Renewable Energy Fund

Transcription

1 The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. Renewable Energy Fund Trusted Alternatives Information Memorandum March 2013 Under The Enterprise Investment Scheme

2 Important Information This notice is important and requires your immediate attention. If you are in any doubt as to the action you should take, you are recommended to seek independent financial advice from a person authorised under the Financial Services and Markets Act 2000 ("FSMA") to provide investment advice in relation to securities of the type described herein. Unless otherwise defined in this information memorandum (this "IM"), all capitalised terms in this IM have the same meanings ascribed to them in Section 13. The Manager and the Investment Adviser The Manager of Old Burlington Investments Renewable Energy Fund (the Fund ) is Thompson Taraz Collectives Limited ( Thompson Taraz ), which is authorised and regulated by the Financial Services Authority (the FSA ), reference The Investment Adviser is Old Burlington Ventures LLP, trading as Old Burlington Investments, ( OBI ), which for the purposes of section 39 of FSMA is an Appointed Representative of Sturgeon Ventures LLP ( Sturgeon Ventures ), which is authorised and regulated by the FSA, reference Under the terms of the Investor Agreement at Section 12 of this IM, OBI will immediately succeed Thompson Taraz as the Manager of the Fund if it becomes appropriately authorised and regulated by the FSA to manage the Fund s Investments for the investors. In the event OBI becomes authorised and regulated by the FSA, it will cease to be an Appointed Representative of Sturgeon Ventures. Promotion restrictions This IM is a financial promotion for the purposes of section 21 of the FSMA. The content of this IM has not been approved by a person authorised under the FSMA and may only be communicated in reliance upon an exemption from the financial promotion restriction in section 21 of the FSMA. Accordingly, this IM is only intended as a promotion made to: 1. Investment professionals, as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order ); 2. High value entities (corporate, unincorporated, partnerships or trusts), as defined in accordance with Article 49 of the Order; 3. A director, officer or employee of any entity falling under (1) or (2), where that person has responsibility for the entity s investments and is approached in such capacity; 4. Any certified high net worth individual, as defined in Article 48 of the Order, being a person whom the Manager reasonably believes has signed a statement complying with Part I of Schedule 5 to the Order to the effect that in the financial year to 5 April 2012, he or she had: i) an annual gross income to the value of 100,000 or more; or ii) net assets (subject to exclusions for his or her principal home and mortgage thereon, and certain life insurances and pension products specified in the Order) to the value of 250,000 or more Any certified sophisticated investor, as defined in Article 50 of the Order, being a person who: i) holds a current certificate signed by an FSA-authorised person to the effect that he is sufficiently knowledgeable to understand the risks associated with an investment in unquoted securities; and ii) has signed, not more than 12 months prior to the date of this IM, a statement in accordance with Article 50(1)(b) of the Order; 6. A self-certified sophisticated investor, as defined in Article 50A of the Order, being a person whom the Manager reasonably believes to have made within the past 12 months a statement complying with Part II of Schedule 5 to the Order indicating that one of the following conditions applies to him: i) he has been a member of a network or syndicate of business angels for at least the 6 months prior to the date on which the above statement was signed ("Statement Date"); or ii) he has made more than one investment in an unlisted company in the two years prior to the Statement Date; or iii) he is working, or has worked in the 2 years prior to the Statement Date, in a professional capacity in the private equity sector, or in the provision of finance for small and medium enterprises; or iv) he is currently, or has been in the 2 years prior to the Statement Date, a director of a company with an annual turnover of at least 1 million. Any recipient of this IM to whom Articles 48, 50 or 50A of the Order applies and is in any doubt about the investment to which this IM relates should consult a person authorised by the FSA specialising in advising on unquoted securities. If you are not a person to whom any of the above categories apply, this IM is not intended for you and you should place no reliance upon it for any purposes. Distribution of this IM other than in accordance with the relevant exemptions mentioned above is not authorised by the Manager and may contravene FSMA. Client acceptance restrictions An investment in the Fund may not be suitable for all recipients of this IM. A prospective investor should consider carefully whether such an investment is suitable for him in light of his personal circumstances and the financial resources available to him. Other regulatory disclaimers By accepting this Information Memorandum (IM), the recipient represents and warrants to the Manager and Investment Adviser that they are a person who falls within the above description of persons entitled to receive it. This IM is not to be disclosed to any other person or used for any other purpose. Any other person who receives this IM should not rely or act upon it. Any individual who is in any doubt about the investment to which this IM or subsequent communication relates should consult an authorised person specialising in advising in participation in unquoted securities. Old Burlington Investments

3 Please note that applications may only be made, and will only be accepted, subject to the terms and conditions set out in this IM, the Investor Agreement and the Application Form. The attention of prospective investors is drawn to the fact that amounts invested in the Fund will be committed to investments which may be of a long term and illiquid in nature. Neither the Fund nor the companies in which it invests will be quoted on any recognised or designated investment exchange and, accordingly, there will not be an established or ready market in participations in the Fund nor the underlying investments. An investment in the Fund will therefore not be easily realisable. The protections offered by the FSA do not apply to the Fund and compensation under the UK Investor Compensation Scheme will not be available. Your attention is drawn to the risk factors in section 9 of this IM, which sets out certain risk factors relating to an investment in the Fund. All statements regarding the financial position, prospects and performance of the Fund should be viewed in the light of the risk factors set out in section 9 of this IM. In making an investment decision with respect to the Fund, all recipients must rely on their own examination of the Fund and the terms of the offer, including the merits and risks involved. A prospective investor should not subscribe for units in the Fund unless it is satisfied that it and its investment representative have asked for and received all information which would enable it or both of them to evaluate the merits of the proposed investment and the legal, regulatory, tax and other investment consequences and risks of doing so. This IM does not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not authorised or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation. It is the responsibility of each recipient (including those located outside the UK) to satisfy itself as to full compliance with the applicable laws and regulations of any relevant territory in connection with any application to participate in the Fund including obtaining any requisite governmental or other consent and observing any other formality presented in such territory. It does not constitute, and should not be considered as, an offer to buy or sell or solicitation of an offer to buy or sell any security or share. The Manager and Investment Adviser have taken all reasonable care to ensure that all the facts stated in this IM are true and accurate in all material respects and that there are no other material facts, or opinions, which have been omitted, which would make any part of this promotion misleading. Prospective investors should not regard the contents of this IM as constituting advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers before contemplating any investment or transaction. The information contained in this IM makes reference to the current laws concerning EIS relief, IHT relief and CGT deferral relief. These levels and bases of relief may be subject to change. The tax reliefs referred to in this IM are those currently available and their value depends on individual circumstances. Past performance is not necessarily a guide to future performance and may not necessarily be repeated. You should be aware that share values and income from them may go down as well as up and you may not get back the amount you originally invested. No person has been authorised to give any information or make any representation concerning the Fund other than the information contained in this IM or in connection with any material or information referred to in it and, if given or made, such information or representation must not be relied upon. This IM contains information relating to investment in the Fund and the Manager and Investment Adviser reserve the right to update this IM from time to time. An investment may only be made on the basis of this IM, the Investor Agreement and the Application Form. All statements of opinion or belief contained in this IM and all views expressed and statements made regarding future events represent the Manager s own assessment and interpretation of information available to it as at the date of this IM. No representation is made, or assurance given, that such statements or views are correct or that the objectives of the Fund will be achieved. Prospective investors must determine for themselves what reliance (if any) they should place on such statements, views or forecasts, and no responsibility is accepted by the Manager, the Fund or the Investment Adviser in respect thereof. Enterprise Investment Scheme funds such as this Fund, which are structured as discretionary portfolio management services, fall within the FSA's expanded definition of the Retail Investment Products and financial advisers should consider this before giving advice. Old Burlington Investments Renewable Energy Fund This information is dated 26 March This IM is not required to take the form of a prospectus compliant with regulations made under Part VI of FSMA, as there is no offer of securities being made to the public. This is because the maximum value of securities to be subscribed for by each Investee Company under the offer in this IM will not exceed 5 million during the 12 months commencing with the date of this IM. Old Burlington Investments Renewable Energy Fund 3

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5 Contents 2 Important Information 6 Section 1 List of Parties 7 Section 2 Introduction 8 Section 3 Fund Summary 11 Section 4 OBI and the Investment Committee 12 Section 5 The Investment Opportunity 14 Section 6 Investment Policy 15 Section 7 Tax and the Enterprise Investment Scheme 19 Section 8 Fund Structure, Offer Details and Fees 22 Section 9 Risks 24 Section 10 Operation of the Fund 25 Section 11 Frequently Asked Questions 26 Section 12 Investor Agreement 38 Schedule 3 Definitions 41 Application Form Old Burlington Investments Renewable Energy Fund 5

6 Section 1 List of Parties Investment Adviser and Promoter Old Burlington Ventures LLP, trading as Old Burlington Investments 10 Old Burlington Street London W1S 3AG Manager Thompson Taraz Collectives Limited 35 Grosvenor Street London W1K 4QX EIS Tax Advisers PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT Solicitors HowardKennedyFsi LLP 19 Cavendish Square London W1A 2AW Fund Administrator and Custodian Woodside Corporate Services Limited 7th Floor Gracechurch Street London EC3V 0EH Nominee WCS Nominees Limited 7th Floor Gracechurch Street London EC3V 0EH 6 Old Burlington Investments

7 Section 2 Introduction Almost all of today s mainstream investments were alternative investments once. Experience shows that those which make the journey from the fringes of the investment marketplace to the centre are those which meet a clear investor need, not met adequately elsewhere. At Old Burlington Investments "OBI", we believe that a number of investment vehicles currently described as alternatives now pass this test. These alternatives now meet two main investor needs. First, since the end of the 80s and 90s bull market, investment strategies for growth have been hard to develop and implement. In a turbulent, low-growth environment, blue-chip asset classes, markets and stocks have performed relatively poorly. As a counterbalance, many portfolio managers have looked to higher-risk satellite holdings to boost performance - but many of these have also disappointed. And second, with more restrictive pensions legislation now effectively capping contribution levels, there is also a pressing need for investments that can play an effective role in retirement planning strategies. OBI is a new investment boutique, established by a team with backgrounds in corporate finance, investment and asset management. Our aim is to identify opportunities to make accessible what are now seen as niche and alternative investment vehicles, promoting them to individual investors and their advisers, demonstrating the roles they can play in portfolio management and tax planning and presenting what they have to offer in clear, fair, balanced and transparent language. This demand for equity investment and the availability of tax incentives both stem from a single cause: the difficulties that smaller businesses continue to experience in raising equity and debt finance from traditional sources. To help overcome this problem, HM Treasury has created the EIS investment with a package of tax benefits that includes 30% Income Tax relief and, subject to certain conditions, complete exemption from Capital Gains Tax and Inheritance Tax. The Old Burlington Investments Renewable Energy Fund aims to bring together the principal benefits available in the category. Investors will enjoy the generic EIS tax advantages, the ability to take stakes in a portfolio of small and dynamic companies in an exciting market sector, based on stable technologies and robust revenue stream, as well as the opportunity to benefit from the skills of a fund management team with sleeves-rolled-up, hands-on management experience in renewable energy finance. I feel sure that in all these respects, it represents an attractive and appropriate starting-point for a new boutique with a clear and distinctly different vision. If you have any questions or comments, I would be pleased to hear from you. Brett Williams Managing Partner, Old Burlington Investments To this end, our first area of focus is the Enterprise Investment Scheme (EIS), a scheme which, as a result of recent regulatory changes, is poised for substantial growth potentially, we think, from 800 million last year to 2.5 billion or higher within the next three years. This IM will explain how EIS funds can now offer individual investors opportunities to invest up to 1 million a year to help meet the demand for equity investment on the part of many smaller, potentially high-growth companies and enjoy significant tax incentives in return. Old Burlington Investments Renewable Energy Fund 7

