Notice of Extraordinary General Meeting and Explanatory Memorandum Emefcy Group Limited ACN 127 734 196 Notice is given that an extraordinary general meeting (Meeting) of the Company will be held at: Date: 12 July 2017 Time: 11:00 am Location: Hall & Wilcox Level 11, Rialto South Tower 525 Collins Street Melbourne, Victoria The Company proposes to acquire all of the limited liability company interests in RWL Water LLC, a global provider of water, wastewater and reuse solutions from RSL Investments Corporation. The acquisition will be funded by the issue of Emefcy Shares. Subject to completion of the acquisition of RWL Water LLC, the Company also proposes to issue to RSL Investments Corporation Emefcy Shares at the issue price of A$0.85 to raise US$20,000,000. The Independent Expert has prepared an Independent Expert's Report in relation to the issue of Emefcy Shares to RSL Investments Corporation and has concluded that, in the absence of a superior offer, the Proposed Transactions are fair and reasonable to non-associated Shareholders. Refer to Annexure A for further information. Important notices This Notice of Meeting and Explanatory Memorandum is issued factors and risks specific to the industries and countries in by Emefcy Group Limited ACN 127 734 196 (Company or which the Company or RWL Water Group operates as well as Emefcy). general economic conditions, prevailing exchange rates and interest rates and conditions in the financial markets. Actual Purpose of this document events or results may differ materially from the events or results expressed or implied in any forward looking statement. This document is important. It contains information for Shareholders relating to the issue of Shares in the Company. Some of the risks that Shareholders may be exposed to if the This Notice of Meeting and Explanatory Memorandum provides Proposed Transactions are completed are set out in the Shareholders with information to assist them in deciding how Explanatory Memorandum. None of the Company, the Seller, to vote on the Resolutions to be considered at the Meeting. their respective officers or employees, any persons named in This Notice of Meeting and Explanatory Memorandum does not this Notice of Meeting and Explanatory Memorandum with take into account the individual investment objectives, financial their consent or any person involved in the preparation of this situation and particular needs of Shareholders or any other Notice of Meeting and Explanatory Memorandum, makes any person. Accordingly, this Notice of Meeting and Explanatory representation or warranty (express or implied) as to the Memorandum should not be relied upon as the sole basis for accuracy or likelihood of fulfilment of any forward looking any decision in relation to your vote at the Meeting. statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by This Notice of Meeting and Explanatory Memorandum has law. The forward looking statements included in this Notice of been prepared in accordance with item 7, section 611 of the Meeting and Explanatory Memorandum are made only as of Corporations Act 2001 (Cth) (Corporations Act) which require the date of this Notice of Meeting and Explanatory Shareholder approval of the issue of Shares to the Seller. Memorandum. You are cautioned not to place undue reliance Further, ASIC Regulatory Guide 74 (RG 74) and ASIC Regulatory on any forward looking statement. The forward looking Guide 111 (RG 111) set out certain disclosure requirements statements in this Notice of Meeting and Explanatory which have been addressed in this document. This includes the Memorandum reflect views held only as at the date of this requirement to provide an Independent Expert’s Report Notice of Meeting and Explanatory Memorandum. prepared in accordance with RG 111 assessing the fairness and reasonableness of the Proposed Transactions. The Independent Disclaimer as to information Expert’s Report is attached to the Explanatory Memorandum and should be read in conjunction with this Notice of Meeting No person is authorised to give any information or make any and the rest of the Explanatory Memorandum. representation in connection with the Proposed Transactions which is not contained in this Notice of Meeting and You should read this Notice of Meeting and Explanatory Explanatory Memorandum. Any information or representation Memorandum in its entirety before making a decision as to not contained in this Notice of Meeting and Explanatory how to vote at the Meeting. If you have any doubt as to what Memorandum may not be relied on as having been authorised you should do once you have read this Notice of Meeting and by the Company or the Directors in connection with the Explanatory Memorandum, you should consult your legal, Proposed