PARTICIPATION & INVESTMENT

All participants in, and investors in, projects in Kentron-managed sandpits must agree to and sign the Kentron Shareholder Agreement and Kentron Company Constitution. The Shareholder Agreement includes non-disclosure clauses to protect the Intellectual Property (IP) inherent in each sandpit project.

External investors may wish to invest in a project by purchasing Type 1 Conversion Notes. The Project Leader has veto rights regarding any external investment. If, however, the Project Leader accepts the proposed investment, the following conditions apply:

• The minimum value, and the number of Type 1 Conversion Notes available for purchase, will have been set by the Project Leadership Team at the preceding 6-month review. The investor is able to purchase any number of Conversion Notes up to the prescribed limit. The actual purchase price is determined by negotiation between the Project Leadership Team and the investor and can end up being higher than the minimum value.

• The funds accruing from the sale of Conversion Notes by the project are bound to the project and are added to the project account.

• The Conversion Notes allocated to the investor are bound to the project.

If the Project Leader has asked an individual to work on their project, they are able to offer two different types of compensation to cover the time the individual contributes to the project, viz.:

As the allocation of Type 2 Conversion Notes to an individual allows work to be done on a project without significant capital outlay, the allocation of these Conversion Notes will often be the preferred method for compensation, especially in the initial stages of the project. However, the Project Leader can choose to pay for the services of an individual to work on a specific task within the project. If the project has sufficient funding to cover the costs to contract in expertise, the Project Leadership Team is able to authorise this. The person being employed on the project is formally employed by Kentron Ltd and is then seconded to the project. A fee may be charged (as detailed in the contract between Kentron and the client organisation) to cover costs associated with such employment, e.g. payroll costs, ACC costs etc.