8 Section 3 Fund Summary The key details of the Fund are set out below and should be read in conjunction with the full text of this IM. The Fund The Fund is a discretionary managed fund service investing in growth businesses in the renewable energy and energy efficiency sectors, focussing on stable technologies (including, but not limited to, wind, solar, anaerobic digestion and energy efficiency), on durable revenues from state backed Feed-In Tariffs (FITs), Renewable Energy Obligation Certificates (ROCs) and equivalents, and on long term output arrangements with reputable counterparties. The Fund s core strategy is to work with experienced renewable energy asset managers whether in solar, wind, anaerobic digestion, energy efficiency or others throughout the life of each investment. The OBI Team Members of the OBI team have extensive finance and renewable energy backgrounds. Please refer to section 4 for further details. Offer Details Minimum Fund Size: 2,000,000 1 Maximum Fund Size: 10,000,000 2 Launch Date: 1 January 2013 Closing Dates: The earlier of full subscription or 5th April 2013 for Minimum Individual Investment: 5,000 applications in respect of the 2012/13 tax year and 28 June 2013 for applications in respect of the 2013/14 tax year 3 Before deduction of OBI Performance Fee After deduction of OBI Performance Fee 4 4 Target Return per 100p invested (before tax relief): Multiple of Net Invesment of 70p: Target Annual Rate of Return on Net Investment: Target Gross Equivalent Annual Rate of Return: 131p % 24.20% 120p % 21.60% 1 The Manager reserves the right at its discretion to decrease the minimum fund size 2 The Manager reserves the right at its discretion to increase the maximum fund size 3 The Manager reserves the right at its discretion to extend the Closing Dates 4 Assumes invested for four years 8 Old Burlington Investments

9 Investment Strategy The Fund s investment size may range from 2,000,000 to 5,000,000 per Investee Company. All initial investments will be in the form of equity. The Manager, advised by the OBI team, may consider an element of debt financing if this would be appropriate to enhance investor returns but, in the ordinary course, refinancing with debt will be considered only once investee revenues are stable. EIS Tax Reliefs Investors in EIS Qualifying Companies can, depending upon their individual circumstances, enjoy some or all of the following benefits: Up to 30% Income Tax Relief, reducing the cost of investment to 70p per 1 invested; Exemption from CGT on gains made from the disposal of EIS shares after three years; Unlimited deferral of capital gains realised in the three years prior to, or up to 12 months after, investments made by the Fund; Income tax or CGT relief for a loss made on the disposal of EIS shares; Inheritance tax relief if shares are held for more than two years - there is no limit on the amount of the investment qualifying for this relief. Fees and charges Initial fee 3.5%; Annual Investment Advisory Fee 1.95%; Annual Fund Administration and Custodian Fee 0.25%; Annual Fund Manager Fee 0.2%; As is customary, the Investment Adviser is entitled to a Performance Fee which is dependent upon successful realisations of the assets held within the portfolio. Accordingly, the Investment Adviser will receive from Investors a Performance Fee equal to 35 per cent of the amount realised over 1 for each 1 invested provided that the return exceeds the equivalent of an annual hurdle of 5 percent over the life of the fund. The above fees are exclusive of VAT if applicable. There are no additional arrangement, service, exit or monitoring fees and we will not invest in a company unless we have Advance Assurance from HMRC based on current law. Charges in the case of Applications in respect of which authorised intermediaries have provided financial advice Following the Retail Distribution Review (RDR) from 1 January 2013, authorised financial intermediaries offering financial advice are no longer permitted to receive commission from investment product providers. Therefore, in relation to Applications from applicants who have been advised by authorised financial intermediaries, in accordance with regulations introduced by the FSA, such intermediaries will have been obliged to recover compensation from the Applicants in consideration of advice provided to them, and no commission (initial or trail) is payable. However, subject to express instruction from the Applicant, arrangements will be made to pay on the Applicant s behalf such one-off advisory fees as the Applicant and his intermediary agree (and notify to the Fund Administrator) represents the cost to the Applicant of the advice he received in relation to the making of this Application. The rate of the Initial Fee payable to Old Burlington Investments (acting as Investment Adviser) by Investee Companies equal to 3.5% of amounts invested in them by Applicants through the Fund will remain unchanged by such arrangements. However, the amount of the one-off advisory fee will be deducted from the Applicant s subscription and remitted to the intermediary. Furthermore, tax relief will only be available on the amount subscribed net of such one-off fee and if the intermediary s fee includes VAT, the Applicant may remain liable for the VAT element thereof, even where arrangements have been made to make and pay the deduction mentioned above. Authorised intermediaries providing financial advice will be entitled to receive annual trail payments provided that the intermediary continues to act for the Investor and the Investor continues to be the beneficial owner of the shares subscribed for in the relevant Investee Companies for as long as laws and regulations permit such payment. Commission in the case of Applications in respect of which authorised intermediaries have not provided financial advice Authorised intermediaries not offering financial advice (sometimes known as execution only brokers) are eligible to receive: Introductory commission of 3.75%; or Introductory of 3% plus trail commission of 0.4% per annum for three years. Such authorised financial intermediaries also have the option of waiving an amount (e.g. 0%, 1%, 1.5%, 2%, 2.5%, 3%) or all of their commission, in which it will be reinvested in additional new shares in Investee Companies. The rate of the Initial Fee payable to Old Burlington Investments (acting as Investment Adviser) by Investee Old Burlington Investments Renewable Energy Fund 9

10 Companies equal to 3.5% of amounts invested in them by Applicants through the Fund will be increased to the extent necessary to cover the relevant rate of commission that is payable. For example, if an Applicant opts for introductory commission of 3.75%, the Initial Fee payable to Old Burlington Investments in respect of that Application will be increased to 7.25%. However, if the authorised intermediary indicates that they are waiving, for example, 2.75% of that initial commission in order to receive a lower commission payment of 1%, the Initial Fee of the Investment Adviser in respect of that Application will be increased to 4.5% to cover the commission payment of 1%. Applications Once you have read the IM and Investor Agreement, please complete either: A hard-copy Application Form which accompanies this IM, and return it to Graham Urquhart at Woodside Corporate Services Limited, 7th Floor, Gracechurch Street, London, EC3V 0EH along with the supporting documentation as requested therein to arrive no later than 1pm on 5 April 2013 for applications in respect of the 2012/13 tax year or 1pm on 28 June 2013 for applications in respect of the 2013/14 tax year 5 ; or An electronic copy of the Application Form and submit it by to info@woodsidesecretaries.co.uk by 1 pm on 5 April 2013 for applications in respect of the 2012/13 tax year or 1pm on 28 June 2013 for applications in respect of the 2013/14 tax year 5. Application Forms must be received before the relevant Closing Date. 5 Please arrange for investment monies to be transferred to Woodside Corporate Services Limited OBI Renewable Energy Fund Client A/c. Sort code: Account Number: Branch: RBS London St Mary Axe Applications may only be made and accepted subject to the terms and conditions of this IM, the Investor Agreement and the Application Form. Reporting The Manager will write to you every six months with a valuation statement and an update on each Investee Company s progress. The first report will be in respect of the first six months after the relevant Closing Date. The report will be issued two months from that date. Subsequent reports will be issued six monthly from the date of the previous report. 5 The Manager reserves the right at its discretion to extend the Closing Dates 10 Old Burlington Investments

11 Section 4 OBI and the Investment Committee The Investment Adviser of the Fund is OBI, whose cornerstone strategy is to work closely with the Manager and sector specialist Asset Managers. Asset Managers will be incentivised to identify attractive renewable energy investment opportunities and to oversee those investments with us during the course of the investment, to both protect and enhance value. The members of the OBI team possess a wealth of experience of investing at the forefront of the alternative asset industry, in conjunction with some of the world s major financial institutions. Investors in the Fund can expect to benefit from their considerable expertise in structuring project and asset finance, including renewable energy projects, and the subsequent realisation of value in these specialist assets. Brett Williams, Managing Partner Brett has over 30 years experience in the investment industry. He was formally Chief Executive of Cofunds a business he grew from 13 to 27 billion in assets under administration in 18 months - and prior to this was Chief Executive of Selestia overseeing its growth from zero to 5 billion in assets under administration. He was part of the acquisition of the Old Mutual team that aquired the Skandia Group, and was subsequently made Chief Executive of Skandia UK. Prior to that, Brett was retail sales director of M&G Group. Brett holds an honours degree in Economics from Aberystwyth UCW. Neil Lewis, Partner and Head of Risk Management Neil brings twenty-five years of experience in business to help OBI identify and evaluate a strong pipeline of opportunities. He was formerly General Counsel EMEA for Babcock & Brown and also a director of a number of operating and asset-owning entities in the Babcock & Brown Group. The Babcock & Brown Group was involved in infrastructure and renewable energy transactions throughout Europe (including France, Portugal, Greece, Germany, Spain, Italy and the UK) and Neil was responsible for the legal aspects of these transactions. Prior to this role, Neil worked for Nomura Babcock & Brown in Tokyo and as a solicitor for Freshfields in London. Sean Carey, Associate Sean is a Chartered Accountant and holds a Bachelor of Business Science degree in Finance from the University of Cape Town. Sean joined Old Burlington Investments after having spent four years in the assurance team at Ernst & Young in London. His professional experience is largely in the mining, oil, gas and utilities department where he focused on renewable energy and multinational mining clients. During this time Sean worked in teams overseeing multi-location assurance engagements on his key clients. Investment Committee The Investment Committee will be operated by Thompson Taraz, an established fund manager with knowledge of the EIS sector. The Investment Committee will be comprised of at least two senior investment managers who have the necessary approvals from the FSA and are authorised to make the final decisions on behalf of the Manager on Investments and realisations, based on advice of the Investment Adviser. The initial composition of the Investment Committee will be as follows: Brett Williams, Managing Partner of OBI See profile opposite. Neil Lewis, Partner and Head of Risk Management of OBI See profile opposite. Andrew Grieve, Partner of Thompson Taraz Thompson Taraz Collectives Limited is part of the Thompson Taraz LLP group (a firm of Chartered Accountants and Registered Auditors) which is a leader in the effective management of alternative investment funds. It offers a full range of fund support services from consultancy through to a complete outsourced fund administration package and has been instructed on over 2 billion of assets including property, solar, biofuel, waste to energy, wind and other trading and investment activities. Thompson Taraz Collectives Limited is authorised and regulated by the Financial Services Authority. Dan Bennett, Head of Business Affairs Dan has over eight years experience in renewables and private equity. Dan s professional experience has focused on renewable energy and energy efficient investment and deal execution, specifically M&A activity (structuring, negotiating and de-risking), financing, green field project, development and asset management. Prior to joining Old Burlington Investments, Dan held the position of Head of Legal Australia in the largest specialist renewable energy business in Australia, Infigen Energy. Dan also worked with Minter Ellison lawyers in their Finance Group. Old Burlington Investments Renewable Energy Fund 11

