In isolation the option needs to be exercised at $0.65, so if...

In isolation the option needs to be exercised at $0.65, so if the share price is greater than that, the option is considered 'in the money' meaning you can pay the $0.65 to convert and you'll be in a profit position.

The tricky part is (using my example) today we have a chance to use our $5,000 to buy shares on market at $0.30, or alternatively we use that $5,000 to participate in the Share Purchase Plan.

I'll break this down in to the two choices so they're easier to refer to:
Option 1 - If you buy on market you'll have 16,666 shares
Option 2- If you buy in the SPP you'll have 10,869 shares and 10869 options.

So now look at the position if the share price is $0.65 and you convert the options.

Option 1 - Your 16,666 shares are worth $10,832.90 and you paid $5,000 (profit = $5,832.90)
Option 2 - Your 21,738 shares are worth $14,129.70 and you paid $5,000 + $7,064.85 = $12,064.85 (profit = $2,064.85).

Now i realise I made a mistake somewhere as the hurdle rate is actually $1.40, not $2.65 (was going by memory from calculating earlier that morning so not sure where I've gone off).

So looking at $1.40:

Option 1 - Your 16,666 shares are worth $23,333.33 and you paid $5,000 (profit $18,333.33)
Option 2 - Your 21,738 shares are worth $30,434.78 and you paid $12,064.85 (profit $18,369.93)

So if you think the share price will exceed $1.40 in 5 years you're better off buying in the SPP as you'll have exposure of 21,738 shares instead of 16,666, but unless the price reaches $1.40, you'll be worse off participating.

Apologies for the error in previous calculations - I'll go back and edit.