Transactions. financial or other professional adviser. Responsibility for information ASIC and ASX involvement Emefcy has prepared, and is responsible for, the Emefcy A copy of the Notice of Meeting and Explanatory Memorandum Information. Neither the Seller nor RWL Water Group (and each has been lodged with ASIC pursuant to the applicable of their respective directors, officers and advisers (as regulatory guides and with ASX pursuant to the Listing Rules. applicable)) assumes any responsibility for the accuracy or Neither ASIC, ASX nor any of their officers take any completeness of any of the Emefcy Information. responsibility for the contents of the Notice of Meeting and Explanatory Memorandum. The Seller has prepared, and is responsible for, the RWL Information. Emefcy (and each of its respective Directors, Disclaimers as to forward looking statements officers and advisers (as applicable)) does not assume any responsibility for the accuracy or completeness of any of the Some of the statements appearing in this Notice of Meeting RWL Information. and Explanatory Memorandum (including the Independent Expert’s Report) may be in the nature of forward looking The Independent Expert has prepared the Independent Expert’s statements. You should be aware that such statements are not Report and takes responsibility for that report and has based on historical facts, but rather reflect the current views of consented to the inclusion of that report in this Notice of the Company or, in relation to the RWL Information, the Seller, Meeting and Explanatory Memorandum. held only as of the date of this Notice of Meeting and Emefcy does not assume any responsibility for the accuracy or Explanatory Memorandum concerning future results and completeness of the Independent Expert’s Report nor do its events and are only predictions and are subject to inherent Directors, officers and advisers. risks and uncertainties. Those risks and uncertainties include 2 Privacy The Company has collected your information from the Share Registry for the purpose of providing you with this Notice of Meeting and Explanatory Memorandum. The type of information the Company has collected about you includes your name, contact details and information on your shareholding in the Company. Without this information, the Company would be hindered in its ability to issue this Notice of Meeting and Explanatory Memorandum. The Corporations Act requires the name and address of Shareholders to be held in a public register. Your information may be disclosed on a confidential basis to the Company’s Related Bodies Corporate and external service providers (such as the Share Registry and print and mail service providers) and may be required to be disclosed to regulators such as ASIC. If you would like details of information about you held by the Company, please contact the Share Registry at Boardroom Pty Limited via the details found on the contact page at www.boardroomlimited.com.au. The registered address of the Company is Suite 1, 1233 High Street Armadale, Victoria, 3143. Definitions Certain terms and abbreviations used in this Notice of Meeting and Explanatory Memorandum have defined meanings which are explained in the Glossary. Enquiries If you have any questions please call the Company Secretary on + 61 (0)3 9824 5254 at any time between 8.00am and 5.00pm (Australian Eastern Standard Time) Monday to Friday until the date of the Meeting. Date This Notice of Meeting and Explanatory Memorandum is dated Thursday, 8 June 2017. 3 Contents NOTICE OF EXTRAORDINARY GENERAL MEETING 6 IMPORTANT INFORMATION 11 CHAIRMAN'S LETTER 13 EXPLANATORY MEMORANDUM 15 1 INTRODUCTION 15 1.1 General 15 1.2 Purpose of Meeting 15 1.3 Proposed Timetable 16 2 TRANSACTION SUMMARY AND RELEVANT CONSIDERATIONS 18 2.1 Background 18 2.2 Proposed Transactions 18 2.3 Strategic rationale for the Merger by the Acquisition of RWL 19 2.4 About RWL and RWL Water Group 20 2.5 RWL's Technologies 24 3 DETAILS OF RESOLUTIONS – GENERAL MEETING 27 3.1 Resolutions 1, 2 and 7 – Issue of Consideration Shares and Placement Shares and Acquisition of Relevant Interest in Consideration Shares by the Company 27 3.2 Resolution 3 - Approval of Appointment of Dr Rengarajan Ramesh as a Director and Issue of Options 30 3.3 Resolution 4 - Approval to amend a material term of the Employee Share Option Plan 32 3.4 Resolution 5 - Approval of Increase in the Maximum Aggregate Remuneration for Non- Executive Directors 33 3.5 Resolution 6 – Approval of Issue of Options to Directors 34 3.6 Resolution 8 –Approval of Potential Termination Benefits to Mr Henry J. Charrabé and Astaris SAS 36 3.7 Resolution 9 - Refreshment of Placement Capacity through Ratification and Approval of Previous Issue of Options in reliance on