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BUSINESS PLAN

Real Dutch Water

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TABLE OF CONTENTS

BUSINESS PROFILE.........................................................................3

1.0 PROJECT BRIEF.................................................................................................................6

1.1 FINANCIAL SUMMARY...................................................................................................7

1.2 PROJECT RATIONALE.....................................................................................................7

2.0 MARKET OPPORTUNITY................................................................................................7

2.1 MARKET OVERVIEW.......................................................................................................7

2.2 COMPETITION AND MARKET SHARE CHARACTERISTICS....................................8

3.0 BUSINESS PLAN...............................................................................................................8

3.1 PRODUCT SALES..............................................................................................................9

3.2 RAW MATERIALS.............................................................................................................9

3.3 PRODUCTION PROCESS..................................................................................................9

3.4 DISTRIBUTIONAND MARKETING TECHNIQUES....................................................10

3.5 HUMAN RESOURCE REQUIREMENT.........................................................................10

4.0 PROJECT FINANCIALS..................................................................................................11

4.1 OPERATIONAL DATA....................................................................................................11

4.2 OVERALL FINANCIAL PROSPECT..............................................................................11

5.0 BENEFITS TO INVESTOR.........................................................................................12

APPENDIX 1: EXCISE WATER MANUFACTURERS LICENCED BY KENYA REVENUE AUTHORITY IN THE YEAR 2012....................................................................14

SELLERS AGREEMENT.......................................................................................................16

REAL DUTCH WATER (INVESTOR’S PAY BACK PLAN)..............................................17

INVESTORS AGREEMENT..................................................................................................18

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BUSINESS PROFILEa) Name of Business: Real Dutch Water

b) Main business: Supply of Healthy drinking water (DWL)

c) Management:

Advisor/Chief Executive: Rex van der Munnik NS65DB226

Director: Purity WangeciHirigo 1197702

Director BenardMutioNzavi 9344202

Director: David NziokaMutisya 20789753

d) Financial Standing:

Work Capital: 460,000 ksh.

Bank Capital ABN-AMRO: 15,000,000 ksh.

Total Capital: 15,460,000 ksh.

Sales + V.A.T. a month: 896,161 ksh

Net Profit: 186,864 ksh

e) Contact:

Name: Rex van der Munnik

Phone: +254 728 630 571

E-mail realdutchwater@yahoo.com

f) Head office Nairobi:Portal Place House

Muindi Mbingu Street

2nd Floor no. 211

P.O. Box: 41397-00100 Nairobi

g) Current Source of water:

Water factory: Mtwapa, Mombasa

Registration no.: BN/2014/273180

h) Resumes of Directors

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1. Advisor/Chief Executive:Reginald (Rex) van der Munnik

Reginald (Rex) van der Munnik, aged 51 years, lives at the

ChairoadPangani. Currently Rex works as an assistant Manager with

the Irdeto in The Netherlands. Rex obtained his education in The Netherlands; he graduated

with Bachelor of business from Haarlem Business School (H.E.A.O) Business Economic.

Rex started his first business in 1992 in The Netherlands in car hired of expensive cars. In

1999 Rex started his first company on the Africa continent, Crexxit is a car hire in Benin

City, Nigeria. From 1995 till 1999, Rex was working in the water cleaning business for PWN

in Haarlem, The Netherlands. In 2008, Rex came in contact with DWL Mombasa and started

to sell, healthy drinking water in Loitokitok, Kenya.

2. First Director

David NziokaMutisya

David Nziokawields a B2 French Diploma from the ForrNax College,Nairobi as well as

Foundational Accreditation in Arabic from Avicenna Cultural Library of the Islamic

Republic of Iran, Nairobi. He has possesses a BSC (Forestry) degree from Moi University

and is currently an MA (Communication Studies) candidate in the University of Nairobi and

He has been a rigorous researcher and social entrepreneur. He has also been a resource person

with the Deutsche Technishe Universität, Dresden, Germany in collaborative research

projects targeting Kenya, Ethiopia, Sudan and Germany. David has also taught organizational

behavior at college level in Kenya and has been active in the CSO and PSO sectors. As such,

he is the treasurer of the Living Testimony Organization, a Kenyan non-profit organization.