12 Section 5 The Investment Opportunity Renewable energy and energy efficiency have emerged as two of the most significant areas for private investment for two good reasons: firstly, the widely understood urgency to address climate change and relevant governmental targets and, secondly, the severe funding constraints facing renewable energy and energy efficiency businesses in the UK and elsewhere due to the current economic downturn. Industrial development and rapid population growth over the last 150 years has led to a dramatic increase in atmospheric CO2, the driver of global warming. Indeed, global annual emissions of green house gases increased by 70% between 1970 and The burning of fossil fuels - oil, coal and gas - releases carbon dioxide into the atmosphere and as CO2 levels build up they prevent solar radiation - that has already reached the earth s surface - from escaping back into the stratosphere. The result has been a shift in global climatic activity. With the global consumption of energy projected to grow by 45% between 2006 and 2030, there is major concern that these trends will simply accelerate. The UK Government wants to ensure that renewable energy fills some of this generation gap and, as a result, action is required sooner rather than later to ensure that renewable energy is obtained at a cost that keeps the UK economy competitive. The renewables obligation is the main support scheme for renewable electricity projects in the UK. It provides a strong financial incentive for all licensed electricity suppliers to secure a specified and rising proportion of the electricity they supply from eligible renewable sources. A ROC is a green certificate issued to an accredited generator for electricity generated within the UK from renewable sources and supplied to customers within the UK by a licensed electricity supplier. ROCs are issued for each megawatt hour (MWh) of eligible renewable output generated, the amount depending on the technology used. Suppliers meet their obligations under the scheme by presenting sufficient ROCs to the Office for Gas and Electricity Markets. Where suppliers do not have sufficient ROCs to meet their obligations, they must pay an equivalent amount into a fund, the proceeds of which are paid back on a pro-rated basis to those suppliers that have presented ROCs. The Government intends that suppliers will be subject to a renewables obligation until 31 March Hydroelectricity and anaerobic digestion ( AD ) projects with an installation size of 5MWh or less, are separately entitled to access to FiTs which were introduced by the Government, as of 1 April 2010, to provide guaranteed prices for individuals, businesses and communities who generate electricity from renewable or low carbon sources. Both hydroelectricity and AD are EIS qualifying trades. From November 2011, the Renewable Heat Incentive came into force, which guarantees fixed payments for 20 years to non-domestic generators of heat from renewable sources including biomass boilers, solar thermal, ground source heat pumps and on site bio gas consumption. It is important because it will encourage an increase in the level of renewable heat produced in the UK. The CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) is a UK climate change and energy saving scheme and is mandatory for certain entities. The scheme commenced in April 2010 and is focused on improving energy efficiency and cutting emissions in large public and private sector organisations. The scheme provides a strong financial incentive to reduce energy use by putting a price on carbon emissions from such use and also provides the opportunity for participants to make savings on energy bills through improved energy efficiency. Certain entities purchase allowances equal to their annual CO2 emissions. The overall emissions reductions achieved by the scheme will be determined by the emissions cap on the total allowances available to CRC participants. Within the overall limit, individual organisations can determine the most cost-effective way to reduce their emissions. This could be through buying extra allowances or investing in ways to decrease the number of allowances they need to buy. 6 IPCC Contribution of Working Group III to the Fourth Assessment Report 7 International Energy Agency, World Energy Outlook 2008 of the Intergovernmental Panel on Climate Change Climate Change 2007, Summary for Policy Makers 12 Old Burlington Investments

13 All the money raised through the allowances will be used to support public finance including spending on the environment. The scheme features an annual performance league table that publicly ranks participants on energy efficiency performance. In September 2009, the Government further announced the creation of a 350 million Community Energy Saving Programme. We anticipate that these financial incentives will stabilise the returns derived from Renewables Projects investing in energy saving technologies across domestic and industrial consumers, such as smart metering devices and more energy efficient building materials. Renewable energy technologies tend to be stable as projects generate revenues often linked to Government sponsored FiTs (for hydroelectricity and AD) and ROCs (for large solar and some AD). At the same time, equipment costs are expected to come down as the scale on which they are manufactured increases. We anticipate that both the security and stability of returns provided by Government led initiatives, together with the general outlook for future energy prices, will attract significant investment into the public and private renewable energy sectors over the next few years. We believe mobilising now and investing at this point in the renewable lifecycle brings great opportunity. We seek tax relief in a manner consistent with prevailing legislation and guidelines as well as with Advance Assurance from HMRC. Old Burlington Investments Renewable Energy Fund 13

14 Section 6 Investment Policy The Fund aims to deploy capital raised across a portfolio of high quality businesses within the renewable energy and energy efficiency sectors thus not only offering attractive returns for investors, but also creating employment and stimulating the economy by generating taxable revenues. Generally, we will not deploy funds in businesses whose primary activity is early stage development of renewable energy facilities (i.e. prior to full planning and construction consents) other than for an accelerated pre 5 April 2013 investment. Our core strategy is to work with experienced external sector specialist Asset Managers who are focussed on particular renewable energy or energy efficiency technologies - for example, whether solar, wind, hydro or energy efficiency, - and who have high quality pipelines of opportunities. We will ensure that their fees and their profit participations align their interests as closely as possible to those of its investors. The adoption of a conservative investment strategy will require the Investment Adviser to identify opportunities which have the potential to mitigate the risk to capital, while providing for commercially attractive and stable returns. Furthermore, the emphasis will be on business opportunities initiated by specialist developers. In each case, the Investment Adviser expects to work closely with sector specialist Asset Managers to secure suitable opportunities and to maintain oversight throughout the term of the investment. Each Investee Company is likely to sub-contract, where appropriate, certain services to highly qualified technicians and engineers to assist the Investee Company with the delivery and operation of the project. We anticipate that the majority of Renewable Projects will be delivered and operating within twelve to eighteen months from the time the site has secured full planning consents and contractual permits. The likely geographical focus will be across the UK, although recent changes to the EIS legislation mean that opportunities both inside and outside of the UK may be considered by the Manager where they, in the view of the Investment Adviser, meet the necessary risk and reward criteria and where the Investee Company has a permanent establishment in the UK. In accordance with industry practice, the majority of Investee Companies are likely to be new special purpose vehicles established for the purposes of progressing particular business opportunities. Investee Companies will benefit both operationally and strategically from the expertise of the Investment Adviser through its appointments to the board of directors of such Investee Companies. This will also assist with ensuring that the relevant Investee Companies operate within the agreed parameters mandated by the Fund. Each Investee Company will be required, prior to investment, to demonstrate that the relevant renewable energy or energy efficiency business opportunity offers scope to generate stable government backed income from ROCs, FiTs or income with an equivalent duration and stability. The size of each of the Fund s investments may range from 2,000,000 to 5,000,000 per Investee Company. The Manager may consider an element of debt financing where, in the view of the Investment Adviser, this would be appropriate to enhance investor returns, but refinancing with debt will usually only be considered once revenues are stable. 14 Old Burlington Investments

15 Section 7 Tax And The Enterprise Investment Scheme Unapproved Investment Fund The Fund is an Unapproved Investment Fund for the purposes of the Enterprise Investment Scheme. It has been structured to enable investors to claim EIS Relief and relief from IHT on the amount subscribed, as set out below. Under an Unapproved Investment Fund, such as the Fund, an investor can make a claim for Income Tax Relief upon receipt of an EIS 3 form issued by the relevant Investee Company. An Investee Company needs to have traded for a period of four months before the Company can make an EIS application to HMRC. Upon approval from HMRC, the Fund Administrator will distribute EIS 3 forms to investors in respect of the EIS Qualifying Company. Consequently, investors can make a claim for an Income Tax Relief as and when each EIS 3 is issued, rather than having to wait until the Fund has deployed all of its capital. The summary below provides an indicative guide to the tax implications of an investment in the Fund and is based on current understanding of UK tax law and practice. It does not set out all of the rules or regulations that must be adhered to and should not be interpreted as the provision of tax, legal or financial advice. Investors are strongly recommended to seek independent professional advice on the tax consequences of acquiring, holding and disposing of EIS Qualifying Shares before proceeding with an investment into the Fund. EIS Relief is only available on the amounts subscribed for shares in Investee Companies and its availability is dependent on the individual circumstances of each investor. The illustrations included in this section are indicative purposes only and should not be construed as forecasts or projections of the likely performance of the Fund. In order to access all the tax reliefs described, it is necessary to be a UK resident taxpayer and subscribe for EIS Qualifying Shares. Under the EIS legislation, there is a carry back facility which allows all or part of the cost of shares acquired in one year to be treated as though the shares had been acquired in the preceding tax year. Relief is then given against the income tax liability of that preceding year, rather than against the tax year in which those shares were acquired. This is subject to the overriding limit of 1,000,000 for years 2012/2013 onwards and 500,000 for 2011/2012. Consequently, if an Unapproved Investment Fund uses all of the funds raised to subscribe for EIS Qualifying Shares in the tax year 2012/2013, then an investor s subscription of up to 500,000 may be elected to be carried back to the 2011/2012 tax year for purposes of claiming Income Tax Relief (subject to the investor having sufficient income tax liability in that tax year). While reasonable efforts will be employed to deploy funds in Investee Companies to make carry back available to the Investor, the Manager cannot guarantee that it will have the full fund size in pre-allocated sites. As such, part of your investment may not qualify for carry back. We suggest you speak with your financial adviser for further details. EIS Reliefs Income Tax Relief Qualifying investors should obtain income tax relief at 30% (by way of a tax credit) on their subscriptions to the Fund and upon submission of an EIS tax certificate. Old Burlington Investments Renewable Energy Fund 15

