party of the Company as a result of its relationship with him, or any associate of those people (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. Resolution 7 – the ratification of the issue of ordinary shares to Auster Holdings Pty Ltd In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 7 by Auster Holdings Pty Ltd, or any associate of Auster Holdings Pty Ltd (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. Resolution 9 – the issue of ordinary shares to interests associated with Alfred J Chown In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 9 by Alfred J Chown, or any person who is a related party of the Company as a result of its relationship with him, or any associate of those people (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. Resolution 10 – the issue of ordinary shares to interests associated with Gary A Ferguson In accordance with the Corporations Act, the Company will disregard any votes cast on Resolution 10 by Gary A Ferguson, or any person who is a related party of the Company as a result of its relationship with him, or any associate of those people (each an Excluded Shareholder). However, the Company need not disregard a vote if: (a) it is cast by a person as a 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 a proxy of a person, in accordance with a direction on the proxy form to vote as the proxy decides. M:6537639_1 PJF page 5 Explanatory Notes These are the Explanatory Notes for the shareholders of Energy Technologies Limited (Company) for the Annual General Meeting to be held on 19 November 2015. The Explanatory Notes explain the items of business to be considered at the meeting and are provided to assist shareholders in their consideration of the proposed Resolutions 1 to 10 inclusive, contained in the Notice of Meeting, and form part of that Notice of Meeting. Financial Statements and Reports The Corporations Act 2001 (Cth) ("Corporations Act") requires the financial report, directors' report and auditor's report to be laid before the meeting. There is no requirement either in the Corporations Act or the Company's Constitution for members to vote on, approve or adopt these reports. Members will have a reasonable opportunity at the meeting to ask the Chairman questions and make comments on the business, operations and management of the Company. The auditor of the Company will also be available to take members' questions and comments about the conduct of the audit, the preparation and content of the auditor’s report, the accounting policies adopted by the Company in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. In addition to taking questions at the meeting, written questions to the Company’s auditor about the conduct of the audit of the financial report and the preparation and content of the auditors’ report, may be submitted no later than the fifth business day before the day on which the meeting is held (i.e. no later than 12 November 2015) to: The Company Secretary Energy Technologies Limited 102 Old Pittwater Road Brookvale NSW 2100 Facsimile: +61 2 9939 9812 The Company will pass all written questions on to the auditor. The auditor will prepare and provide to the Company a question list which sets out the questions that the Company has passed on to the auditor and that the auditor considers to be relevant to the conduct of the audit of the financial report or the content of the auditor's report. Please note that a question may not be included in the question list if the question list includes a question that is substantially the same as that question or if it is not practicable to include the question in the question list because of the time when the question is passed on to the auditor. There is no requirement for the auditor to provide written answers to the questions, however, if the auditor chooses to prepare written answers to any of the questions, the Chairman may permit the auditor to table the written answers at the meeting. The auditor will also answer questions asked at the meeting, however where questions concern issues raised in the written questions, the auditor may refer members to the written answers (if any). For the benefit of the meeting, the auditor will briefly outline to the meeting the matters covered in the written questions. Resolution 1: to adopt the Remuneration Report The Corporations Act requires the Remuneration Report be adopted at the meeting by a resolution. While there is a requirement for a formal resolution, the members' vote is advisory only and does not bind the Company, nor will it require the Company to alter any arrangements detailed in the Remuneration Report should the resolution not be passed. The Remuneration Report is set out on pages 10 to 13 of the Company's 2015 Annual Report. (The Annual Report is available on the Company's website at www.energytechnologies.com.au). The Remuneration Report explains the structure of, and policy behind, EGY's remuneration practices and the link between the remuneration of employees and the Company's performance. The Report also sets out remuneration details of each director and for any specified executive. A Remuneration Committee has been established to evaluate and make recommendations to the Board regarding remuneration policy. Members will have a reasonable opportunity at the meeting to ask questions and make comments on the Remuneration Report. M:6537639_1 PJF page 6 From 1 July 2011, the Corporations Act has been amended so that if there are two consecutive Annual General Meetings of the Company held after 1 July 2011, and at least 25% of votes cast are against the adoption of the Remuneration Report put before the meeting (in accordance with section 250R of the Corporations Act), the second meeting must also consider a resolution that a further meeting of the Company's members be held within 90 days (a 'Spill Meeting') at which the then current directors of the Company (as at the time of the second meeting, but excluding the Manager Director) will cease to hold office immediately before the end of that Spill Meeting and resolutions will be put to the vote to appoint new directors of the Company to fill those vacancies (which may include re-election of those current directors). All members of the Company are encouraged to cast their vote on Resolution 1 (Remuneration Report). Voting on Resolution 1 by proxy Undirected proxies held by the Chairman will be voted in favour of Resolution 1. Undirected proxies held by any other member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report (or closely related parties of such persons) will not be voted on Resolution 1 (Remuneration Report). 