David has also worked directly for the Kenya government as well in government funded

projects. Furthermore, he is also the Director of Data and Print Experts Kenya, a research

consultancy firm with local and international reach. To this end, he brings on board strong

management and networking skills.

3. Second Director

Bernard Mutio Nzavi

Bernard is a robust business man (A-level graduate). For the last close to thirty years,

Bernard has worked in the hotel and tourism sector. He is also the director of Light Tours and

Safaris, A tour firm that targets the East Africa region. He brings on board immense capacity

in business liaison and venture in the region.

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4. Third Director

Purity Wangeci Hirigo

Purity is a college graduate (Tourism) and has been active in establishing SMEs. As such she

has worked in the food, graphics and cosmetics sectors. She has firm understanding of the

Kenyan business landscape and shall be pivotal to the success of the project.

i) Experience

The project is informed by a prior project undertaken under the auspices of the advisor

(Reginald (Rex) van der Munnik). Under this project, water has been obtained from Dutch

Water Limited in Mombasa and marketed in Kajiado and Nairobi. The project has had been

successful and this has led to the conceptualization of establishing a water processing plant in

Nairobi to cater for the huge local demand.

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HEALTHY DRINKING WATER PROCESSING PROJECT

1.0 PROJECT BRIEFThis proposed project presents an investment opportunity for establishing a bottled water

plant for providing pure drinking water. The proposed product line will consist of bottles of

0.5, 1, 2,4,12 and 20 liters. In the initial phase of the project will focus on bottles of 12 liters

and dispenser bottles of 20 liters in the in the local market. After successful introduction of

this type of bottled water, the product line will be extended to .5, 1, 2 and 4 liter bottles.

The market for mineral water in Kenya has been showing a mushroom growth trend over the

last fewyears. Kenya’s bottled water industry is worth about 12 billion Kenyan shillings per

year ($160 million). In 2009 alone, the industry sold 314 million liters of water under more

than 100 brands1. This was at an average price of 38.22 shillings ($0.48) per liter, which is far

too costly for most Kenyans. Ever since, there has been rampant growth in the water sector.

Regrettably, the quality of bottled water is often hard to ascertain; not with the rise of

counterfeit goods in Kenya. This makes this project unique since customers will be given

warranty2 for the water they purchase.

The potential markets for bottled / mineral water in Kenya consist of foreigntourists and

foreigners working in Kenya, hotel industry, patients (bottle water is alsoused to avoid the

possible consumption of contaminated water), travelers and increasingly offices and

homesteads. Moreover, thebottled / mineral water has been emerging as a daily preference of

the elite class.

The project can bottle 30,000 litersof water per day. Each liter shall be sold at a whole sale

price of Ksh 7. The sale at 100% capacityutilization per month is project at Ksh. 4,410,000.

The project would be set up in Nairobi County where allthe required infrastructure and

amenities are available.

1 Githinji, P. Thriving bottled water business attracts thirsty vendors. The Standard. April 6, 2010. Accessed on the Standard Online website (http://www.standardmedia.co.ke) on June 10, 2010.2 Customers will be given warranty for all the water they purchase. This shall entail refund for all water previously purchased from the company and free medical treatment for any sickness associated with drinking the water.

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1.1 FINANCIAL SUMMARY1) Monthly income:Ksh. 4,697,500

2) Gross Profit Margin3: 53.59%

3) Mark up: 115.48%

4) Gross profit per month: 2,517,500.00

5) Payback period 4Years

1.2 PROJECT RATIONALENairobi and its surrounding areas is a land that has immense underground water resources.

Indeed the name Nairobi is from the Maasai name for place of cool waters. This presents an

ample opportunity to bottle this local consumption. Furthermore, the need for affordable

bottled water in Nairobi cannot be gainsaid. Furthermore, the increase of awareness of

waterborn diseases is increasing. Coupled with modern trends of living, the market of

bottledmineral water is growing faster than the supply. As such, there is increasing interest of

investment in this sector. This emanates from the fact that the market for purified bottled /

mineral water is a growingmarket. Furthermore, Real Dutch Water borrows heavily from

extant experience from one of its Directors in implementing successful marketing networks.