16 Qualifying investors will have the option to carry back income tax relief to the previous tax year, on investments up to the amount of the unused allowance for that year of 500,000. Thus, a qualifying investor who has made no EIS investment in 2012/13 or the previous tax year may subscribe up to 1.5 million via the Fund in EIS Qualifying Shares by 5 April 2013 and elect to carry back 500,000 to the previous tax year in which the Fund invests to claim income tax relief. Qualifying Shares must be held by individuals for a minimum of three years from issue or else the relief may be withdrawn. In both cases, the total income tax relief cannot exceed an amount which reduces the investor s income tax liability in the relevant tax year to nil. Example ( ) Gross Investment in EIS Qualifying Shares 100,000 Less: Income Tax Relief at 30% (30,000) Net Cash Outlay for Investment 70,000 Income Tax Relief will be withdrawn if an investment attributable to an individual s portfolio of EIS Qualifying Shares is not held for the Relevant Period, or if the investor or his or her associate is connected with any EIS Qualifying Company at any time in the period beginning two years before the date of investment in the EIS Qualifying Company and ending at the expiry of the Relevant Period. Husbands, wives and civil partners can each make a maximum investment of 1 million in shares of EIS Qualifying Companies, in which the Fund will invest, provided that they are not connected with the EIS Qualifying Company. Exemption from CGT Any capital gains realised on disposal of EIS Qualifying Shares through the Fund after the Relevant Period and where Income Tax Relief has been granted and not withdrawn, will be exempt from capital gains tax. CGT Exemption ( ) Sales Proceeds from EIS Qualifying Shares 131,000 Less: Subscription Cost (100,000) Exempt Gain 31,000 Capital Gains Deferral Individuals can defer CGT on an unlimited amount of chargeable gains by subscribing to the Fund an amount equivalent to the chargeable gain. The gains which may be deferred are those which have arisen in the three years before the EIS Qualifying Shares are issued, and those which arise up to one year after that date. The ability to defer gains relates to each individual investment made by the Fund and so in order to claim full relief for the amount subscribed, the time limits must be applied by reference to the date of final investment made by the Fund. Capital gains are deferred until a chargeable event occurs such as a disposal of the EIS Qualifying Shares or a breach of the EIS legislation. However, a revived gain can be further deferred by reinvesting the gain in another EIS Qualifying Company. Share Loss Relief Under current legislation any capital losses realised on the disposal of EIS Qualifying Shares (net of Income Tax Relief attributable to the investment) qualify for Share Loss Relief. The amount of the net loss may be set off against capital gains in the tax year of disposal or carried forward for relief against future capital gains. Alternatively, an investor may elect to set off the net loss against income arising in the tax year of the disposal or the previous tax year. There are proposals to restrict the amount of loss that can be claimed against income. Inheritance Tax Relief On the basis that investments undertaken by the Fund will be in EIS Qualifying Companies, this will usually mean that EIS Qualifying Shares will constitute Relevant Business Property (as defined in IHTA). Providing the EIS Qualifying Shares are held for a period of not less than two years they should qualify for up to 100% business property relief, which could reduce any IHT liability arising on transfer of the EIS Qualifying Shares to nil. Even if the investor dies within the two year period and his or her spouse inherits the EIS Qualifying Shares, the holding period of both the investor and the spouse are combined in order to determine whether the two year holding period condition has been satisfied on death of the spouse. 16 Old Burlington Investments

17 Trustees Under certain conditions, and where the beneficiaries are individuals, trustees will usually qualify for CGT deferral, Share Loss Relief (limited to set off against capital gains) and IHT Relief. Neither Income Tax Relief nor exemption from CGT are available to trustees. EIS Qualifying Companies Investee Companies must be unquoted (i.e. they must not be 'listed' on a recognised stock exchange). For the purposes of EIS, shares listed on AIM or PLUS markets are regarded as being unquoted. Each Investee Company must use the funds raised through the issue of EIS Qualifying Shares in a Qualifying Trade, as prescribed under the EIS legislation, and have a permanent establishment in the UK. Throughout the Relevant Period, a company must not be a subsidiary of, or be controlled by, another company. Furthermore, the company must exist to carry on a Qualifying Trade or must be the parent company of a trading group carrying on a Qualifying Trade. No pre-ordained arrangements that allow for the Investee Company to come under the control of another company, or for any disposal of the shares in the Investee Company are permitted. Fund Investments Each Investee Company may raise up to 5 million from EIS, VCT or any other State Aid investment sources in any 12 month period. All funds must be used exclusively for the purposes of the Qualifying Trade within two years from the EIS Qualifying Shares being issued or the commencement of trade (if later) by the Investee Company. Gross Assets Immediately before the EIS Qualifying Shares are issued, the gross assets of the Investee Company must not exceed 15 million, nor 16 million immediately afterwards. Claiming EIS Relief An investor cannot claim Income Tax Relief until the Investee Company has been approved by HMRC as EIS Qualifying and an EIS 3 has been obtained. An application will be made to HMRC once an Investee Company has been trading for four months and it is expected that the necessary clearances and EIS 3 form will be issued shortly thereafter. Relief must be claimed within five years after 31 January following the year of assessment in which each investment was made by the Fund. Investors are strongly recommended to seek professional tax advice on making claims for Income Tax Relief as personal circumstances may differ. It is anticipated that the Fund will commence making investments in the 2012/13 tax year. The recently introduced carry back rules enable an investor with sufficient income tax liability who has subscribed 1.5 million through the Fund in EIS Qualifying Shares in 2012/2013 and made no EIS qualifying investments in 2011/2012, to elect to treat 500,000 as if it has been invested in that previous tax year and claim the corresponding Income Tax Relief in that period. While reasonable efforts will be employed to deploy funds on or before 5 April 2013, the Manager cannot guarantee that it will be able to do so and Investors should take appropriate advice in this regard. Old Burlington Investments Renewable Energy Fund 17

18 18 Old Burlington Investments

19 Section 8 Fund Structure, Offer Details and Fees Fund Structure The Fund is not an unregulated collective investment scheme and has been structured as a discretionary portfolio service for the purposes of the EIS legislation. It is not a separate legal entity in its own right. Rather, each investor enters into a discretionary portfolio investment management arrangement with the Manager by means of the Investor Agreement, which permits the Manager to implement the investment strategy on a collective basis. The Fund will comprise of a number of discretionary managed Portfolios. The Portfolios are managed on the terms of the Investor Agreement on a discretionary basis, in accordance with the investment objectives and restrictions set out in this IM. Each Investor for legal and tax purposes is the beneficial owner of a specific number of shares in each Investee Company, the aggregate of which comprise his or her Portfolio. The combined Portfolios comprise the Fund. The Nominee will be the registered holder of all Investments of the Fund. Subscriptions made by investors will be aggregated by the Fund for the purposes of making investments and the Manager will make investments in Investee Companies. Investors will therefore be the beneficial owners of EIS Qualifying Shares in Investee Companies, while the Manager will be responsible for the selection of, and exercising the rights in relation to, such investments, having consulted the Investment Adviser. Under an Unapproved Investment Fund an Investor can claim Income Tax Relief once a form EIS 3 has been issued by the Investee Company in respect of the investment in that particular Investee Company. After the Fund has invested in each EIS Qualifying Company, and that company has been trading for a period of four months, an EIS application can be made to HMRC. On receipt of clearance from HMRC, the Fund Administrator will send forms EIS 3 to each investor in respect of that EIS Qualifying Company. The Investors in the Fund can therefore claim their Income Tax Relief as and when each investment is made and the corresponding EIS 3 forms obtained. This could result in cashflow benefits for the investors. Under the terms of the Investors Agreement at section 12 of this IM, OBI will immediately succeed Thompon Taraz as the Manager of the Fund and will cease to be an Appointed Representative of Sturgeon Ventures if it becomes appropriately authorised and regulated by the FSA to manage the Fund s Investments for the Investors. Old Burlington Investments Renewable Energy Fund 19

20 Subscriptions The minimum individual subscription in the Fund is 5,000. While there is no limit on the maximum investment into the Fund, it should be noted that an investor may only claim Income Tax Relief on investments of up to 1,000,000 for year 2012/2013 onwards and 500,000 for 2011/2012. An investor may elect to carry back Income Tax Relief into the tax year preceding the date the Fund makes its qualifying investments, to the extent that the investor has not fully utilised the relief in that year. Hence, it is possible for an investor to invest up to 1.5 million via the Fund in EIS Qualifying Shares by 5 April 2013 and claim Income Tax Relief on 1,000,000 attributed to tax year 2012/2013 and on 500,000 for the tax year 2011/2012. The limit is measured on the aggregate value of EIS qualifying investments made by an investor in any one tax year. There is no limit on the amount of capital gains which may be deferred through an investment under the EIS, or correspondingly, the value of assets qualifying for inheritance tax relief. Exit Strategy The proposed life of the Fund is at least three years and you should be prepared to leave your investment in place for at least a four year period. There can be no guarantee that all EIS Qualifying Shares will be realised within this timeframe. To qualify for Income Tax Relief, EIS Qualifying Shares must be held for at least three years from issuance. The Manager anticipates that all subscription proceeds will be invested, and EIS Qualifying Shares issued, in Investee Companies by 5 April As part of its duty to maximise the value of the investment Portfolio, the Manager, together with the Investment Adviser, will consider the appropriate timing and strategy for exit after the expiry of the Relevant Period. Options may include any of the following: Trade sale to a third party purchaser Management buy-out Repurchase of shares by Investee Company Flotation on a listed stock market Liquidation Offer Details Launch Date 1 January 2013 Closing Dates: 1pm 5 April (2012/13 tax year) 1pm 28 June 2013 (2013/14 tax year 6 ) Minimum Fund size 2,000,000 Maximum Fund size 10,000,000 6 The Manager reserves the right at its discretion to extend the Closing Dates Applications Once you have read the IM and Investor Agreement, please complete either: A hard-copy Application Form which accompanies this IM, and return it to Graham Urquhart at Woodside Corporate Services Limited, 7th Floor, Gracechurch Street, London, EC3V 0EH along with the supporting documentation as requested therein to arrive no later than 1pm on 5 April 2013 for applications in respect of the 2012/13 tax year and on 1pm 28 June 2013 for applications in respect of the 2013/14 tax year 6 ; or An electronic copy of the Application Form and submit it by to info@woodsidesecretaries.co.uk by 1pm on 5 April 2013 for applications in respect of the 2012/13 tax year and on 1pm 28 June 2013 for applications in respect of the 2013/14 tax year 6. Please arrange for investment monies to be transferred to Woodside Corporate Services Limited OBI Renewable Energy Fund Client A/c". Sort code: Account Number: Branch: RBS London St Mary Axe Right of Cancellation You may exercise a right to cancel the Investor Agreement by notification to the Manager within 14 days of the Manager receiving your Application Form. This should be done by a cancellation notice sent to the Custodian as set out in this document. For convenience, a cancellation notice form is provided at the end of this document. On exercise of your right to cancel, the Manager shall refund any monies paid to the Fund by the investor, less any charges the Manager or Custodian has already incurred for any services undertaken in accordance with the Investor Agreement (but not any initial fees paid to the Manager). The Custodian will hold client monies until satisfactory completion of checks under the Money Laundering Regulations 2007 (as amended from time to time). You will not be entitled to interest on monies refunded following cancellation. The right to cancel under the FSA rules does not give you the right to cancel, terminate or reverse any particular investment transaction executed for your account before cancellation takes effect. Fees and Expenses All of the fees and costs associated with the Fund will be payable by the Investee Companies, with the exception of the Performance Fee. Therefore the full amount of Old Burlington Investments

