Income VCT Prospectus - The Tax Shelter Report

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Keydata Income VCT also be subject to earlier termination in certain other circumstances. Any action taken by the Investment Manager in the event of a breach of the Investment Management Agreement will be announced through the RNS. 4.3 Secondment Agreement Agreements (each a “Secondment Agreement”) both dated 23 February 2005, entered into between each Investment Manager and Renewables Management whereby Renewables Management will make available to the relevant Investment Manager the expert services of the members of Investment Management Team in such locations and for such periods of time as will enable the Investment Manager to perform its obligations under the Investment Management Agreement. Renewables Management receives annual fees (inclusive of any VAT) equal to 0.65 per cent of amounts invested by the Company less an amount equal to the Investment Manager’s quarterly running costs until the termination of a Secondment Agreement. Such amount will be payable quarterly in arrears. The Secondment Agreement is co-terminous with the Investment Management Agreement (ie if the Investment Management Agreement is terminated for any reason, the Secondment Agreement will be automatically terminated). 4.4 Directors’ Letter of Appointment Each of the Directors has entered into an agreement with each Company dated 23 February 2005 as referred to in paragraph 3.4 above whereby he is required to devote such time to the affairs of each Company as the Board reasonably requires consistent with his role as a non-executive Director. Each Director is entitled to receive an annual fee of £12,000 and the Chairman £15,000. Either party can terminate the agreement by giving to the others at least three months’ notice in writing to expire at any time after the date 15 months from the respective commencement dates. 4.5 Administration Agreement An Agreement (“the Administration Agreement”) dated 23 February 2005 between each Company and KIS, whereby KIS provides certain administration services to the Companies in respect of all the investments of the Companies, for an annual fee of £25,000 (plus VAT) per Company. The Administration Agreement continues for a period of 3 years from Admission and thereafter is terminable by either party giving 12 months’ written notice, such notice to expire no earlier than the period 3 years from Admission, subject to early termination in certain circumstances. 4.6 Company Secretarial Agreement An Agreement (“the Company Secretarial Agreement”) dated 23 February 2005 between each Company and Keydata Investment Services Limited, whereby Craig McNeil provides certain company secretarial services to the Companies for an annual fee of £12,000 (plus any applicable VAT) per Company, payable direct to Craig McNeil. The Company Secretarial Agreement continues for a period of 3 years and thereafter is terminable by either party giving 12 months’ written notice, such notice to expire no earlier than the period 3 years from Admission, subject to early termination in certain circumstances. 4.7 Trade Name License Agreement An agreement (“the Trade Name License Agreement”) dated 23 February 2005 between Keydata UK Limited and each Company, whereby Keydata UK Limited grants to the Companies a non-exclusive license at no cost to use the “Keydata” name in connection with the Companies activities. The Trade Name License Agreement commenced from the date of the agreement and is terminable by either party if the other party suffers certain events of insolvency and is terminable by Keydata UK Limited if any person or persons acting in concert (as defined in the City Code on Takeovers and Mergers) obtains control of the Company. 4.8 Offer Agreement Under the Offer Agreement dated 15 December 2005 between, inter alia, each Company (1), its Directors (2), the Sponsor (3), Keydata Investment Services Limited (“KIS”) (4), and Falck Renewables Limited (5), the Sponsor has agreed to act as sponsor to the Offers and KIS undertakes as agent of the Companies to use its reasonable endeavours to procure subscribers under the Offers for up to 40,000,000 Shares. KIS is entitled to any interest earned on subscription monies prior to the allotment of Shares which will be applied to defray the costs of the Offers. Under the Offer Agreement, each Company will pay to KIS a fee of 5 per cent. of the aggregate value of accepted applications for Shares received pursuant to the Offers. Each Company will also pays to KIS a broking commission of 0.9 per cent. per annum of the Net Asset Value of each Company payable quarterly in arrears, plus VAT (if any). Out of its fee, KIS will pay all other costs and expenses of or incidental to the Offers, including paying the Sponsor’s fee of £17,500 per Company. Authorised financial advisers will be paid by KIS out of its capital raising fees. Total initial costs payable by each Company under the Offer Agreement are limited to 5 per cent. of the gross proceeds of the Offers. 35