A pilot distribution project of mineral water in Nairobi has been successful. Indeed demand

for water under the proposed price regime of Real Dutch Water surpasses supply.

2.0 MARKET OPPORTUNITY

2.1 MARKET OVERVIEWThere are more than 100 major players in the bottled water sector (Appendix 2). According to

the industry sources (Kenya Revenue Authority). This has been due to the demand for pure

drinking water in Kenya. The market comprises of two segments:retail market and bulk

market.

The retail market consists of 0.5, 1, 2 and 4 liter capacity disposable bottles. The bulk market

consists of home and officedelivers in 5 -20 liters dispenser bottles.The process of purified

bottled water manufacturing consist of collecting water from a suitable source, filtration,

3 Margin Formulas/Calculations: The gross profit P is the difference between the cost to make a product C and the selling price or revenue R (P = R – C); the mark up percentage M is the profit P divided by the cost C to make the product. (M = P / C = (R - C) / C) and; the gross margin percentage G is the profit P divided by the selling price or revenue R (G = P / R = (R - C) / R).

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demineralization, blending with salts, aeration, testing for standards

conformation, bottling and packaging.

2.2 COMPETITION AND MARKET SHARE CHARACTERISTICSAs already pointed out, there are over 100 major players in bottled water sector in Kenya.

The following is an overview of the competitive landscape. Most of the Kenyan market

(about 70%) is controlled by Four Major brands (Aquamist, Crown, Dasani and Keringet).

The remaining 30 percent is controlledby the other brands. Real Dutch Water shall endeavor

to penetrate this market through competitive pricing, superior products, robust marketing and

progressive research.

Figure 1: Market Share Characteristics

Source (Adapted from the University of Nairobi4 and EuroMonitor)5

3.0 BUSINESS PLANHigh quality bottled mineral water will be processed/produced for the customers. Theplant

will start its operation from 30% capacity and finally reach 90% capacity by the endof 4

years. There is also anticipated growth of 10 % in sale price of the product. As the market

share increasesthe product shall also be marketed in neighboring East Africa countries.

3.1 PRODUCT SALES1. Plant Capacity liters per day 90,000 liters

4 Kenya’s Bottled Water Industry, University of Nairobi, Department of Chemistry. Accessed on 26 from February 2014 http://www.euromonitor.com/bottled-water-in-kenya/report5 Euro Monitor (2013) Bottled Water in Kenya: Country Report. Available on 26 February 2014 from http://www.euromonitor.com/bottled-water-in-kenya/report;

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2. Production per day in liters (30% capacity)

30,000 liters3. Production capacity utilization growth rate 10%4. Sales growth rate 10%5. Capacity utilization in first yr 60%6. Maximum Capacity utilization 95%7. Sale price per liter Ksh. 78. Initial Sales per day at 30% production capacity Ksh. 4,410,000

3.2 RAW MATERIALSThe project shall purchase a piece of land (0.5 acre) within a radius of 40 Km from Nairobi

CBD. A bore hole shall be drilled in this piece of land to provide water for the project.

3.3 PRODUCTION PROCESSThe first step for setting up a water purification plant is the analysis of source of water. After

the chemical analysis, the specifications of the purification plant are set. In the purification

plant, source water is stored in the feed water tank, passes through the pre-filter for

preliminary water filtration.

Water then is soften further and filtered further in a fine filter. After this, the water passes

through Reverse Osmosis (RO) membranes. Reverse Osmosis Reverse osmosis removes

many types of molecules and ions from water. After that, the water passes through a Nitrate

removal unit. It is then filtered further in the post filter and stored in a clean water reservoir.

The next stage includes further filtration in a fine filter and ultra violet (UV) disinfection and

delivery. Ultra Violet treatment is done to avoid any contamination frombacteria and other

micro organisms. Water then is delivered through a bulk line delivery or through the bottling

plant.The complete process flow is shown in Figure 2.