21 Subscriptions should be available to invest in Qualifying Investments under the EIS and investors with sufficient tax liabilities should be able to claim EIS Relief on their gross Subscriptions assuming they are within the relevant EIS investment limits as set out in section 7. The following fees will be charged with respect to the Fund: Initial Fee 3.5% of the aggregate amount of subscriptions invested in the Fund will be charged by the Investment Adviser pro rata to each Investee Company and payable upfront upon investment. Annual Investment Advisory Fee A management fee of 1.95% of the aggregate amount of subscriptions invested in the Fund will be charged by the Investment Adviser pro rata to each Investee Company. Performance Fee As is customary, the Investment Adviser is entitled to a Performance Fee which is dependent upon successful realisations of the assets held within the portfolio. Accordingly, the Investment Adviser will receive from Investors a Performance Fee equal to 35 per cent of the amount realised over 1 for each 1 invested provided that the return exceeds the equivalent of an annual hurdle of 5 percent over the life of the fund. Fund Administrator and Custodian Fee A Fund Administrator and Custodian Fee of 0.25% per annum of the aggregate amount of subscriptions invested in the Fund (subject to a minimum of 10,000) will be charged by the Investment Adviser pro rata to each Investee Company, out of which an equivalent fee will be paid to the Fund Administrator and Custodian. There are no additional arrangement, service, exit or monitoring fees and we will not invest in an Investee Company unless we have Advance Assurance from HMRC based on current law. The Fund Manager Fee A Fund Manager Fee of 0.2% per annum of the aggregate amount of subscriptions invested in the Fund will be charged by the Manager pro rata to each Investee Company. The above fees are exclusive of VAT if applicable. There are no additional arrangement, service, exit or monitoring fees and we will not invest in an Investee Company unless we have Advance Assurance from HMRC based on current law. Charges in the case of Applications in respect of which authorised intermediaries have provided financial advice Following the Retail Distribution Review (RDR) from 1 January 2013, authorised financial intermediaries offering financial advice are no longer permitted to receive commission from investment product providers. Therefore, in relation to Applications from applicants who have been advised by authorised financial intermediaries, in accordance with regulations introduced by the FSA, such intermediaries will have been obliged to recover compensation from the Applicants in consideration of advice provided to them, and no commission (initial or trail) is payable. However, subject to express instruction from the Applicant, arrangements will be made to pay on the Applicant s behalf such one-off advisory fees and trail commissions as the Applicant and his intermediary agree (and notify to the Fund Administrator) represents the cost to the Applicant of the advice he received in relation to the making of this Application. The rate of the Initial Fee payable to Old Burlington Investments (acting as Investment Adviser) by Investee Companies equal to 3.5% of amounts invested in them by Applicants through the Fund will remain unchanged by such arrangements. However, the amount of any one-off advisory fees (and any trail commissions) will be deducted from the Applicant s subscription and remitted to the intermediary. Furthermore, tax relief will only be available on the amount subscribed net of such one-off fee and if the intermediary s fee includes VAT, the Applicant may remain liable for the VAT element thereof, even where arrangements have been made to make and pay the deduction mentioned above. Authorised intermediaries providing financial advice will be entitled to receive annual trail payments provided that the intermediary continues to act for the Investor and the Investor continues to be the beneficial owner of the shares subscribed for in the relevant Investee Companies for as long as laws and regulations permit such payment. Commission in the case of Applications in respect of which authorised intermediaries have not provided financial advice Authorised intermediaries not offering financial advice (sometimes known as execution only brokers) are eligible to receive: Introductory commission of 3.75%; or Introductory of 3% plus trail commission of 0.4% per annum for three years. Such authorised financial intermediaries also have the option of waiving an amount (e.g. 0%, 1%, 1.5%, 2%, 2.5%, 3%) or all of their commission, in which it will be reinvested in additional new shares in Investee Companies. The rate of the Initial Fee payable to Old Burlington Investments (acting as Investment Adviser) by Investee Companies equal to 3.5% of amounts invested in them by Applicants through the Fund will be increased to the extent necessary to cover the relevant rate of commission that is payable. For example, if an Applicant opts for introductory commission of 3.75%, the Initial Fee payable to Old Burlington Investments in respect of that Application will be increased to 7.25%. However, if the authorised intermediary indicates that they are waiving, for example, 2.75% of that initial commission in order to receive a lower commission payment of 1%, the Initial Fee of the Investment Adviser in respect of that Application will be increased to 4.5% to cover the commission payment of 1%. Old Burlington Investments Renewable Energy Fund 21

22 Section 9 Risks Investors must carefully consider all of the information contained in this IM and whether an investment in the Fund constitutes a suitable investment for them in light of their personal circumstances, tax position and the financial resources available to them. The Fund will be investing in unquoted, high risk companies and may not be suitable for all types of investor. Potential investors are, therefore, strongly recommended to seek independent financial and tax advice from a suitably qualified professional adviser before undertaking investment in the Fund. If in any doubt, an investor should not proceed. This section details the material risk factors that the Manager and Investment Adviser believe could adversely impact an investment in the Fund or the availability of tax reliefs to investors. It does not represent an exhaustive list of risks factors nor have they been set out in any particular order of priority. Investment Risks The value of EIS Qualifying Shares and income from them can go down as well as up. An investor may not get back the full amount invested and may, therefore, lose some or all of their investment. Most or all investments of the Fund will be in small, unquoted trading companies and, therefore, are unlikely to be readily realisable. Such companies generally have a high risk profile and may not produce the anticipated returns, which could affect an investor s ability to realise his or her initial investment. There may be difficulty in disposing of such investments at a reasonable price and in some circumstances it may be difficult to sell them at any price even after holding the EIS Qualifying Shares for the Relevant Period. The performance of the Fund is contingent on the Manager and Investment Adviser being able to identify suitable Investee Companies which carry on, and continue to carry on, a Qualifying Trade for the Relevant Period. There is no guarantee that the objectives of the Fund will be met. The Manager intends to invest the Fund across a Portfolio of Renewable Projects, following consultation with the Investment Adviser. However, there is a risk that the Fund s investments may be concentrated and the total return to investors may therefore be adversely affected by the unfavourable performance of one or a small number of Investee Companies. In the event that the maximum size of the Fund is not raised, there will be less opportunity to diversify investments across a range of different projects, which may increase the volatility of returns. Unquoted companies typically have small management teams and are highly dependent upon the skills and experience of a small number of individuals. The Portfolio of companies in which the Fund will be invested will be subject to the risks of Renewables Projects including, inter alia, lower than projected energy sources, lower than projected energy output, downtime of plant and machinery, higher than projected operating costs, volatility in annual revenues, adverse changes in government policy, change in legislation, unavailability of offtake agreements, risk of counterparty default, changes in base interest rates or breach of senior debt facilities. Having regard for the Fund s investment objectives and the tax reliefs available, an investment in the Fund should be considered as a medium term investment. Each investor should note that it is possible that other taxes or costs may arise for the investor in connection with their investment in the Fund that are not paid via, or imposed by, the Manager. Assumptions and targets included in the IM do not constitute forecasts of how the Fund or the Investments will perform. At the minimum Fund size and, possibly, at greater Fund sizes, it may not be appropriate or possible for the Fund to invest similar amounts in all Investee Companies or, indeed, to invest at all in more than one Investee Company or more than two Investee Companies. As a consequnce, the Fund may only invest in one or two Investee Companies and/ or one or more Investee Companies may need to take on a greater amount of debt in order to develop than would otherwise have been the case. Any of these factors may increase risk and/or limit investment returns. A further result of this may be that Investors would not enjoy the same level of diversification among different Investee Companies than would otherwise be the case. Of course less diversification exposes the client to potentially additional downside. Tax Risks Potential investors should be aware that the various tax benefits described in this IM are based on the Manager s understanding of the existing tax legislation and HMRC practice. Such interpretation may not be correct and it is possible that tax legislation may change in the future which would adversely affect the performance of the Fund and/or the position of the investor. The amount of EIS Relief an investor may gain from subscription to the Fund depends on their own personal circumstances. Investors are strongly advised to seek independent professional advice in relation to the tax implications of their investment into the Fund. The Manager and Investment Adviser will take all reasonable steps to ensure that EIS Relief is available on all investments made by the Fund. However, tax relief could be withdrawn or modified in certain circumstances and neither the Manager, the Fund, the Investment Adviser nor the Custodian accept any liability for any loss or damages suffered by an investor or other person as a consequence of such relief being denied or withdrawn or reduced. 22 Old Burlington Investments

23 An investor may lose some or all of the tax benefits derived under the EIS if the Investor fails to comply with the relevant legislation. Such situation might arise, for example, if an investor ceases to be UK tax resident during the Relevant Period or an investor receives value from an Investee Company, other than by way of an ordinary dividend, in the period commencing one year prior to the issue of EIS Qualifying Shares to the Fund to the end of the Relevant Period. An investor whose pro-rata beneficial interest, together with the interest of his or her associates, in an Investee Company amounts to more than 30% of the capital or voting rights will be deemed to be connected for the purposes of the EIS legislation and in such circumstances will not be entitled to claim Income Tax Relief in relation to that investment. Since investment will be through the Fund, this test should only be met where an investor and his or her associates holds a greater than 30% interest in the Fund. To the extent that an Investor s investment is allocated to an Investee Company by 5 April 2013, the Investor should be able to claim income Tax relief for the year 2012/13 in respect of that part of the Investment. Provided that an investor s investment is fully subscribed by 5 April 2013, the investor should be able to claim Income Tax Relief for the tax year 2012/2013 in respect of the entire investment. While the Manager will take all reasonable steps to ensure that an investor s investment is fully subscribed by 5 April 2013, it cannot guarantee that this will be achieved. In the event that all or part of the an investor s subscriptions cannot be made until the tax year 2013/2014, this would postpone the ability to claim Income Tax Relief in respect of that part of the investment until the tax year 2013/2014, with the potential to carry back to the tax year 2012/13. To the extent that an Investor s investment is allocated to an Investee Company by 28 June 2013, the Investor should be able to claim income Tax relief for the year 2013/14 in respect of that part of the Investment. Provided that an investor s investment is fully subscribed by 28 June 2013, the investor should be able to claim Income Tax Relief for the tax year 2013/2014 in respect of the entire investment. While the Manager will take all reasonable steps to ensure that an investor s investment is fully subscribed by 28 June 2013, it cannot guarantee that this will be achieved. In the event that all or part of the an investor s subscriptions cannot be made until the tax year 2014/15, this would postpone the ability to claim Income Tax Relief in respect of that part of the investment until the tax year 2014/15, with the potential to carry back to the tax year 2013/14. Delays to the investment timetable could also cause investors to lose the opportunity to defer capital gains which arose more than three years prior to their respective investment in an Investee Company through the Fund. Where an Investee Company ceases to carry on a Qualifying Trade during the Relevant Period, whether through the actions taken by the Investee Company or otherwise, its EIS qualifying status may be adversely affected and therefore, so will the EIS Relief accruing to investors. No guarantee can be given that all investments made by the Fund will carry on a Qualifying Trade, or continue so doing, for the purposes of claiming EIS Relief. The Manager will, where possible, implement measures to provide against this risk such as seeking Advance Assurance from HMRC that each company in which the Fund intends to invest is an EIS Qualifying Company. Each investor should note that it is possible that other taxes or costs may arise for the investor in connection with their investment in the Fund that are not paid via, or imposed by, the Manager. Assumptions and target included in the IM do not constitute forecasts of how the Fund or the Investments will perform. There may be a change to the policy of government such that the existing support of renewable energy shifts. Commercial Risks It is possible that the budgeted costs of a Renewable Project may overrun. As part of any prudent measures, it is intended that each project will incorporate a commercial allocation for contingency matters as well ensure that appropriate insurance policies and liquidated damages clauses have been negotiated prior to financial close. The inherent risks of the renewables industry present a significant challenge in terms of volatility in future predicted revenues. For example, varying wind speeds can have a dramatic impact upon the energy yield from a wind project. The Manager will seek to mitigate these risks by selecting projects that have been subjected to analysis and stress testing and which also benefit materially from government financial incentives so as to stabilise the returns. With the recent extension of the EIS legislation to permit activities being undertaken outside of the UK, together with the fact that certain sectors rely on a base currency other than sterling, for example, biofuels, it is possible that Investee Companies may be exposed to exchange rate fluctuations. Where possible, the Investee Companies will endeavour to ensure that receipts and costs are settled in sterling or appropriate hedging arrangements are implemented. Current financial conditions for financing are difficult which may impact the ability to refinance or divest from the any investment at a future date. It is possible that an investment is made into an Investee Company prior to all development work having been completed. In this circumstance the EIS funds will be warehoused until fully developed and then deployed. There is a risk that the project will not achieve full development. In this circumstance a new project will be designated to the Investee Company and HMRC guidance will be sought. Old Burlington Investments Renewable Energy Fund 23