'Key Management Personnel' of the Company are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or non-executive) of the Company. A 'closely related party' of Key Management Personnel is a term defined in the Corporations Act and includes close family members, such as the children or spouse of the relevant Key Management Personnel, companies that person controls and other members of that person's family who may be expected to influence, or be influenced by, that person in that person's dealings with the Company. Members are encouraged, should they choose to appoint a proxy, to direct that proxy as to how to vote on Resolution 1 (Remuneration Report) by marking either For, Against or Abstain on the proxy form for that item of business. Resolution 2: Re-election of Director The Listing Rules of the Australian Securities Exchange ("ASX Listing Rules") require the Company to hold an election of directors each year. The Constitution of the Company also requires one third of the directors (other than the Managing Director, or if there is more than one managing director, only one managing director) to retire from office at each annual general meeting, together with any director who has held office without re-election for three or more years. Phillip W Dulhunty was appointed to the Board in 2014. He retires, in accordance with the ASX Listing Rules and the Constitution, and offers himself for reappointment. Phillip W Dulhunty OAM (Age 91) (Non-Executive Director) Appointed 3 December 2014 Founder of Dulhunty Power (Aust) Pty Limited, importers, exporters and distributors of electrical power transmission equipment. Honorary Life Member and distinguished member of the international electrical transmission industry body, CIGRE and Honorary Life Senior member of IEEE. Holder of Centenary Medal for Contribution to Australian Industry. Mr Dulhunty was also the recipient of the Institute of Engineering and Technology (IET) James N Kirby Medal in 2007. Mr Dulhunty was previously a Director of the company from 31 March 2003 to 1 October 2012. Mr Dulhunty is also a member of the Audit and Nomination Committees of the company. M:6537639_1 PJF page 7 Resolution 3: The issue to and conversion of convertible notes by Auster Holdings Pty Ltd Auster Holdings Ltd is a company associated with Mr Yulin Hu, a highly successful businessman who is the major shareholder of Fujian Hongsheng Construction Group Co., Ltd. Fujian Hongsheng, founded by Mr Hu, is a major engineering construction firm with turnover in excess of 1 billion AUD. Its operations are centred in Fujian province. This company’s main expertise lies in building luxury residential developments. Mr Hu started his career as an electrical contractor and built his business from that base to be one of China’s most respected building construction companies. Fujian Hongsheng has won numerous awards for the scale and quality of the projects it has undertaken. Mr Hu is an Australian resident. Due to his involvement and that of his family in Australia, he wishes to become involved in building a strong and vibrant business supplying manufactured electrical products. Mr Hu has identified Energy Technologies as having the footprint and structure that will enable rapid growth on the back of coming major infrastructure projects in Australia. Mr Hu, by means of Auster Holdings Pty Ltd (Auster), is prepared to act as a cornerstone investor to build the business, alongside the existing shareholder base and current management, to achieve the vision of the Company, which is to build a group of businesses that supply to the electricity supply industry and to major commercial and Infrastructure projects. Mr Hu recognises that the first step on this quest is to develop Bambach Cables and then to use this model to build other ancillary or complementary businesses alongside Bambach as operating subsidiaries of EGY. Auster Holdings Pty Ltd will bring balance sheet strength, and Mr Hu a wealth of experience, to the Company. Mr Hu will actively seek to generate export sales of Bambach-produced cables in China and he will actively seek to explore the acquisition of China manufacturing businesses that can be brought under the EGY umbrella that will complement existing manufacturing and bring strategic strength. EGY has made an initial placement of shares to Auster under the Company’s 15% capacity. A total of 33,679,269 ordinary shares at $0.01/share have been issued to Auster to raise $336,792 – at a 65 % premium to the 6 month volume-weighted average share price for EGY’s shares. This placement of ordinary shares did not require the approval of shareholders. A further investment is proposed be made by way of subscription for secured convertible notes, which is the note issue referred to in resolution 3. The resolution seeks approval for the conversion of secured convertible notes. Both the issue of the notes, and their subsequent conversion require the approval of shareholders, as the conversion of the notes in due course would necessitate the issue of a significant number of shares in the Company. In light of the share issue which has already occurred, the issue of fully paid ordinary shares that would result from a conversion of the proposed notes may result in Auster Holdings Pty Ltd becoming the owner of more than twenty per cent (20%) of the issued capital of the Company. Such a result would be prohibited by the Corporations Act, unless one of the exceptions set out in the Corporations Act were to apply. The prior approval of EGY’s shareholders in the manner contemplated in resolution 3 would amount to such an exception. The grant of this prior approval to conversion of the notes will also operate to authorise the issue of the notes themselves. Accordingly, the approval sought by resolution 3 is effectively the consent of the shareholders of EGY to Auster Holdings Pty Ltd moving to a shareholding in EGY which is more than 20% of the issued ordinary shares in the Company (which is sometimes called the takeover threshold). If all the convertible notes were converted, it would require the issue of fifty million (50,000,000) shares. After the prior issue of ordinary shares is taken into account, Auster Holdings Pty Ltd would have a total shareholding in EGY of 83,679,269 shares, or 27.15% of the total shares then on issue. This percentage does not take into account the issue of shares contemplated by resolutions 9 and 10 of this meeting, or the conversion of the other convertible notes contemplated to be issued, or those already on issue. EGY proposes to enter into a conditional funding arrangement to raise up to $500,000.00 (five hundred thousand dollars dollars) by the issue of convertible notes. The Company intends to make a personal offer to Auster Holdings Pty Ltd. Acceptance of the offer will not result in a breach of the 20 investors/ $2 million ceiling set out in s708 of the Corporations Act. Entry into the funding arrangement is conditional on the approval of the shareholders of the Company (Resolution 3) to the issue of the convertible notes to Auster Holdings Pty Ltd. The funding arrangement is expected to result in the issue of up to 500 Convertible Notes each with a face value of one thousand dollars to Auster Holdings Pty Ltd. The terms of the Convertible Notes will be set out in a Convertible Note Deed Poll (“Deed Poll”) executed by the Company in favour of the Noteholder, and are summarised below. M:6537639_1 PJF page 8 The following is a broad summary of the rights, privileges and restrictions attaching to the Convertible Notes. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of the Noteholders. Term Issuer Issue date Eligibility Face Value Maturity Date Ranking Interest Conversion rights Co