Listing Rule 7.1 38 3.8 Resolution 10 - Change of company name 39 4 REASONS FOR AND AGAINST THE PROPOSED TRANSACTIONS 40 4.1 Why you should vote in favour of the Proposed Transactions 40 4.2 Why you might vote against the Resolutions to approve the Proposed Transactions 41 4.3 Risks Factors 43 4.4 Consequences if the Proposed Transactions Do Not Proceed 46 5 SUMMARY OF TRANSACTION DOCUMENTS 48 5.1 Summary of Sale And Purchase Agreement 48 5.2 Private Placement Letter Agreement 52 5.3 Summary of the employment terms of Managing Director and Chief Executive Officer 52 6 INFORMATION ABOUT THE MERGED GROUP 54 6.1 Profile of the Merged Group 54 6.2 Changes to the Capital Structure 56 6.3 Effect on Working Capital Requirements 56 6.4 Effect on Financial Position 57 4 6.5 Effect on Financial Performance 57 7 ADDITIONAL INFORMATION 59 7.1 ASX confirmation 59 7.2 Consents 59 7.3 Directors’ Shareholdings and Voting Intentions 59 8 STATEMENT BY DIRECTORS 60 9 GLOSSARY 61 ANNEXURE A - INDEPENDENT EXPERT'S REPORT 66 ANNEXURE B - PRO FORMA CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2016 67 ANNEXURE C - POTENTIAL TERMINATION BENEFITS TO MR HENRY CHARRABÉ 70 ANNEXURE D - POTENTIAL TERMINATION BENEFITS TO ASTARIS SAS 72 ANNEXURE E - TERMS OF ESOP 74 5 EMEFCY GROUP LIMITED ACN 127 734 196 NOTICE OF EXTRAORDINARY GENERAL MEETING Notice is given that an extraordinary general meeting of Shareholders of Emefcy Group Limited ACN 127 734 196 (Company or Emefcy) will be held at the time and location and to conduct the business specified below (Notice of Meeting). Date: 12 July 2017 Time: 11:00 am Location: Hall & Wilcox Level 11, Rialto South Tower 525 Collins Street Melbourne, Victoria 3000 At the Meeting Shareholders are asked, among other matters, to consider the acquisition of the limited liability company interests in RWL Water LLC from RSL Investments Corporation in consideration for the issuance of the Consideration Shares and also the issuance of Placement Shares to RSL Investments Corporation (or its Related Bodies Corporate) to raise US$20,000,000. To assist Shareholders with their decision on whether to approve the proposed acquisition and capital raising and other matters, the Explanatory Memorandum and Independent Expert's Report accompany, and form a part of, this Notice of Meeting. Terms used in this Notice of Meeting will, unless the context requires otherwise, have the meaning given to them in the Glossary of defined terms in section 9 of the Explanatory Memorandum. BUSINESS The business of the Meeting shall be as follows: 1. RESOLUTION 1: APPROVAL FOR THE ISSUE OF CONSIDERATION SHARES To consider and, if thought fit, to pass the following Resolution as an ordinary resolution: “That, subject to Resolutions 2 and 7 being passed and for the purposes of section 611, item 7 of the Corporations Act and for all other purposes, approval is given for the issue of 100,500,000 Shares to RSL Investments Corporation or its Related Bodies Corporate as consideration for the Company's acquisition of all of the limited liability company interests in RWL Water LLC on the terms and conditions set out in the Sale and Purchase Agreement.” Voting exclusion statement on Resolution 1: The Company will disregard any votes cast on this Resolution by RSL Investments Corporation and any Associates of RSL Investments Corporation. However, the Company need not disregard a vote if 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 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. 6 2. RESOLUTION 2: APPROVAL FOR THE ISSUE OF PLACEMENT SHARES To consider and, if thought fit, to pass the following Resolution as an ordinary resolution: “That, subject to Resolutions 1 and 7 being passed and for the purposes of section 611, item 7 of the Corporations Act and for all other purposes, approval is given for the issue of the number of Shares equal to (X) US$20,000,000 converted into Australian dollars at the US-AU dollar exchange rate published by the Reserve Bank of Australia as at 10.00 a.m. (AEST) on the date of completion of the acquisition of RWL Water LLC under the Sale and Purchase Agreement, divided by (Y) A$0.85 (rounded to the nearest whole Share), for the issue price of A$0.85 per Share to RSL Investments Corporation or its Related Bodies Corporate under a private placement on the terms and conditions set out in the Explanatory Memorandum.” Voting exclusion statement on Resolution 2: The Company will disregard any votes cast on this Resolution by RSL Investments Corporation and any Associates of RSL Investments Corporation. However, the Company need not disregard a vote if 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 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. 