Figure 2: The processing plant

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3.4 DISTRIBUTIONAND MARKETING TECHNIQUESBranding and marketing of bottled water is as essential as water for the survival of thehuman body. The traditional marketing tools include site advertisement, TV and print mediaadvertising and brochures. This projectshall use robust online marketing techniques and social marketing techniques. Independent marketers shall work through closed matrix marketing plan. To this end, marketers shall be paid for each new customer and shall be paid for subsequent orders from the client. This shall reduce operational costs since marketers (sellers) do not have to be fulltime employees of the business. In addition, the business shall sponsor public events like sport events or hospital campaigns, distributing free brochures about water and its daily consumption, water requirements in different age brackets. This shall be critical in garnering new markets and promoting the brand. Furthermore, the project shall use interactive marketing. This may include educating the general public about the importance of water and itsdaily consumption requirements for human body through the participation in seminars andin general public gatherings (e.g. College and University gatherings). All in all, the overall marketing strategy may change with the change of target market. Amarket research study is recommended to design the different dynamics of marketing beforelaunching the new brand. Marketing expense has been included in the total project cost and it has been estimated at Ksh. 300,000.

3.5 HUMAN RESOURCEREQUIREMENTThe following requirement of staff along with their levels and monthly salary is foreseen forthis project.Designation Number of staff Salary (Total)

1) Chief Executive/ Advisor 1 150,000*2) Marketing Manager 1 75,000*3) Sales Manager 1 75,000*4) Public Relations 1 75,000*5) Accountant 1 50,0006) Machine operator 2 50,0007) Driver 2 50,0008) Fillers 6 150,0009) Packing supervisor 2 50,00010) Cleaner 2 50,00011) Watch man 4 100,000

Total 23 875,000* The first four positions shall be drawn from the directors of Real Dutch Water as such their salaries could fluctuate based on the monthly performance of the company. All other positions shall be on a fixed rate.

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4.0 PROJECT FINANCIALS4.1 OPERATIONAL DATAThe plant will be operated in the first year at 30% capacity and as the market expands the

90 % plant capacity will be attained by the end of fourth year.

4.2 OVERALL FINANCIAL PROSPECTItem Amount (Ksh)InvestmentWater cleaning machine 3,025,000Transport 40,000Lease Land and building 700,000Licenses 80,000Total 3,845,000

Production cost per monthSalary (15 persons) 875,000Maintenance of machine 300,000Electricity 80,000Total 1,255,000

Monthly incomeWater (30,000 liters @ Ksh 7 per liter) 4,410,000Donation (2500 Euro) 287,500Total 4,697,500

Annual profit for first 4 years 85,303,089

Notes 1. Annual Profit calculation:

= (Total income*12 months) – ((Total investment / 4 years) + (Production cost*12))

2. Amount Requested (Ksh):

= Total investment + production cost per month for 1 month

= 3,745,000 + 1,255,000

= 5,000,000/=

=Five Kenya shillings only

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5.0 BENEFITS TO INVESTOR1. Offer 20% share of net profit for a period of 4 years.

2. Sponsor the events of the funder/investor ( see section 3.4);

3. Offer more direct employment opportunities as they arise

4. Pay 1% of the post-tax profit as investor’s liaison person allowance for the time spent

in meetings during the process of executing the project for a period of 4 years.

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6.0PROJECTED CASH FLOW STATEMENT

Year 1 Year 2 Year 3 Year 4Starting CapitalTotal Capital RDW: 15,460,000 39,142,997 54,529,694 69,916,392Investor 5,000,000Total Capital 20,460,000 39,142,997 54,529,694 69,916,392Investment Cost: Water Cleaning Machine 756,250 756,250 756,250 756,250Transport 10,000 10,000 10,000 10,000Lease Land and Building 700,000 700,000 700,000 700,000Insurance 174,750 174,750 174,750 174,750Transport Cost: Car 500,000 500,000 500,000 500,000Fuel 424,000 424,000 424,000 424,000Insurance (Car) 115,000 115,000 115,000 115,000Office equipment Cost: Desk 38,000 0 0 0Seats 34,500 0 0 0Laptop 34,500 0 0 0Tablet 115,000 0 0 0Smartphone 69,000 0 0 0Airtime 36,504 36,504 36,504 36,504Production Cost: Maintenance of Machine 3,600,000 3,600,000 3,600,000 3,600,000Salary 10,500,000 10,500,000 10,500,000 10,500,000Electricity 960,000 960,000 960,000 960,000Repayment Investor: Extern 1,250,000 1,250,000 1,250,000 1,250,000Intern (Rex) 5,000,000 5,000,000 5,000,000Other Cost: Licenses 400,000 400,000 400,000 400,000Research and Development 200,000 200,000 200,000 200,000Training 400,000 400,000 400,000 400,000External work 200,000 200,000 200,000 200,000Total Business Year Cost 20,517,504 25,226,504 25,226,504 25,226,504