24 Section 10 Operation of the Fund Nominee While the EIS Qualifying Shares will be issued in the name of the Nominee, for EIS purposes, they will be treated as if subscribed for by, and issued directly to, the investors who will enjoy the beneficial ownership over them throughout the life of the Fund. Any distributions made by the Investee Companies during the term of the Fund will be paid onward by the Nominee to the investors. Custodian Upon completion of the Application Form, the prospective investor will, inter alia, be deemed to irrevocably agree to the Manager having appointed the Custodian on their behalf, to exercise the powers, and carry out the duties, on behalf of the investor in accordance with the Custodian Agreement. Investors are permitted to request a copy of the Custodian Agreement from the Manager. Client Accounts The Custodian will hold investors funds prior to investment in Investee Companies, or ahead of any distribution of disposal proceeds upon realisation, in a client account in cash. The interest or return arising thereon will be paid to the Investment Adviser as an advance against its Initial Fee, Annual Investment Advisory Fee and/or any Performance Fee. Application of Funds Investors will be allocated EIS Qualifying Shares in each investment at the time investment in an Investee Company is made. There may be small variations to this rule where, for example, this would give rise to a requirement to issue fractional shares or investors invest after an investment has been made in an Investee Company or Investee Companies. Conflicts of Interest The Investment Adviser is a very active investor, adviser and fundraiser for individuals and entities operating in the renewables and other industries. There may potentially be occasions in the future where an investment approved by the Manager is connected in some way to the commercial interests of the Manager or the Investment Adviser. If the Fund were to provide follow-on investment into existing Investee Companies or into companies who have received investment from other funds managed by the Manager or advised by the Investment Advise, the interests of existing investors into such companies and those of this Fund s investors may differ, for example, with regard to valuation and speed of exit. The interest of the investors and the Manager and/or Investment Adviser may also diverge as a result of the Fund s fee structure, for example, by encouraging speculative investments on behalf of the Fund. If there are third party investors in an Investee Company, other than investors who have subscribed through this Fund, the objectives of the Fund and the third party or parties may differ. This would also apply if there were providers of debt capital alongside equity provided through the Fund. The Manager and Investment Adviser will also act as manager and investment adviser to other EIS funds. However, the Manager and Investment Adviser shall, at all times, ensure that any decisions in their capacity are undertaken without prejudice to the interests of investors and in accordance with the prescribed policies for dealing with conflict, as set out in the Investor Agreement. Reporting The Manager will write to you every six months with a valuation statement and an update on each investee s progress. The first report will be in respect of the first six months after the relevant Closing Date. The report will be issued two months from that date. Subsequent reports will be issued six monthly from the date of the previous report. Furthermore, the Fund Administrator will distribute to investors EIS 3 forms in respect of each Investee Company, as and when issued by HMRC. An EIS 3 form is required by an investor to claim EIS Relief for each investment made by the Fund, subject to an individual s personal circumstances. 24 Old Burlington Investments

25 Section 11 Frequently Asked Questions Below you will find some of the questions that are frequently asked in relation to the Fund. The Manager and Investment Adviser are not in a position to offer any Investor specific advice regarding the Fund s suitability in that person s individual circumstances. How do I invest in the Fund? Complete the Application Form at the back of this Information Memorandum. The Application Form includes full instructions on how to pay in your funds as well as details on where to send the form. Once received, the Fund Administrator will confirm receipt of your funds and application form. What is the minimum investment? The minimum investment is 5,000. There is no maximum investment, but you should be aware that income tax relief is currently available only on the first 1,000,000 invested for each tax year for which EIS Income Tax Relief is claimed. (Inheritance Tax Relief and Capital Gains Tax Deferral Relief are not capped however). See section 7 for further details on tax and the Enterprise Investment Scheme. Date then it may require that any remaining funds will be deployed within six months of that date How do I claim EIS Reliefs? The Fund Administrator will distribute to investors EIS 3 forms in respect of each Investee Company, as and when issued by HMRC. An EIS 3 form is required by an investor to claim EIS Relief for each investment made by the Fund. If you have completed your tax return already, you can make the claim by completing the claim section of the EIS 3 certificates and sending it to your Tax Office. Please call us on if you have any other questions regarding the Fund. Where is my money held before being invested into the Investee Companies? Your money is held by the Custodian in a segregated account until it is drawn down for investment in an Investee Company. Whilst it is in the account it may accrue interest which will be credited to your account once received. Once an Investment is made, you will become a beneficial owner of shares in that Investee Company. Your shares in an Investee Company will be held by the Nominee who will also hold your share certificates for you. How will you report progress of the businesses invested in? The Manager will write to you every six months with a valuation statement and an update on each Investee Company s progress. The first report will be in respect of the first six months after the relevant Closing Date. The report will be issued two months from that date. Subsequent reports will be issued six monthly from the date of the previous report. When do I get my income tax relief? You can claim EIS Income Tax Relief once an investment has been made into an Investee Company, and after those companies have been trading for four months. At that point we will seek EIS approval of the Investee Company from HMRC on each investor s behalf. The Fund intends to commence making investments soon after the relevant Closing Date. If the Fund is unable to fully deploy funds in Investee Companies by midnight on the relevant Closing Old Burlington Investments Renewable Energy Fund 25

26 Section 12 Investor Agreement This Investor Agreement (the Agreement ) sets out the terms and conditions for the Old Burlington Investments Renewable Energy Fund established for the Closing Dates specified in the Application Form to which this is attached, and on acceptance of an Investor s Application Form by the Manager will constitute a binding agreement between such Investor, the Manager and the Investment Adviser Subject to any variations of the terms of this Investor Agreement which may be agreed with specified Investors, such variations to be incorporated into this Investor Agreement by way of a supplement to this Information Memorandum issued to such Investors. This is a three-party agreement, made between (1) Thompson Taraz Collectives Limited as Manager ; (2) Old Burlington Ventures LLP as Investment Adviser ; and (3) you as the Investor. 1. Definitions 1.1. This Agreement employs the same defined terms as are found in the Definitions section, commencing on page 38 of the IM Words and expressions defined in the FSA Rules which are not otherwise defined in or for the purposes of this Agreement shall, unless the context otherwise requires, have the same meaning in this Agreement Any reference to a statute, statutory instrument or to rules or regulations shall be references to such statute, statutory instrument or rules and regulations as from time to time amended, reenacted or replaced and to any codification, consolidation, re-enactment or substitution thereof as from time to time in force References to the singular only shall include the plural and vice versa Unless otherwise indicated, references to Clauses shall be to Clauses in this Agreement Headings to Clauses are for convenience only and shall not affect the interpretation of this Agreement. 2. Investing in the Old Burlington Investments Renewable Energy Fund 2.1. By signing the declaration contained in the Application Form, the Investor agrees to be bound by the terms and conditions of this Agreement The Investor hereby appoints the Manager to manage the Portfolio for the Investor on the terms set out in this Agreement. The Manager agrees to accept its appointment and obligations on the terms set out in this Agreement The Manager is authorised and regulated by the FSA. The Investor is classified by the Manager as a retail client for the purposes of the FSA Rules. The Investor has the right to request a different client categorisation. However, if the Investor does so and if the Manager agrees to such categorisation the Investor will lose protections afforded to retail clients by certain FSA rules In certain circumstances, the Investor has the right to cancel this Agreement for a period of up to 14 days from the day on which the Manager accepts the Investor s Application Form. If the circumstances apply, a cancellation form will accompany the Information Memorandum and the Investor, if wishing to cancel, should complete the form and return it in accordance with the instructions printed on it, so as to arrive at the offices of the Fund Administrator not later than the 14th day after receipt. In the event of cancellation: The Investor will receive back from the Fund Administrator his Subscription, net of the Fund Administrator and Custodian s reasonable processing costs, within 28 days thereafter; and All further provisions of this Agreement shall cease thereupon to apply. 26 Old Burlington Investments

27 3. Subscriptions 3.1. In respect of the Fund: The Investor shall make a Subscription of not less than 5,000 at the same time as submitting his Application Form to invest in the Fund. There is no maximum subscription but income tax relief for the Investor under the EIS is limited to 1,000,000 in any one tax year (less any proportion thereof which the Investor has sought to use as relief in relation to investment in Venture Capital Trusts in the same tax year). Although this may be carried back to a previous tax year to the extent of unused EIS Relief, such EIS Carry Back Relief is limited to investments up to 500, The Investor may make further Subscriptions to the Fund up to and including the Closing Dates for the Fund. The total Subscriptions made to the Fund by the Investor shall be the initial value of the Investor s Portfolio The Fund Administrator shall deposit Subscriptions received in an interest- bearing client account pursuant to Clause 7 pending their investment or other use in accordance with this Agreement The Manager reserves the right not to proceed with the Fund if the aggregate subscription (net after the notional deduction of the Initial Fee) is less than 2,000,000 million, in which case the Manager shall treat the Investor s aggregate subscription (inclusive of any notional Initial Fee) as being subject to a withdrawal request validly received in accordance with Clause 15, and this Agreement will be terminated. 4. Services 4.1. Subject to Clause 7.3, the Manager will manage the Fund as from the Closing Dates on the terms set out in this Agreement. The Manager will exercise all discretionary powers in relation to the selection of, or exercising rights relating to, Investments of the Fund on the terms set out in this Agreement The Fund Administrator will provide administration services to the Fund and safe custody services in relation to the Portfolio investments and the cash The Manager shall not, however, except as expressly provided in this Agreement or unless otherwise authorised, have any authority to act on behalf of, or in respect of, the Investor or to act as the agent of the Investor For so long as the Investment Adviser is as an appointed representative for the purposes of section 39 of FSMA, the Investment Adviser is permitted to provide investment advice and to arrange investment transactions in relation to the Fund. Accordingly, the Manager will consult with the Investment Adviser in relation to the taking of decisions to invest the Fund or to realise the Fund s Investments. Insofar as the Investor is concerned, the Manager accepts responsibility for the acts and omissions of the Investment Adviser If the Investment Adviser becomes appropriately authorised and regulated by the FSA to manage Investments on a discretionary basis, the Investment Adviser and the Manager will make appropriate arrangements for Old Burlington Ventures LLP to succeed Thompson Taraz Collectives Limited as the Manager of the Fund, with all rights and obligations of Thompson Taraz Collectives Limited as Manager under this Agreement becoming the rights and obligations of Old Burlington Ventures LLP. The Investor will not be required to enter into a new or further agreement, and the terms of this Agreement will continue to apply, so as to govern the relationship between the Investor and Old Burlington Ventures LLP as Manager If the Investment Adviser becomes authorised and regulated by the FSA, it will cease to be an appointed representative of Sturgeon Ventures. Old Burlington Investments Renewable Energy Fund 27