3. RESOLUTION 3: APPOINTMENT OF DR RENGARAJAN RAMESH AS A DIRECTOR AND ISSUE OF OPTIONS To consider and, if thought fit, to pass the following resolution as an ordinary resolution: (a) “That subject to Resolutions 1, 2 and 7 being passed and in accordance with clause 4.2(b) of the Company's constitution, Dr Rengarajan Ramesh be appointed a director of the Company after receiving any applicable consent required from that person.” (b) “That subject to Resolutions 1, 2 and 7 being passed, for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,500,000 Options to Dr Rengarajan Ramesh to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” Voting exclusion statement on Resolution 3(a) and 3(b): The Company will disregard any votes cast on this Resolution by Dr Rengarajan Ramesh and any of his Associates. However, the Company need not disregard a vote if 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 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. 4. RESOLUTION 4: APPROVAL TO AMEND A MATERIAL TERM OF THE EMPLOYEE SHARE OPTION PLAN To consider and, if thought fit, to pass the following resolution as an ordinary resolution: “That subject to Resolutions 1, 2 and 7 being passed and for the purposes of Listing Rule 7.2 (Exception 9) and for all other purposes, Shareholders approve and authorise the Directors to increase the number of the Options able to be issued under the ESOP from 5% of the then current number of Shares on issue to 6% of the then current number of Shares on issue". Voting exclusion statement on Resolution 4: The Company will disregard votes cast as a proxy by a Director (except one who is ineligible to participates in any employee incentive scheme ) and a member of the Company's key management personnel (KMP) or any of their Closely Related Parties. However, the Company need not disregard a vote if 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 it is cast by the Chairman of the Meeting as a proxy for a person who is entitled to vote and the appointment of the Chairman as proxy does not specify the way the proxy is to vote and 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 KMP. 7 5. RESOLUTION 5: APPROVAL OF INCREASE IN THE MAXIMUM AGGREGATE REMUNERATION FOR NON-EXECUTIVE DIRECTORS To consider and, if thought fit, to pass the following resolutions as an ordinary resolution: “That, subject to Resolutions 1, 2 and 7 being passed, for the purpose of Listing Rule 10.17 and in accordance with clause 4.6(b) of the Company's constitution, approval is given for the increase in the maximum aggregate remuneration for non-executive directors from $500,000 to $1,000,000 per annum.” Voting exclusion statement on Resolution 5: The Company will disregard any votes cast on this Resolution by a Director and an Associate of the Director. The Company will also disregard votes cast as a proxy by a member of the Company's KMP or any of their Closely Related Parties. However, the Company need not disregard a vote if 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 it is cast by the Chairman of the Meeting as a proxy for a person who is entitled to vote and the appointment of the Chairman as proxy does not specify the way the proxy is to vote and 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 KMP. 6. RESOLUTION 6: APPROVAL OF ISSUE OF OPTIONS TO DIRECTORS To consider and, if thought fit, to pass the following resolutions as an ordinary resolution: (a) “That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 2,000,000 Options to Mr Richard Irving, Executive Chairman, to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” (b) “That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,500,000 Options to Mr Ross Haghighat, Non-Executive Director, to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” (c) “That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,500,000 Options to Mr Peter Marks, Non-Executive Director, to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” (d) “That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,500,000 Options to Mr Robert Wale, Non-Executive Director, to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” (e) “That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,000,000 Options to Mr Eytan Levy, Executive Director, to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum.” Voting exclusion statement on Resolutions 6(a), 6(b), 6(c) 6(d) and 6(e): The Company will disregard any votes cast on this Resolution by a person who is to receive securities in relation to the Company and an Associate of that person (or those persons). The Company will also disregard votes cast as a proxy by a member of the Company's KMP or any of their Closely Related Parties. However, the Company need not disregard a vote if 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 it