Business Sales: Water 7 52,920,000 52,920,000 52,920,000 52,920,000Donation 287,500 287,500 287,500 287,500Total: 53,207,500 53,207,500 53,207,500 53,207,500Profit Befor tax and internal investment: 32,689,996 27,980,996 27,980,996 27,980,996New Water Cleaning MachineNew Water Cleaning Machine 6,000,000 6,000,000 6,000,000 6,000,000Profit Befor tax: 26,689,996 21,980,996 21,980,996 21,980,996Total Profit after Tax: Tax 8,006,999 6,594,299 6,594,299 6,594,299 Total Profit: 18,682,997 15,386,697 15,386,697 15,386,697

Total Capital after Tax: 39,142,997 54,529,694 69,916,392 85,303,089

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APPENDIX 1: EXCISE WATER MANUFACTURERS LICENCED BY KENYA REVENUE AUTHORITY IN THE YEAR 2012

NO. COMPANY NAME BRAND TOWN STATUS1Penrose Enterprises Aberdare wells Bottled Water Nairobi Licensed2Aberdares Water Ltd Aberdares Nairobi Licensed3Alpine Coolers Ltd Alpine Coolers Nairobi Licensed4World Trade Ltd Alpine Drinking water Mombasa Licensed5Gambino Bottling Ltd Aqua Drop Nairobi Licensed6Aqua Mineral& Beverages Ltd Aqua Minerale Nairobi Licensed7Tri Clover Industries (K) Ltd Aqua3 Nairobi Licensed8Aqua Kula Ltd Aquakula Voi Licensed9Aquamist Ltd Aquamist Nairobi Licensed

10Edu Premier Co. ltd Aquanella Nairobi Licensed11Saab Enterpries Ltd Aquasafe Mwingi Licensed12Komax Investment Ltd Aquelle Drinking water Mombasa Licensed13AsiliaEnterpises Asilia Mombasa Licensed14AvianoE.A Aviano Nairobi Licensed15Blue Wave Company Ltd Blue Wave Mombasa Licensed16Rayaan Traders Ltd Blueridge Mombasa Licensed17Canan Gardens Ltd Canan Embu Licensed18Chemlana Springs Chemlana Springs Nairobi Licensed19Cheranganyi Spring Water Cheranganyi Springs Moi's Bridge Licensed20Red Rocks Enterprises Cherry Creek Meru Licensed21Qplast Industries Ltd Cool Blue Mineral Water Nairobi Licensed22Crystal Cool Pure Springs Water Crystal Cool Nairobi Licensed23Sammeer Agriculture & Livestock (K) Limited Daima Nairobi Licensed24Nairobi Bottlers Ltd Dasani Nairobi Licensed25DanmarEnter.Ltd Deep Rock Aqua Limuru Licensed26Dutch Water Ltd Dutch Water Mombasa Licensed27Elims Food Processors & Distributors Elims Spring Water Chogoria Licensed28Debby’s Investment Engare Bibirion, Limuru Licensed29Super Brewers Equator Kisumu Licensed30Everpure Enterprise Everpure Malindi Licensed31Krystalline Mineral Water Com,pany Exquisite Nairobi Licensed32Raili Enterprises Ltd Fresh & Cool Nairobi Licensed33Malindi Industries Galana Malindi Licensed34Hydrolab Ltd Glacier Spring Water Nairobi Licensed35Grange Park/Usafi Services Ltd Grange Park Nairobi Licensed36Great Rift Mineral Water Ltd Great Rift Mineral Water Mai Mahiu Licensed37Highlands Mineral Water ltd Highlands Nyeri Licensed38Himalaya Himalaya Mombasa Licensed39Modular Products Horizon Nairobi Licensed40Mohamed Maye Omar Ismahan Enjoy Ice Water Mombasa Licensed41Guru Mineral Water Jasmine Mombasa Licensed42Lujusco Food & Bev Ind. Ltd Jusco Pure Drinking Water Nairobi Licensed43Khetia Drapers Kabarnet Mineral Water Kitale Licensed44Cartubox Industries(E.A) Ltd Kabazi Spring Water Nakuru Licensed45Kathini Springs Mineral Water Kathini Nairobi Licensed46Kelunet Ltd Kelunet Kericho Licensed47Kenrema Trading Co, Ltd Kenrema Mombasa Licensed48Kereita Enterprises Ltd Kereita Natural Spring Water Uplands/Thika Licensed49Crown Beverages Keringet, Pur Aqua Molo Licensed50Kimwa Suppliers KiliKili Karatina Licensed51AbdiRASHIDDirie Investment Kilimanjaro Alps Mombasa Licensed52Kirinyaga Mineral Water Co. Ltd Kirinyaga Mineral Water Embu Licensed53Lowland Food Industry Ltd Lowlands Spring Water Nakuru Licensed