28 5. Investment Objectives and Restrictions 5.1. In performing its services, the Manager shall have regard to and shall comply with, the Investment Objective and the Investment Restrictions set out in Schedule 1 to this Agreement In performing its services, the Manager shall at all times have regard to: The need for the Fund to attract the EIS Reliefs, and All Applicable Laws Generally, the Manager reserves the right to return uninvested cash if it concludes that it cannot be properly invested for the Investor and it considers it to be in the best interests of the Investor having regard to availability of EIS Relief for the Investor In the event of a gradual realisation of Investments prior to termination of the Fund under Clause 15.1, the cash proceeds of realised EIS Investments may be placed on deposit or invested in government securities or in other investments of a similar risk profile. 6. Terms Applicable to Dealing 6.1. In effecting transactions for the Fund, the Manager will act in accordance with the FSA Rules and will ensure that: in relation to transactions in quoted securities. deals are made on such markets and exchanges and with such counterparties; and in relation to transactions in unquoted securities, they are entered into on the best commercial terms in the circumstances and in either case as the Manager considers to be in the best interests of the Investor. The Manager maintains a written execution policy with respect to the Fund and the transactions which it enters into in relation to the Fund, and will provide the Investor with a copy upon written request Where clause applies, transactions will be effected in accordance with the rules and regulations of the relevant market or exchange and the Manager shall take all such steps as may be required or permitted by such rules and regulations and/or by good market practice Transactions to which clause applies will be subject to the rules and customs of the exchange or market and/or clearing house through which the transactions are executed and to all Applicable Laws so that: if there is any conflict between the provisions of this Agreement and any such rules, customs or Applicable Laws, the latter shall prevail; and Action may be taken as thought fit in order to ensure compliance to any such rules, customs or Applicable Laws. That said, the Investor acknowledges that the Portfolio will be substantially invested in one or more unlisted securities and, there is generally no relevant market or exchange and consequent rules and customs, and there will be varying practices for different securities. Transactions in shares of such securities will be effected on the best commercial terms which can be secured Subject to the FSA Rules, transactions for the Portfolio may be aggregated with those of other clients of the Manager (including those of the Investment Adviser and other Investors), and of the Manager s employees and associates and their employees. Investments made pursuant to such transactions will be allocated on a fair and reasonable basis in accordance with the FSA Rules and endeavours will be made to ensure that the aggregation will work to the advantage of each of the Investors, including the Investor, but the Investor acknowledges that the effect of aggregation may work on some occasions to the Investor s disadvantage. 28 Old Burlington Investments

29 6.5. Where transactions for the Investor are aggregated with transactions undertaken for other Investors, the Manager shall have absolute discretion as to the number of shares in an EIS Qualifying Company held as an Investment for the Fund allocated to the Investor, provided that Investors shall not have fractions of shares. Minor rounding up or down may be allowed to prevent Investors being deemed to be interested in fractions of shares and the aggregate of fraction entitlements may be held by the Fund Administrator for the Manager, but the Investor is always the beneficial owner of the shares held for him Certain categories of professional person are required to be excluded from any Investments to which they or their employer are connected, for the purposes of prevailing EIS legislation. If this applies to the Investor in relation to a given potential Investment, his allocation of that Investment will be redistributed across all other Investors as equitably as practically possible, and an equivalent cash amount will be re-credited to his Portfolio The Manager will act in good faith and with due diligence in its choice and use of counterparties but, subject to this obligation, shall have no responsibility for the performance by any counterparty of its obligations in respect of transactions effected under this Agreement Proceeds of a sale of an Investment and Investments receivable by the Portfolio will, respectively, only be credited to that Portfolio when settlement is effected in full. Where settlement with a relevant counterparty in respect of a transaction is not effected in full, the Investor will, as against all other Investors in the Fund whose transactions were effected for settlement with the relevant counterparty: if purchasing Investments, be entitled to Investments actually delivered by the relevant counterparty and thereafter to a cash sum from the client settlement bank account equal to the whole or relevant part of the sum debited to the account in respect of the relevant Investments; and if selling Investments, be entitled to cash actually paid to such relevant counterparty and thereafter to Investments held by the Fund Administrator in the nominal value of the bargain made for the Investor. 7. Custody and Administration Arrangements 7.1. The Manager has agreed with the Fund Administrator that the latter shall provide a custody, safe-keeping and administration service for Investors and the Fund The Fund Administrator will be responsible for the safe keeping of Investments and cash comprised in the Fund, including the settlement of transactions, collection of income and the effecting of other administrative actions in relation to the Investments Investments will be registered in the name of the Manager s appointed Nominee on behalf of the Investor, and will therefore be beneficially owned by the Investor at all times, but the Fund Administrator has by virtue of this Agreement the Investor s proxy to vote on the Investor s behalf at the direction of the Manager (or to refrain from voting if the Manager so determines) and to instruct the disposal of the Investments providing that the voting and other rights exercisable by the Manager shall not exceed 50% of the aggregate rights relating to any Investment The Fund Administrator will hold any title documents or documents evidencing title to the Investments Investments or title documents may not be lent to a third party and nor may there be any borrowing against the security of the Investments or such documents An Investment may be realised in order to discharge an obligation of the Investor under this Agreement, for example in relation to payment of fees, costs and expenses The Fund Administrator will arrange for the Manager to receive details of any meetings of shareholders in Investments and any other important information issued to shareholders in Investments. The Manager may apply to the Fund Administrator for a proxy directing how any voting rights are to be exercised by the Fund Administrator in respect of an Investment. Old Burlington Investments Renewable Energy Fund 29

30 7.8. The Fund Administrator will hold cash subscribed by the Investor in accordance with the Client Money Rules of the FSA. Such cash balance will be deposited with an authorised credit institution in a bank account (or accounts) opened and maintained in the name of the Fund Administrator. The Fund Administrator may debit or credit the said account for all sums payable by or to the Investor (including dividends receivable in cash and fees and other amounts payable by the Investor) Interest will be payable on credit balances in the said account at rates published by the Fund Administrator The Fund Administrator has confirmed to the Manager that if clause 4.5 above shall apply, the Fund Administrator will continue to perform its services in relation to the Investor once Old Burlington Ventures LLP has replaced Thompson Taraz Collectives Limited as the Manager of the Investor s Portfolio. 8. Reports and Information 8.1. The Investor will be sent an electronic report every six months, in compliance with the FSA Rules. Reporting will commence following the first anniversary of the relevant Closing Dates. Reports will include a measure of performance in the later stages of the Fund once valuations are available for the Investments Details of dividends which are received in respect of the Investments will be provided in respect of each tax year ending 5 April and appropriate statements sent to the Investor Contract notes will be provided for each transaction for the Investor s Portfolio which is of a type that conventionally generates a contract note. In other cases, the Manager will confirm to the Investor when a transaction has been entered into and the number of shares or securities under that transaction which have thereby been allocated to, or sold on behalf of, the Investor s Portfolio The Manager shall supply (or arrange for the Fund Administrator to supply) such further information which is in its possession or under its control as the Investor may reasonably request as soon as reasonably practicable after receipt of such request Any statements, reports or information provided under Clause 8.4 to the Investor will state the basis of any valuations of Investments provided. 9. Fees and Expenses 9.1. The Manager and the Fund Administrator shall receive fees for their respective services, and reimbursements of costs and expenses, as set out in Schedule 2 to this Agreement The fees of the Fund Administrator shall be payable by the Investment Adviser out of the fees the Investment Adviser receives under clause The Investment Adviser is entitled to receive a fee from the Portfolio in consideration of its services to the Manager, as set out in Schedule 2 to this Agreement. After Clause 4.5 applies, Old Burlington Ventures LLP as Manager shall continue to be entitled to receive fees at the same rate. 10. Management and Fund Administration and Custodian Obligations The Manager and Fund Administrator and Custodian shall devote such time and attention and have all necessary competent personnel and equipment as may be required to enable them to provide their management and fund administration and custodian services properly, efficiently and in compliance with the FSA Rules. However, in furtherance of the Investment Objective, which has been designed with the Investment Adviser, the Manager shall be entitled to call upon the Investment Adviser to provide such assistance with the discharge of its duties as is reasonable in the circumstances (including, without limitation, the provision of directors to serve on the boards of Investee Companies) Except as disclosed in the Information Memorandum and as otherwise provided in this Agreement (for example on early termination), none of the Manager, the Fund, the Investment Advisor or the Fund Administrator will take any action which may prejudice the tax position of the Investor insofar as they are aware of the relevant circumstances, and in particular which may prejudice obtaining the EIS Reliefs for the Investor s Investments. 30 Old Burlington Investments

31 11. Obligations of the Investor The Investor s participation in the Fund shall be on the basis of the declaration made by the Investor in his Application Form which includes statements by the Investor in relation to the following matters, namely: Whether or not the Investor wishes to seek EIS Relief for the Investments; That he agrees to notify the Manager if any Investment by the Fund in any company with which the Investor is connected within section 163 and sections 166 to 177 of the Income Tax Act 2007 (in which case clause 6.5 of this Agreement will apply at once); That he agrees to notify the Manager if, within three years of the date of issue of shares to his Portfolio in an EIS Qualifying Company or within three years of commencement of trade if later, the Investor becomes connected with the company or receives value from such company (in which case clause 6.6 will apply at that time); and the Investor s tax district, tax reference number and National Insurance number. The Investor confirms that the information stated in the Application Form in these (and all other) respects is true and accurate as at the date of this Agreement The Investor agrees to immediately inform the Manager in writing of any change of tax status, other material change in circumstance and any change in the information provided in the Application Form to which Clause 11.1 above refers In addition, the Investor agrees to provide the Manager with any information which it reasonably requests for the purposes of managing the Fund pursuant to the terms of this Agreement. 12. Delegation and Assignment The Manager may, where reasonable, employ agents, including associates, to perform any administrative, custodial or ancillary services to assist the Manager in performing its services, in which case it will act in good faith and with due diligence in the selection, use and monitoring of agents. Any such employment of agents shall not affect the liability of the Manager under the terms of this Agreement Clause 12.1 does not apply in relation to the appointment of the Investment Adviser, where Clause 4.4 above governs the liability of the Manager for the Investment Adviser. 13. Potential Conflicts of Interest and Disclosure 13.1 The Manager and Investment Adviser may each provide similar services or any other services whatsoever to any other client and shall not in any circumstance be required to account to the Investor for any profits earned in connection therewith. So far as is deemed practicable, the Manager and Investment Adviser will each use all reasonable endeavours to ensure fair treatment as between the Investor and other clients in compliance with the FSA Rules. The Manager and Investment Adviser separately have in place a conflict of interest policies (the Conflicts Policies ) pursuant to the FSA Rules which sets out how it identifies and manages conflicts of interest Under the respective Conflicts Policies, the Manager and Investment Adviser are required to take all reasonable steps to identify conflicts of interest between: Itself, including its employees and contracted consultants, or any person directly or indirectly linked to them by control, and a client of the Manager; or One client of the Manager or the Investment Adviser and another such client The Manager and the Investment Adviser believe that it should identify any conflicts that may arise in other situations including between the Manager and any of its shareholders. Where the Manager or Investment Adviser owes a duty to such clients, they must maintain and operate arrangements to prevent any conflict from giving rise to a material risk of damage to the interests of its clients A copy of each of the Conflicts Policies is available upon request. Old Burlington Investments Renewable Energy Fund 31