is cast by the Chairman of the Meeting as a proxy for a person who is entitled to vote and the appointment of the Chairman as proxy does not specify the way the proxy is to vote and 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 KMP. 7. RESOLUTION 7: APPROVAL OF THE ACQUISITION OF A RELEVANT INTEREST BY THE COMPANY To consider and, if thought fit, to pass the following resolution as an ordinary resolution: “That, subject to Resolutions 1 and 2 being passed and for the purposes of section 611, item 7 of the Corporations Act and for all other purposes, Shareholders approve the acquisition by the Company of a Relevant Interest in the 100,500,000 Consideration Shares to be issued to the Seller or its Related 8 Bodies Corporate acquired as a result of the escrow restrictions described in sections 3.1 and 5.1(c) of the Explanatory Memorandum." Voting exclusion statement on Resolution 7: The Company will disregard any votes cast on this Resolution by any Associates of the Company. However, the Company need not disregard a vote if 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 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. 8. RESOLUTION 8: APPROVAL OF POTENTIAL TERMINATION BENEFITS To consider and, if thought fit, to pass the following resolutions as an ordinary resolution: (a) “That, subject to Resolutions 1, 2 and 7 being passed and for the purposes of sections 200B and 200E of the Corporations Act, Listing Rule 10.19 and for all other purposes, approval is given for the giving of benefits by the Company or any of its Related Bodies Corporate to Mr Henry J. Charrabé (proposed Managing Director and Chief Executive Officer of the Merged Group), in connection with Mr Charrabé ceasing to be a director or ceasing to hold a managerial or executive office in the Company or a Related Body Corporate, as set out in the Explanatory Memorandum." (b) “That, subject to Resolutions 1, 2 and 7 being passed and for the purposes of sections 200B and 200E of the Corporations Act, Listing Rule 10.19 and for all other purposes, approval is given for the giving of benefits by the Company or any of its Related Bodies Corporate to Astaris SAS in connection with Astaris SAS ceasing to provide the services of Mr Philippe Laval (proposed Chief Operating Officer of the Merged Group) which results in his ceasing to hold a managerial or executive office in the Company or a Related Body Corporate, as set out in the Explanatory Memorandum." Voting exclusion statement on Resolutions 8(a) and 8(b): The Company will disregard any votes cast on this Resolution by an officer of the Company or any of its child entities who is entitled to participate in a termination benefit. The Company will also disregard votes cast as a proxy by a member of the Company's KMP or any of their Closely Related Parties. However, the Company need not disregard a vote if 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 it is cast by the Chairman of the Meeting as a proxy for a person who is entitled to vote and the appointment of the Chairman as proxy does not specify the way the proxy is to vote and 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 KMP. 9. RESOLUTION 9: PREVIOUS ISSUE OF OPTIONS TO MR HENRY J CHARRABÉ To consider and, if thought fit, to pass the following resolution as an ordinary resolution: “That subject to Resolutions 1, 2 and 7 being passed and for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders ratify and approve the previous issue, in reliance on Listing Rule 7.1, of a total of 11,191,336 Options on 31 May 2017 to Mr Henry J Charrabé (proposed Managing Director and Chief Executive Officer of the Merged Group) to subscribe for Shares on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting.” Voting exclusion statement on Resolution 9: The Company will disregard any votes cast on this Resolution by a person who participated in the issue and an Associate of that person (or those persons). However, the Company need not disregard a vote if 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 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. 10. RESOLUTION 10: CHANGE OF COMPANY NAME To consider and, if thought fit, to pass the following resolution as a special resolution: “That, subject to Resolutions 1, 2 and 7 being passed, for the purpose of section 157(1) of the Corporations Act and for all other purposes, the Company's name be changed from Emefcy Group Limited to Fluence Corporation Limited and that, for the purposes of section 136(2) of the Corporations 9 Act and for all other purposes, all references to Emefcy Group Limited in the Company's constitution be replaced with references to Fluence Corporation Limited." Dated 8 June 2017 By Order of the Board Richard Irving Executive Chairman 10