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REAL DUTCH WATER MARKETING PLAN

Contact: Rex van der Munnik +254 728 630 571 e-mail: realdutchwater@yahoo.com

Real Dutch Water

Marketers’subscription fee 10, 000 ksh

First time delivery (By 10 piece)

200 x 24 = 4,800 ksh (1 new order)

Following up order

100 x 24 = 2, 400 ksh

Month income = 7.200 ksh (After 2 month)

8, 200 ksh (After 3 month)

" "

36, 000 ksh – 7, 200 ksh = 28, 800 ksh. (After 1 year) (Without selling)

By 540 jerry can = month income 21.000 ksh

SELLERS AGREEMENT

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Contact: Rex van der Munnik +254 728 630 571 e-mail: realdutchwater@yahoo.com

Real Dutch Water

Sellers Agreement

On ../../…. we agree to that .......................will do sales for Real Dutch Water.

.................................. paid a deposit of 10.000 ksh to M-pesa 07 28 630571.

Real Dutch Water give the seller a commission of 200 ksh after every paid new order of 10 jerry can or 5 dispenser bottles. Real Dutch Water give by every paid following up order of 10 jerry can or 5 dispenser bottles, 100 ksh.

By Fraud will Real Dutch Water not be responsible for any consequence and Real Dutch Water will not pay any commission.

Date:

Place:

Seller Real Dutch Water Witness

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REAL DUTCH WATER (INVESTOR’S PAY BACK PLAN)

Contact: Rex van der Munnik +254 728 630 571 e-mail: realdutchwater@yahoo.com

Real Dutch Water

Investors 72,000 ksh

Daily profit: 7,700 ksh

Partnership of 1/6 (72,000 ksh)

1,300 ksh each partner.

24 day's (Working day's)

Month income:

1,300 x 24 = 21,200 ksh. (Without selling)

After 4 months (Investment back)

4 x 21,200 ksh = 84,800 ksh

(The investor gets totally6 x 21,200ksh) = 127,200 ksh

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INVESTORS AGREEMENT

Contact: Rex van der Munnik +254 728 630 571 e-mail: realdutchwater@yahoo.com

Real Dutch Water

Investors Agreement

On …./…./2014 i agree to invest 72,000 ksh. in Real Dutch Water

The Investor, .............................. will be a sleeping investor for a time of six month. The

investor have send the investment of 72,000 ksh. to M-pesa 07 28 630 571.

Real Dutch Water (Reginald van der Munnik), have resaved the investment on …./…./2014

by M-pesa 07 28 630 571. RexDWL will use the investment for expanding the market of

healthy drinking water.

Real Dutch Water will pay the investor every month 21,200 ksh. for a time of six month, with

a total of 127,200 ksh after six month.

Date:

Place:

Investor Real Dutch Water Witness

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