32 14. Liability of the Manager The Manager and Investment Adviser will each act at all times in good faith and with reasonable care and due diligence. Nothing in this paragraph 14 shall exclude any duty or liability owed to the Investor by the Manager or Investment Adviser under the FSA Rules Neither the Manager nor the Investment Adviser shall be liable for any loss to the Investor arising from any investment decision made or advised in accordance with the Investment Objective and the Investment Restrictions or for other action in accordance with this Agreement, except to the extent that such loss is directly due to the negligence or wilful default or fraud of the Manager, the Investment Adviser or of their Associates or any of their respective employees Subject to Clauses 4.4, 6.7 and 12, the Manager shall not be liable for any defaults of any counterparty, agent, banker, nominee or other person or entity which holds money, investments or documents of title for the Fund, other than such party which is its Associate In the event of any failure, interruption or delay in the performance of the Manager s or the Investment Adviser s obligations resulting from acts, events or circumstances not reasonably within its control including but not limited to war, riot, civil commotion, terrorism or threat thereof, acts or regulations of any governmental or supranational bodies or authorities and breakdown, failure or malfunction of any telecommunications or computer service or systems, neither the Investment Adviser nor the Manager shall be liable or have any responsibility of any kind to any loss or damage thereby incurred or suffered by the Investor The Manager has carried out an assessment of the suitability of the Fund as an investment for the Investor (by means of seeking answers to relevant questions in a form of questionnaire accompanying the Information memorandum). However, the Manager does not give any representations or warranty as to the performance of the Portfolio. The Investor acknowledges that EIS Investments are high risk Investments, being non-readily Realisable Investments. There is a restricted market for such Investments and it may therefore be difficult to sell the Investments or to obtain reliable information about their value. The Investor undertakes that he has considered the suitability of investment in EIS Investments carefully and has noted the risk warnings set out in the Information Memorandum about the Fund The Manager and the Investment Adviser shall be entitled to an indemnity in relation to any costs or expenses they incur arising from breach by the Investor of this Agreement (including but not limited to any misrepresentation by the Investor in the Application Form), and to fund such indemnity from the net amount of the Investor's subscription to the Fund remaining at the time such indemnity is claimed, but provided always that the FSA Rules do not prohibit the Manager or the Investment Adviser from seeking the indemnity in question, and subject always to the extent to which the Manager or the Investment Adviser were contributory to the cost or expense in question The aggregate liability of the Manager and the Investment Adviser in connection with this Agreement is limited to: (a) in the case of a claim made by an individual Investor, the gross amount of the Investor's subscription to the Fund under this Agreement; and (b) in the case of a class claim by or on behalf of all Investors, the aggregate amount of the gross subscriptions made by all Investors to the Fund. 15. Termination The Manager shall set a date, which it shall notify to the Investor, on which the Fund will terminate, which is likely to be on or around the fifth anniversary of the Closing Dates. On termination of the Fund, all shares held in the Portfolio will either be sold and cash transferred to the Investor and/or the shares will be transferred into the Investor s name or as the Investor may otherwise direct An Investor may at any time withdraw any uninvested cash comprised within his Portfolio from the Fund prior to termination of the Fund, upon reasonable written notice to the Manager. The Investor may serve similar reasonable written notice on the Manager seeking to withdraw noncash assets from his Portfolio in circumstances where this is sanctioned in accordance with the provisions of paragraph 2 of the Schedule to the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 (as amended, and as treated as amended by implication in accordance with prevailing EIS legislation enacted after the coming into force of the said Order). In the case of a request to withdraw non-cash assets from the Investor s Portfolio, the Investor is warned that, and accordingly acknowledges: 32 Old Burlington Investments

33 That he may lose EIS Relief where such a request to withdraw requires Investments to be sold; and That it may not be practicable for the relevant shares to be immediately sold or transferred, in which case there may be a delay in completing the withdrawal. If it is practicable to effect, and the Investor decides to proceed with an early withdrawal, the Manager will, unless the Investor otherwise requests, effect the withdrawal (whether of cash, non-cash assets or both, or where the Investor s instruction to the Manager is to seek to realise non-cash assets for their cash value) on the last business day of the month following that in which such decision is made If other than where Clause 4.5 applies: The Manager gives to the Investor not less than three months written notice of its intention to terminate its role as Manager under this Agreement; or The Manager ceases to be appropriately authorised by the FSA or becomes insolvent; or The Investment Adviser ceases to be an appointed representative for the purposes of section 39 of FMSA and is therefore not appropriately authorised and regulated by the FSA to replace the Manager; Then the Manager shall endeavour to make arrangements to transfer the Fund to another appropriately authorised and regulated fund manager in which case that fund manager shall assume the role of the Manager under this Agreement, failing which this Agreement shall terminate forthwith and, subject to Clause 16, the Investments in the Portfolio shall be transferred into the Investor s name or as the Investor may otherwise direct. 16. Consequences of Termination On termination of this Agreement pursuant to Clause 15, the Manager will use reasonable endeavours to complete all transactions in progress at termination expeditiously on the basis set out in this Agreement Termination will not affect accrued rights, existing commitments or any contractual provision intended to survive termination and will be without penalty or other additional payments save that the Portfolio will bear the cost of fees, expenses and costs properly incurred by the Manager or the Fund Administrator up to and including the date of termination and payable under the terms of this Agreement On termination, the Manager may retain or realise such Investments as may be required to settle transactions already initiated and to pay the Investor s outstanding liabilities, including fees, costs and expenses payable under Clause 9 of this Agreement, the details of which are set out in Schedule 2 to this Agreement. 17. Confidential Information None of the parties shall disclose to third parties information the disclosure of which by it would be or might be a breach of duty or confidence to any other person In performing this Agreement, neither the Manager nor the Investment Adviser shallbe required to make use of information which comes to the notice of their respective employees, officers or agents (or those of their respective Associates) unless this has come to the actual notice of the individual employees, officer or agent of the Manager or the Investment Adviser specifically retained for providing services under this Agreement to the Investor The Manager and Investment Adviser will at all times keep confidential all information acquired in consequence of this Agreement, except for information which: Is public knowledge; or Either of them may be entitled or bound to be disclosed under compulsion of law; or Required to be disclosed by regulatory agencies; or Is given to their respective professional advisers where reasonably necessary for the performance of their professional services; or Needs to be shared with the Fund Administrator and Custodian for the proper performance of this Agreement; or Is authorised to be disclosed by the Investor, provided that in making such disclosure the Manager or the Investment Adviser, as the case may be, shall use all reasonable endeavours to prevent any breach of this Clause 17 through further or onward disclosure thereof. Old Burlington Investments Renewable Energy Fund 33

34 18. Complaints and Compensation The Manager and Investment Adviser have both established procedures in accordance with the FSA Rules for consideration of complaints. Details of these procedures are available on request. Should an Investor have a complaint, he should contact the Manager in the first instance (who will liaise with the Investment Adviser as necessary). If the Manager cannot resolve the complaint to the satisfaction of the Investor, the Investor may be entitled to refer it to the Financial Ombudsman Service The Fund Administrator participates in the Financial Services Compensation Scheme, established under FSMA, which provides compensation to eligible Investors in the event of a firm being unable to meet its customer liabilities. Payments under the protected investment business scheme are limited to a maximum of the first 85,000 of the claim. Further information is available from the Manager. 19. Notices, Instructions and Communications Notices of instructions to the Manager should be in writing and signed by the Investor, except as otherwise specifically indicated The Manager may rely and act on any instruction or communication which purports to have been given by persons authorised to give instructions by the Investor under the Application Form or subsequently notified by the Investor from time to time and, unless that relevant party receives written notice to the contrary, whether or not the authority of such person shall have been terminated. 20. Unsolicited Real Time Financial Promotion The Manager may and Investment Adviser may both communicate an unsolicited real time Financial Promotion (i.e. interactive communications such as a telephone call promoting EIS Qualifying Company investments) to the Investor. 21. Amendments The Manager (on its own behalf or on behalf of the Investment Adviser) may amend this Agreement by giving the Investment Adviser and Investor not less than ten business days written notice. The Manager may also amend these terms by giving the Investment Adviser and Investor written notice with immediate effect if such is necessary in order to comply with HMRC requirements in order to maintain the EIS Relief or in order to comply with the FSA Rules, and the Investor shall be bound thereby. 22. Data Protection All data with which the Investor provides to the Manager, Investment Adviser, Fund Administrator or Custodian is held by the Manager subject to the Data Protection Act The Investor agrees that the Manager may pass personal data to other parties insofar as is necessary in order for it to provide services as set in this Agreement and to the FSA and any regulatory authority which regulates it and in accordance with all other Applicable Laws. 23. Entire Agreement This Agreement, together with the Application Form, comprises the entire agreement of the Manager and Investment Adviser with the Investor relating to the provision of the services and supersedes all earlier meetings, any correspondences, or discussions that may have taken place preceding the signing of the Investor Application Form Clause 23.1 without prejudice to any agreement between the Manager and Fund Administrator Clause 23.1 shall remain the case even after the happening of the events specified in Clause Old Burlington Investments

35 24. Rights of Third Parties Aside from the Fund Administrator, who may enforce provisions of this Agreement which refer to it by name and to its rights and obligations in relation to the Investor, a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but this does not affect any right or remedy of such third party which exists or is available apart from that Act. 25. Severability If any term, condition or provision of this Agreement shall be held to be invalid, unlawful or unenforceable to any extent, such term, condition or provision shall not affect the validity, legality or enforceability of the remainder of this Agreement. 26. Governing Law This Agreement and all matters relating thereto shall be governed by and construed in accordance with English Law and the parties submit to the exclusive jurisdiction of the English Courts. Old Burlington Investments Renewable Energy Fund 35

36 Schedule 1 Investment Objective and Investment Restrictions of the Fund 1. Investment Objectives 1.1. To offer a wide range of investors the opportunity to invest a portfolio of one or more high quality businesses and/or special purpose vehicles within the renewable energy and energy efficiency sectors, in order to provide them with capital to assist in and accelerate their growth and provide attractive returns for investors The Manager will act on the advice and recommendations of the Investment Adviser. The Manager s aim is to manage the funds subscribed by Investors to mitigate the risk to capital, while potentially providing for commercially attractive and stable returns and the tax advantages associated with EIS investments The intention is to disinvest after three years after the Closing Dates. In the event of a gradual realisation of Investments prior to termination of the Fund under Clause 15, the cash proceeds of realised Investments may be placed on deposit or invested in fixed interest government securities or other investments of a similar risk profile. Proceeds will be paid out on termination of the Fund or in instalments in advance of termination, as determined by the Manager, subject to HM Revenue & Customs approval if relevant. 2. Investment Restrictions 2.1. Each Investment will be in a company into which the Investment Adviser has conducted appropriate investigations in order to establish whether it meets the Fund s objectives and in respect of which the Manager subsequently decides to invest In carrying out its duties under this Agreement in respect of the Fund, regard shall be had, and all reasonable steps taken, by the Manager to comply with such policies or restrictions as are required in order to attract EIS Relief as may be prescribed by HM Revenue & Customs from time to time In particular, but without prejudice to the generality of the above statements, the criteria for the Fund are as follows: So far as practicable, each Investment shall be in shares of an EIS Qualifying Company; So far as is practicable, the Portfolio shall be fully invested (subject to cash retention to meet fees, costs and expenses); and Generally the Manager reserves the right to return a small surplus of cash if it concludes that it cannot be properly invested for the Investor or considers it to be in the interests of the Investor, having regard to EIS Relief for the Investor. 36 Old Burlington Investments