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									Nova Technology Fund

Information on the Fund and the Application Process

General Information

Nova Technology Fund (Nova) is a venture capital fund, otherwise known as a “private equity fund.” It is based in
Aberdeen and chaired by Lord Fraser of Carmyllie, QC, PC. Nova makes an investment by buying a significant, but
minority, stake in the shareholding of a private limited company. The investment transaction is therefore an exchange
of cash for equity, sometimes in combination with equity-related loan stock. Nova reserves the right to appoint non-
executive directors to the board of the company.

The investment is not a grant, nor a simple loan. Nova expects to be able to sell its shares in the company at a later
date for a profit. This is usually done in concert with other shareholders as part of a trade sale, flotation, merger,
management buy-out, or other financial restructuring of the company.

With an early stage company, Nova’s investment may represent most of the company’s financial capital, even though
it only holds a minority of the shares. In this case it is paramount that the company has the prospect of a high rate of
growth, to allow Nova any chance of recovering its investment with a profit. The quality of the company’s
management team is therefore as important as its product.

Clearly there is a commercial risk that an investee company may not grow as expected, and that Nova may not
recover its investment. That is a risk that Nova will take with the company. Nova manages that risk by building a
portfolio of investments in a way that success can reasonably be expected to outweigh failure.

Venture capital is most suited to companies with innovative products and strong growth prospects. Company
directors and shareholders must be willing to engage in a medium term partnership with Nova, and carry the ambition
of an eventual share sale to realise a profit for both.

Comprehensive information about venture capital can be accessed through the British Venture Capital Association
website www.bvca.co.uk

Specialist Nature of Nova

Nova is a specialist venture capital fund. It seeks to invest mainly in small to medium sized British companies which
have innovative technology in the upstream oil and gas industry. The technology must be developed to the point
where the concept has been proven and is ready for commercialisation. Research projects are not suitable.

Nova is particularly interested in technologies which can make a real improvement to exploration results, produce oil
and gas more efficiently, exploit reservoirs better, or provide improved and cost effective safety and environmental
performance.

Nova is supported financially and technically by the UK oil and gas industry. Whilst it is expected that the UK oil and
gas sector will benefit from the new technologies, they must be equally attractive to the wider global market.

Specific Features of Nova

Nova is collective investment scheme. It is structured to be a Limited Partnership of major players in the UK oil and
gas industry, together with a range of commercial investors. Its activities are regulated under the Financial Services
Act. To secure compliance with that act, all of the regulated investment activity is delegated to an authorised
Investment Manager, Aberdeen Murray Johnstone Private Equity.

The general administration of Nova, scouting for investment proposals and the links with the oil and gas industry are
the responsibility of a so-called “General Partner Company.” This is a company specially set up for that task, and it is
called Nova Technology Management Limited (NTML).

NTML has the task of maintaining the flow of technology investment proposals. It does this though actively seeking
out innovation in the supply chain, working with other industry initiatives, liaising with universities and regional
enterprise bodies and communicating Nova’s availability to entrepreneurs. Proposals are screened for proof of
concept, technical merit and availability of a business plan. The promising ones are submitted to an Advisory Panel
of industry technology experts to obtain a broad view on their technical value, and to rank them in priority. Proposals
supported by the Advisory Panel are then passed to the Investment Manager for a commercial assessment of growth
prospects, funding needs, management abilities and so on. If the Investment Manager believes that the proposal is
worthy of investment, he will make a recommendation to Nova’s Investment Committee. Clearance by the Investment
Committee allows the Investment Manager to make a deal with the proposing company.

The maximum size of deal is £1 million or 10% of the fund size. Nova may create or join a syndicate with other
venture capital firms if the size of deal is over that figure, or if it wishes to spread risk and widen its portfolio. The
amount of equity bought in any deal is a matter of negotiation.

On issues of whether to make a deal or not, and how much to invest, and under what conditions, the decision
belongs rightfully and legally to the Investment Manager, and his decision is final. There is no course of appeal by the
proposing company back to the Advisory Panel, to NTML or to the investors.
Once an investment is made, NTML expects to provide continued support from industry, in a variety of ways such as
assisted trials, industry mentors, access to technologists and even staff exchange schemes.


Application Process for Investment Proposals

You should express interest to one of the Directors or the Technical Manager of NTML via the contact points printed
at the end of these notes.

The Technical Manager will arrange to visit you and he will discuss your proposal. He will be interested in the validity
of the technology against Nova’s aims, proof of concept, availability of a business plan, protection of IPR and your
willingness to sell equity in your company. He may direct you elsewhere if the proposal is not right for Nova. If some
aspect needs to be developed, he will stay in touch with you while you do that.

If the proposal is sufficiently developed, he will provide guidelines for your application and distribute it to the members
of the Advisory Panel. All the members of that panel have signed undertakings of confidentiality for Nova applicants.
You will be asked to make a 30-minute presentation to a formal meeting of the Advisory Panel, followed by 15
minutes of questions and answers.

If the panel supports your technology, its report will be passed to the Investment Manager for a commercial
assessment of your proposal. At this point, all further decisions about investment rest squarely with the Investment
Manager, and you must deal with him.

The Investment Manager will visit you to value your proposal, look at your company’s structure and management,
conduct due diligence on any commercial and financial statements, decide on investment levels and equity stake and
build an idea of how to eventually realise the investment. If all of that goes smoothly, the Investment Manager will
offer a deal, subject to the clearance of Nova’s Investment Committee and agreement with your lawyers.


Primary Industry Contacts

Barry Hood, Technical Manager
David Owen, Industry Director, at:

Nova Technology Management Limited
Exploration House
Exploration Drive
Bridge of Don
Aberdeen AB23 8GX

Telephone            +44 (0) 1224 705471
Fax                  +44 (0) 1224 705481

Email                barry.hood@novafund.co.uk
                     david.owen@novafund.co.uk

Website              www.novafund.co.uk




                                                                                           David Owen
                                                                                           and Barry Hood
                                                                                           at the Nova Office
                                                          Founder Industry Partners


INNOVATIVE TECHNOLOGY



Specific technology proposals approved by the Founder
Industry Partners have included the following:


    Subsurface         Facilities     Health & Safety


   Airborne         Acoustic          Remote cable
   gravity          separator         release system
   gradient         enhancement
   surveys


   Cable free       Multiphase        Flammable gas
   seismic data     metering          sensors
   acquisition



   4D seismic       External          Laser light trail
   interpretation   corrosion
                    evaluation
                    system




          KEY AREAS FOR THE NORTH SEA

                  Decommissioning
                 Subsea Intervention
                    Asset Integrity
                          HSE
               Subsea power generation
                Underbalanced drilling
           Reservoir attributes from seismic
          Increased reliability and automation




   Commercialising oil and gas technology in
         partnership with industry

Nova Technology Fund, Exploration House, Offshore
Technology Park, Bridge of Don, Aberdeen AB23 8GX
Tel: +44 (0) 1224 705471 Fax: +44 (0) 1224 705481
                  www.novafund.co.uk

								
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