Keydata Income VCT Under the Offer Agreement, which may be terminated by the Sponsor and KIS in certain circumstances of breach, the Investment Manager, KIS and the Directors have given certain warranties which are subject to certain limitations. Warranty claims must be made by no later than 90 days after publication of the Company’s accounts for the year ending 28 February 2007. Each Company has also agreed to indemnify the Sponsor in respect of its role as Sponsor and under the Offer Agreement. The indemnities are standard for an agreement of this nature and without limit as to time and amount. The Offer Agreement may be terminated, inter alia, if any statement in the Prospectus is untrue, any material omission from the Prospectus arises or any breach of warranty occurs. 5. Litigation As at the date of this document, no member of either Group is or has been engaged in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened by or against any member of either Group of which they are aware) which may have, or has had during the period since its incorporation, a significant effect on the relevant Group’s financial position or profitability. 6. General 6.1 No member of either Group has or has had any employees since their respective dates of incorporation. 6.2 Each Company’s accounting reference date is 28 February in each year. 6.3 The Investment Managers are Green Power 1 Limited and Green Power 2 Limited, both of whose principal place of business is at One Angel Court, London EC2R 7HJ. 6.4 The initial issue price of 100 pence per Share represents the nominal value of such Shares (1pence) plus a premium of 99 pence per Share and is payable in full on application. 6.5 The Offers are not underwritten. The expenses of and incidental to the Offers and the listing of the Shares including registration and listing fees, printing, advertising and distribution costs, legal and accounting fees, expenses and commissions payable to Introducers will amount to 5 per cent. of the gross proceeds of the Offers (including irrevocable VAT) and are payable by the Promoter, in terms of the Offer Agreement. If the maximum of £20,000,000 for each Company is raised under the Offers the net proceeds for each Company will amount to £19,000,000. The net proceeds will be applied in accordance with the Companies’ investment strategy. In respect of each Company if the maximum subscription of £20,000,000 is raised under the Offer, Shares issued will represent 81.6 per cent. of each of the Company’s enlarged share capital. 6.6 A typical Investor is expected by the Directors to be an individual (not a corporate), who is aged 18 or over. The individual should be willing to invest over the long term and be comfortable with higher risk investments, such as unquoted and smaller company shares. The Investor should either have experience of such investments and/or seek advice from an appropriate financial adviser. 6.7 Ernst & Young LLP have been the only auditors of each Company since its incorporation and are members of the Institute of Chartered Accountants in England and Wales. 6.8 Each Company has given notice to the Registrar of Companies, pursuant to section 266 of the Act, of its intention to carry on business as an investment company, which will enhance its ability to pay dividends out of income. Whilst it is an investment company, the Companies articles of association are required to preclude it from distributing capital profits (see paragraph 2.13 above). If and when capital profits are realised which the Directors consider it appropriate to distribute by way of dividend (for example on the disposal of a successful investment), the Directors would anticipate revoking this status, whereupon the prohibition in the Companies’ articles of association against distributing capital profits will automatically terminate. 6.9 Green Power 1 and Green Power 2 have each given, and have not withdrawn, their written consent to the issue of this document with the inclusion of their name and their opinions in Part I in the form and context in which they are included. 6.10 The Offers are sponsored by Howard Kennedy whose address is at 19 Cavendish Square, London W1A 2AW and which is authorised and regulated by the Financial Services Authority. The Sponsor has given, and has not withdrawn, its written consent to the issue of the document with the inclusion of its name in the form and context in which it is included. 6.11 Keydata Investment Services has given, and has not withdrawn, its written consent to the issue of this document with the inclusion of its name in the form and context in which it is included. 6.12 There are no family relationships between any of the Directors or between any directors of either Investment Manager, or between any of the Directors and the directors of the Investment Manager. 6.13 No member of either Group has entered into any related party transactions. 36
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Income VCT Prospectus - The Tax Shelter Report

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